Harbour Energy (HBR) M&A Announcement summary

Deal rationale and strategic fit

• Establishes a leading position in the deepwater U.S. Gulf of America, expanding presence in a prolific offshore 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 an experienced team, ensuring strategic and cultural fit, and supports creation of a new core business unit.

• Complements existing offshore assets in Mexico, Norway, the U.K., and Argentina, leveraging synergies across regions.

• Aligns with a strategy of portfolio high-grading, resilience, and global diversification.

Financial terms and conditions

• Total consideration is $3.2 billion: $2.7 billion in cash and $0.5 billion in ordinary shares priced at GBP 2.15 per share.

• Seller receives $0.5 billion in equity (175 million shares at 215p/share), resulting in 11% ownership post-completion, with 70% of shares under a one-year lock-up.

• 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.

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

• Post-merger leverage will be slightly above target but is expected to decrease through enhanced cash flow.

Synergies and expected cost savings

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

• Operational excellence and capital efficiency demonstrated by LLOG, with significant cost savings in Buckskin development.

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