UK's Harbour flags stable North Sea oil and gas output, BP West of Shetland plans

The UK's Harbour Energy said March 7 it should be able to maintain steady production in 2024-25 on a stand-alone basis, alongside buying Germany's Wintershall Dea, as it seeks to maximize the potential of its North Sea business with near-field drilling and projects.

Harbour said in a statement it had managed to offset around a third of its 2023 production with the addition of 20 million barrels of oil equivalent in new reserves, and said it was extending to 2025 its earlier 2024 production guidance of 150,000-165,000 boe/d. Its production in 2023 averaged 186,000 boe/d, down 11% from 2022, with most of the output derived from the UK, it confirmed.

In 2023, Harbour increased output from its J-Area hub, which feeds Ekofisk crude volumes loaded at Teesside, thanks to near-field drilling, it said, going on to confirm plans to bring on stream a J-Area tie-in known as Talbot around the end of 2024. "We also approved plans to drill a well and retrofit three producing wells for gas lift, targeting improved recovery from the Judy Chalk," it added.

It also highlighted near-field plans for its Greater Britannia and AELE hubs, which feed Forties crude volumes -- the three North Sea hubs were purchased by Chrysaor in deals with the US' ConocoPhillips and Shell in the last decade.

At Greater Britannia, Harbour said it had "progressed" plans to resume drilling at satellite fields, including an infill well initiated in February 2024 and an appraisal well at the Brodgar gas condensate discovery. A gas discovery known as Leverett had been successfully appraised and a potential tie-back to the Britannia platform remained under consideration, it said. Greater Britannia gas feeds into the Scottish Area Gas Evacuation (SAGE) pipeline system, arriving onshore at St Fergus.

Nonetheless, it has also flagged unusually high levels of planned maintenance at its North Sea facilities in 2024, alongside unspecified pipeline shutdowns.

The Platts Dated Brent benchmark was assessed at $86.41/b on March 6, up $1.05 on the day.

Tax burden

Outside its operated assets, the company noted ongoing activity by BP at the West of Shetland Clair and Schiehallion fields, where Harbour is a partner, including preparations for a potential Phase 3 at the Clair heavy oil development.

Production "was supported by four wells drilled across Clair Phase One and Clair Ridge, and a further three wells at Schiehallion. Further drilling at both Clair and Schiehallion is planned for 2024. In addition, the operator continues to optimize the Clair phase 3 development, which is expected to target Clair South," Harbour said.

Harbour has vociferously opposed the UK's Energy Profits Levy, which was introduced as a windfall tax in 2022 and lifted the headline tax rate to 75%. The cut-off date for the EPL was extended by a year to 2029 in the government's latest Budget statement March 6, with the opposition Labour Party threatening further tax increases if it wins power at upcoming elections.

The company reported pre-tax earnings of $600 million, which with an effective tax rate of 95% resulted in post-tax earnings of $32 million.

It highlighted cost cutting measures, including redundancies, and said it was on track with the purchase of Wintershall Dea, intended to diversify away from the UK.

"We remain focused on the successful completion of the Wintershall Dea acquisition and the ongoing safe and efficient management of our existing portfolio," CEO Linda Cook said. "We are excited about our future as we look to continue to build a geographically diverse, large scale, independent oil and gas company focused on safe and responsible operations, value creation and shareholder returns."