Harbour Energy Aktie

Good morning, ladies and gentlemen, and welcome to the Harbour Energy plc Investor Presentation. [Operator Instructions]

The company may not be in a position to answer every question it receives during the meeting itself, however, the company can review all questions submitted today. And will publish those responses where it's appropriate to do so on the Investor Meet Company platform.

Before we begin, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful.

And I would now like to hand you over to CEO, Linda Z. Cook. Linda, good morning.

Thanks, Jake. Good morning, everyone, and thanks for joining the call. Before we get started, maybe just a few words on the events going on in the Middle East. I mean the conflict, I think, as most people are now aware, has seen more than 20% of global crude oil and LNG exports disrupted. That's really unprecedented. It's led to extreme market volatility and, of course, increased concerns over physical oil and gas supplies, including phosphates and other things as well. So quite an event that we're experiencing now.

We're now a couple of weeks into a ceasefire, but of course, still waiting for the safe restart of traffic through the Strait. We do hope that the ceasefire holds and that hopefully, imminent negotiations or further discussions can lead to a return to peace and stability in the region.

But against this uncertain backdrop, Harbour has to continue operating, of course, and we remain focused on continuing to execute our strategy and controlling what we can. And we have a strong track record when it comes to strategic, operational and financial delivery, supported by active portfolio management. And of course, I'm proud to say, a world-class team. Our consistent strategy together with that delivery means that today, we're benefiting from a large-scale diverse production base with a competitive cost structure, a material exposure to both Brent oil prices and European gas prices.

We also have investment-grade credit ratings, and that's supported by our prudent financial policy. And in particular, we do take a rather systematic approach to hedging. So we look to protect our downside exposure while preserving meaningful upside participation and have continued to hedge through the recent volatility, securing in particular some attractively priced European gas collars.

So we'll turn now to the presentation and to the second slide, and for those not so familiar with us, a quick introduction to how we got to where we are today. Over the last 10 years, we've grown rapidly from 0 to 0.5 million barrels per day of production, driven by fairly disciplined M&A and also reinvesting in the assets that we acquired to add value as we've sought to build a global diverse independent oil and gas company.

Since our first acquisition in 2017, we repeatedly demonstrated our ability to identify and secure strategic value-enhancing transactions. Early acquisitions were focused on building scale in our first region, which was the U.K. Then it was about diversifying and adding positions of scale in other countries, in particular, through the Wintershall Dea acquisition in 2024.

Our more recent transactions, which were announced late last year have been targeted towards refining and strengthening the portfolio, making it more resilient and enhancing our longevity. And a good example of this is, of course, the LLOG transaction in the U.S. Gulf of America, which completed ahead of schedule already in February. The LLOG assets that we acquired through that transaction are oil weighted. They're fully operated, which we like, and they have a compelling growth profile and a long reserve life.

So this acquisition helps secure our overall production at a level between 475,000 and 500,000 barrels per day through to the end of the decade. And while overall production stays broadly stable, what we'll see is a significant increase in our cash flow through to 2030 as we have declining U.K. production, and we're replacing that with growth in the U.S. and over time, in Mexico, both lower tax rate jurisdictions.

If we go to the next slide, in addition to the LLOG transaction, we announced 2 other transactions at the end of 2025. We agreed the divestment of most of our Indonesia assets, including our mature and subscale producing assets for $215 million. That divestment will improve the overall quality of our portfolio and accelerate the value from those assets. The transaction is expected to close in the coming weeks, and that will nearly complete our exit from Southeast Asia after our divestment from Vietnam mid-last year.

We also announced the $170 million acquisition of Waldorf, which is a small U.K. producer that is in administration. Once complete, that acquisition will bring significant financial synergies and materially enhance our U.K. cash flow.

The proceeds from the sale of Indonesia, along with the near-term cash uplift we're expecting from Waldorf will help fund the entry into the U.S. Gulf through the $3 billion acquisition of LLOG. As just mentioned, through LLOG, we established a strategic position in the U.S. deepwater, acquiring a high-quality portfolio in one of the world's most prolific oil and gas producing basins. So taken together, these 3 transactions materially increase Harbour's free cash flow outlook to the end of the decade.

