Harbour Energy (HBR) M&A Announcement summary

Deal rationale and strategic fit

• Establishes a leading position in the deepwater US Gulf of America, expanding presence in a prolific oil and gas basin with strong infrastructure and government support.

• Adds a high-quality, oil-weighted portfolio with long-life reserves, significant operational control, and exploration upside.

• Secures a world-class team with a strong track record, seen as a strong cultural and strategic fit for establishing a new US business unit.

• Complements existing core units in Norway, UK, Argentina, and Mexico, leveraging synergies and supporting global diversification.

• Supports investment grade profile, portfolio resilience, and competitive shareholder distributions.

Financial terms and conditions

• Total consideration is $3.2 billion: $2.7 billion in cash and $0.5 billion in ordinary shares, with sellers receiving 11% of voting shares (70% locked for one year).

• Funded by $0.5bn equity, $0.7bn existing liquidity, $1.0bn 3-year term loan, $1.0bn bridge to bond, and proceeds from Indonesia divestment and Waldorf acquisition.

• Deposit of $100 million paid into escrow, credited against cash consideration at completion.

• Post-merger leverage will be slightly above 1x, with a clear deleveraging plan supported by enhanced cash flow.

• Sellers are a private family trust, ensuring long-term alignment.

Synergies and expected cost savings

• Synergies expected from leveraging buying power and supply chain with offshore suppliers across the North Sea, Gulf of America, and Mexico.

• Operational excellence and capital efficiency demonstrated by LLOG, notably in Buckskin development.

• Accretive to margins, lowers effective tax rate, and unit operating cost of $12/boe with a blended tax rate of approximately 23%.

• Integration with Mexico operations anticipated to create further value.