Turning to the next slide. At our full year results last month, we updated our 2026 guidance to reflect these transactions, LLOG completion in February and the expected closing of Waldorf and Indonesia transactions by the middle of the year. For 2026, we now expect production to be between 475,000 and 500,000 barrels per day. We set our unit operating cost guidance at around $14.50 per barrel, while total capital expenditures this year are expected to be between $2.2 billion and $2.4 billion, that's about $13 per barrel on a unit of production basis.

With about 80% of our production exposed to Brent and European gas prices, then that means our margins will continue to be strong. In fact, post completion of the LLOG acquisition, we're now more sensitive to oil prices. So we have -- with a $5 move in the average oil price for the full year, that will impact this year's free cash flow by $170 million, and a $1 change in European gas price impacts free cash flow by $150 million. So hopefully, those rules of thumb are helpful as we navigate this quite volatile period of prices.

At our outlook pricing that we used in March of $65 dated Brent and $11 European gas, we had expected to generate $600 million in free cash flow this year. If we now update that and assume higher commodity prices of, say, $80 Brent and $13 European gas, in particular, that Brent number could be conservative. I think where we are now is higher than $95. But at $80 Brent, $13 European gas, we expect free cash flow this year to be at close to $1.4 billion, so more than 2x kind of the estimate in March -- in early March, which was, of course, at a lower oil and gas price outlook.

Next slide provides a snapshot of Harbour today as a result of the portfolio actions taken over the last few years, including the Wintershall Dea acquisition, which gave us material positions in Norway, Mexico and Argentina, and then also the divestment that I mentioned to Vietnam and Indonesia. The center of gravity of the portfolio is now shifting to the West to lower tax jurisdictions with significant running room. Like in the past, if we don't see a route to scale or assets can't compete for capital in our portfolio, they do become divestment targets. So we have a quite active portfolio management, it will be an ongoing feature of what we do in Harbour. And with the LLOG acquisition, the bar to compete internally for capital has got that much higher.

If we look at the next slide, while we have a global portfolio, it's really 5 key countries that we focus on: Norway, the U.K., Argentina, Mexico and the U.S. And as you can see, these account for around 90% of our company no matter how you slice it, so whether it's production or you're looking at cash flow, reserves or resources, and each of the countries has an important role to play. So let me walk through each one of them, and we'll start on the next slide with Norway.

It's our largest producer today at 170,000 barrels per day. That accounts for 35% of our overall production in Harbour. In the country, we have a strong pipeline of infrastructure-led developments that we expect will sustain production in the country well into the next decade. This includes 4 subsea tieback projects that we're bringing onstream over the next 24 months, including Dvalin North, this is due onstream in the middle of this year. And we're also maturing our next set of projects to final investment decisions, and that will help sustain production even longer. And those projects include the Gjøa subsea tiebacks and our operated Cuvette discovery. And we continue to explore, and just last month, announced the Omega Sør discovery where we have a 35% stake. So we were happy to see that.

Next slide, we talk about the U.K. Here, the team continues to do a great job despite the difficult fiscal environment. This includes maintaining high reliability, structurally lowering our cost base, including unfortunately through continued head count reductions. They've been delivering best-in-class drilling performance and executing selective -- very selectively some high-return, short-cycle investment opportunities that will somewhat offset the production decline.

As a result of these actions, and if we take them together with the Waldorf acquisition and its financial synergies that come mainly in the form of tax loss that we'll be -- tax losses that we'll be able to use against our earnings. We'll be transforming the cash flow outlook from our U.K. business.

And of course, we have to say a few words probably about the energy profits levy or what's called the EPL in the country. This was -- there was genuine optimism, I think, at the end of February that the chancellor might be announcing the early removal of the EPL, which today doesn't expire until 2030, and hoping that it would be replaced with a more sensible windfall profits tax structure.

At the government's request, we had, alongside wider industry, provided some detailed evidence on the scale of investment that early removal of the EPL could potentially unlock. In aggregate, this equated to GBP 17 billion -- sorry, GBP 17 billion of investment across the sector in the U.K. North Sea that would directly support jobs, growth, of course, domestic energy security. However, with the oil prices spiking at the outbreak of the war, I think the decision just became too politically difficult for the chancellor to take, at least for the time being.

We continue to believe, however, that this is precisely the moment to signal early removal of the EPL given the heightened concerns around energy security. And the smart thing to do would be to replace it with the government's windfall profits tax, the new design, and that's set out to reduce oil and gas companies' profits from unusually high oil and gas prices, but still incentivizes the important investment needed to utilize the country's domestic resources and enhance domestic energy security. So we remain in dialogue with the government and hope that someday, we will see early removal of that -- of the EPL tax.

Next slide now, we move on to Argentina. Today, here, we're producing 70,000 barrels per day, and most of that is coming from our conventional gas fields in the CMA-1 license offshore Tierra del Fuego province. At CMA-1, we have a series of potential developments that will keep the infrastructure at capacity at more than 40,000 barrels per day through to 2040.

Perhaps more exciting, though, is our significant position in the huge world-class unconventional Vaca Muerta play. Here, we have a 24% interest in 2 of the largest licenses in the Vaca Muerta. We have San Roque in the oil window and APE in the gas window. At San Roque, we're progressing our application for the unconventional license with the 16 well drilling program, which is expected to start around the end of this year or early next. At APE, we're currently producing about 20,000 barrels per day with production constrained by the domestic gas market. So what we need here is access to additional gas markets, international ones, and that's why we're participating in Southern Energy, which is a 6 million tonne per annum phased LNG project. Export permits and incentives under the new RIGI infrastructure regulation in the country have been secured, and major pipeline and EPC contracts are in the process of being awarded.

We also recently contracted about 80% of the first vessels offtake to SEFE, the German utility gas buyer. And we're starting to -- and we're now seeing significant interest in the offtake of the second vessel as buyers on the world's LNG market are looking to diversify sources of supply away from the Middle East and in some cases, the U.S. So start up from the first LNG vessel remains on track around the end of next year and from the second vessel at the end of 2028. So with our Vaca Muerta acreage and interest in Southern Energy, I think you can maybe see why we're really excited about the potential of Argentina.

Turning now to the next slide and our newest core business unit, the Gulf of America, which came through the LLOG transaction. First, with hindsight, we feel good about having agreed this transaction when oil prices were around $65 per barrel. Looks like with a bit of luck on that regard, we might have got the timing just right there. The acquired assets are oil weighted. They give us scale and growth through to the end of the decade in this important oil and gas producing region. It's 100% operated, centered around 3 deepwater hubs called Who Dat, Buckskin and Leon-Castile. Production is expected to increase to around 65,000 to 70,000 barrels per day by 2028, supported by investment in high IRR drilling targets that are all near existing hubs and the continued ramp-up at Leon-Castile, which started up last year.

With the existing cost structure and attractive fiscal terms, we're adding high-margin barrels to the portfolio that will help fuel our free cash flow growth through to the end of the decade. And with more than 350 million barrels of 2P reserves and 2C resources, plus 0.5 billion barrels of prospective resources and success in recent licensing rounds in the Gulf, we believe we have substantial running room.

And we have a great team. The LLOG team are responsible for about 1/3 of all discoveries made in the Gulf since 2014, and they have a proven track record of converting resources to production, ranking best-in-class among peers when it comes to development cycle time. So our new Gulf of America business unit really is transformative for Harbour, and it raises the bar for capital competition within the company.

Finally, Mexico, on the next slide, our fifth core business unit. This represents our most material long-term growth opportunity. Through the Zama and Kan shallow water hubs where we have existing discoveries, we're building a scaled, advantaged business with additional exploration potential.

At Zama, where operatorship was transferred from Pemex to Harbour in December of last year, which was a significant milestone, our focus is on optimizing the development concept to lower the breakeven cost, improve returns and lower the execution risk ahead of entering FEED later this year.

At our operated Kan discovery to the Southwest of Zama, last year, we upgraded our resource estimates by 50% to 150 million barrels gross. And like with Zama, our focus is on optimizing the development concept ahead of entering FEED. So together, Zama and Kan have the potential to deliver reserves equivalent to more than 2 years of the company's production. And as operator of both of these hubs, we have the opportunity to capture synergies across design, drilling and operations. As I mentioned, both projects are expected to enter FEED this year, and we're targeting both to be FID ready within the next 18 months or so.

We'll also see additional upside through alignment with our Gulf of America business unit just across the border using key capabilities and talent we acquired through LLOG and also leveraging relationships with key suppliers across the broader Gulf to successfully help us deliver both of those Mexico projects.

This next slide then puts everything together, showing our expected CapEx and production outlook to the year 2030. As you can see from the chart on the left, we expect to spend between $2 billion and $2.3 billion per year from 2027, which we think is the right level of expenditure given the size of our portfolio and our opportunity set. And it allows us to sustain production between 475,000 and 500,000 barrels per day through to the end of the decade.

With the U.S. assets and our projects in Mexico, we'll have increased operational control over our spending levels, and that gives us more flexibility to adjust spending if we need it up or down. And with over 3 billion barrels of reserves and resources, we'll be able to prioritize the most competitive projects continuing to high-grade the portfolio.

The next slide now. So while overall production is remaining stable, we're replacing the declining higher cost U.K. production with higher margin barrels in the U.S. and over time, Mexico. As a result, as we look through to 2030, we expect to deliver materially growing free cash flow. So this strategic shift in production towards lower tax jurisdictions mean we expect our effective tax rate to fall significantly as we move through the decade. And in parallel, we expect CapEx to reduce to around $2 billion to $2.3 billion from 2027, as I just mentioned, that reflects the continued portfolio high-grading and disciplined capital allocation.

So as a result of all of that, free cash flow is expected to materially improve in 2028 at flat oil and gas pricing, and that's supported by increasing production in the U.S. Gulf and the significant financial synergies from the U.K. Waldorf acquisition starting from 2027. Beyond that, we see further cash flow margin upside towards the end of the decade, driven by continued growth in the U.S. and as our Mexico projects start to come onstream.

This next slide sets out our 3 capital allocation priorities, which we look to balance through the commodity price cycles. First, we're committed to maintaining an investment-grade balance sheet. Following every major transaction, we've consistently prioritized debt reduction. And with the additional leverage from our recent transactions, we intend to do the same again.

Second, we aim to maintain a robust and diverse portfolio. By investing $2 billion to $2.3 billion per annum, we expect to be able to deliver stable production with improved margins as we move through the coming years.

Third, we'll continue to deliver attractive shareholder returns through the cycle. We recently updated our distribution policy by moving to a payout ratio. This aims to return to shareholders between 45% and 75% of our free cash flow with a base dividend of $300 million. When leverage is greater than 1x, we expect the payout to be towards the lower end of the payout range. That enables us to prioritize debt reduction when leverage is high. And then when leverage is less than 1x, we'd expect the payout ratio to move towards the higher end. This policy allows us to invest in our high-return growth projects and to delever through the cycle. And it also ensures our shareholders are able to benefit from our growth in free cash flow and also to share in the upside from higher commodity prices like we're experiencing at the moment.

As mentioned, for 2026, we said we expected to generate $600 million of free cash flow. That was based on $65 oil and $11 European gas. Given where leverage is following the LLOG transaction, we would pay out at the lower end of our payout range. So this would mean shareholder distributions of $300 million or our base dividend for 2026. At $80 oil and $13 gas, however, we expect to generate $1.4 billion of free cash flow. At a 45% payout that would result in shareholder distributions to doubling to at least $600 million and with the $800 million balance then going towards the balance sheet, and that will help us materially accelerate our ability to reduce debt this year.

Final slide then in summary, 2025, excellent year for Harbour Energy operationally, financially and strategically. We've carried that momentum into 2026 with the completion of the LLOG acquisition. And production is off to a good start this year, averaging more than 500,000 barrels per day for the first 2 months of the year.

Our portfolio actions continue to transform the outlook for Harbour, and we're seeing the benefits already of our increased scale and resilience. Further, our organic opportunity set within the portfolio today mean that we can sustain production and deliver free cash flow growth through the end of the decade and possibly beyond. So we feel well positioned in the current -- in today's current environment.

And with that, we will open it up to questions. Over to you, Jake.

Perfect, Linda. That's great. And thank you very much indeed for your presentation this morning. [Operator Instructions] But Linda, we have received a number of questions. So perhaps, if we dive straight into it.

The first question that we have here asks, can you provide some more color around the impact of the events in the Middle East on Harbour and how you're responding to this?

Yes. Thanks. Of course, it's a good and topical question. I think the first thing to say is that we, thankfully, at this point don't have operations in the Middle East. So from a physical operations standpoint, we're not impacted -- directly impacted. Our closest operations are in Egypt, and there, everything continues normally.

Of course, the big and immediate impact it has are the higher commodity prices, which I've talked about through this presentation just -- and gave you a flavor, I think, of the sensitivity of the Harbour free cash flow outlook to those higher prices. So you already have a feel for that.

I think longer term, we're starting to look at the supply chain and trying to understand where we might have vulnerabilities if the conflict continues and the closure of the Strait continues for some time. So for example, watching for signs of things like fuel shortages for our supply boats and offshore drilling rigs and things in the U.K. is one thing we're keeping a close eye on. So far, we haven't seen any of those manifest, but of course, we're doing planning in case things take a turn for the worse or continue for a very long period of time.

From a capital investment standpoint, this is a long-term business for us. We've seen multiple cycles over the years of prices going up and down. So certainly, we're not counting on prices staying high forever. So I think it's a pretty steady hand on the steering wheel when it comes to capital allocation and the projects that we're investing in, many of which, if we're investing in them today, won't start up until next year at the earliest or beyond that. So we have to take a longer-term view.

And then from a hedging standpoint, we have taken the opportunity where we've seen it to execute some, I think, pretty attractive collars. So we're putting in place floors, for example, for oil that might be in the $70s, but capturing upside up to $100 per barrel. So pretty wide ranges where we see those opportunities, we're feeling good about capturing those and locking in some -- or reducing any downside that we might have in the portfolio, but still capturing a lot of the upside. So those are a few things that we're doing.

Thanks, Linda. And just turning to the next question. We have someone asking, good to see the LLOG transaction completed in February. Can you talk us through the strategic rationale for the acquisition? Why this particular U.S. transaction and really how Harbour came to be the successful bidder?

Yes. Thank you. Yes, we're really excited, as I've already said, about the transaction and our entry into the U.S. Since we started Harbour, now almost 10 years ago, we had always had the aim and it always made sense for us as a conventional, mostly offshore producer to be in the U.S. Gulf. And so we have tracked opportunities for entry there for many, many years. And as we kind of held our wishlist internally of what might be attractive, LLOG was always in the top 1 or 2 on that priority list. But it just unfortunately wasn't available until just last fall. It was privately held and the owners just weren't motivated to sell.

Unfortunately, sadly, the founder of the company passed away now about a couple of years ago. And following that, the family, it was now in the hands of the family and a trust. They decided to proceed with the divestment following the receipt of an unsolicited offer they received from another party. So they kicked off a fairly limited process. It was invitation only. I think you could count the number of companies invited to that process on one hand. So while we don't necessarily like competitive processes, this was a fairly limited one.

In addition to price, what was really important for the family was that they found a good home for the company, one that would continue to honor the company's reputation and in particular, would need all -- most, if not all of the team, which they had a close relationship with. And with Harbour, given that we have no -- had, at the time, no existing U.S. operations or Gulf operations or even any employees based in the U.S. I think we could give them some real reassurance that we were, in fact, going to need all of their team and that our commitment would be to continue to invest in that business and try to grow the company. So they got very, very comfortable with us from that standpoint and then generally, culturally as well.

So we felt good about the outcome of the transaction. It was a competitive process. But if we look at -- we paid $3.2 billion, if you look at independent third-party valuations, they're mostly closer to $4 billion. So we felt good about that. And of course, at the time when we were buying, oil prices were in their $60s. And since we completed in February, oil prices have been much higher, and so we're now benefiting, of course, from the higher prices as well. So I feel good about the transaction. And so far, so good.

Perfect. We've had a number of questions come in on M&A, but perhaps if we take this one as I think it speaks to the others as well. You've got here today by M&A. What's next is the plan for more transformational acquisitions? And how do you think about portfolio management more generally?

Yes. I think our thinking about M&A has evolved with the evolution of the company. So of course, we started and built the company through M&A. We have a really good M&A toolkit and skill set, and really proud of everything that the team has delivered on that front.

But today, we're at 500,000 barrels a day, so 0.5 million barrels per day. The size of the company feels good to me. So 0.5 million barrels a day, over 3 billion barrels of reserves and resources. From that standpoint, we no longer feel the need to necessarily grow the overall size of the company. So we have a scale that we think is sustainable and viable and large enough to be competitive and of interest to investors today.

So going forward, I think the objective of any M&A that we may do will be like the transactions we announced at the end of last year, continuing to just strengthen and refine the overall quality of the portfolio. So divesting positions in countries that are subscale, replacing those by strengthening acquisitions in countries where we're currently present, and have a core strategic position to continue to strengthen those going forward. So probably a bit more tactical rather than transformational going forward.

At these prices, you're generating significant free cash flow. In this context, how are you thinking about debt reduction and where do you want to get leverage to versus additional shareholder distributions?

And then the second part of the question asks, how are you thinking about additional distributions in terms of dividends versus buybacks?

Yes. Good question. And I think the timing was fortunate with our shift to a payout ratio. Of course, those decisions were made before we entered this volatile oil and gas price environment. But I think the new policy will be a good tool for us, and it's good timing to now have it in place because what it will enable us to do is when leverage is high, which we feel it is today, following the LLOG transaction, and that's happened after each of our major acquisitions, our priority at that point in time is to get -- is to strengthen the balance sheet.

Now we've been able to, just at all 3 rating agencies, reiterate our investment-grade credit rating, which was great. But we still feel like we need to get leverage down. And so since leverage is greater than 1x, our framework says that we will pay out at the low end of the range. So that's 45%. And so as I mentioned in the presentation, at $1.4 billion of cash flow this year at $80 Brent, $13 gas, that will give us about $800 million to pay down against debt, which will make a big difference in our balance sheet.

And then we've said when leverage is less than 1x, which has always been our target to have on average leverage less than 1x, that will enable us to start moving up towards the higher end of the payout range as we move beyond this year. Of course, everything will depend on continued operational delivery, which we feel confident about. And then, of course, what commodity prices do as well. And there, it's really anyone's guess probably.

What will we do with the additional distribution? So at $1.4 billion and 45% payout, that's about $600 million of distributions. Our commitment is a minimum dividend of $300 million. And then what we do with the other $300 million, of course, will be a decision for the Board to make, and we'll make it after we move through the end of this year and see what actual cash flow really is.

I think there's big rationale for us to use the excess distributions as buybacks. It's what we've done in the past actually beyond our base dividend. So that's been our track record. And I think the reason why it makes sense for us is we do still have at least one large investor in BASF who continues to -- it's a financial investment for them. They have the shares as a result of the Wintershall Dea transaction. They were the large partner in the selling group on the other side of that transaction, and their stated intention is to continue to exit over time. They've taken the opportunity to exit over the past few weeks a large part of their stake, but they still have quite a position. And so having the ability to have buybacks out there, I think, is helpful given that situation.

Perfect. And we have perhaps one final question here, someone asking, you talked about having 5 core business units: Norway, the U.K., Argentina, Mexico and now the U.S. Gulf of America. But really, which is your favorite or are you most excited about?

Yes, I get asked that question a lot, and it's always hard, right? And it's like asking which of your children is your favorite. It's always hard. And as I tried to explain in the presentation, they each play a different role for us.

So Norway, steady production, good margins, exposure to European gas pricing, lots of running room, stable fiscal environment. So just a ton to like there.

And in the U.K., in particular with the Waldorf transaction, the things we've been -- the team there has been able to do to improve our margins and reliability and operating costs, they're throwing off a lot of cash flow for us over the coming few years even though production is declining.

U.S., lots of running room now with our new position in the Gulf of Mexico. Argentina, we really love our position in the Vaca Muerta and that LNG project giving us exposure to long life reserves and international gas markets.

And then finally, Mexico, that's really the long-term opportunity for us with the big developments there. So really, really hard to pick one. Sorry, I'm not going to be able to answer the question.

No problem. But Linda, thank you very much indeed for answering all of those questions that came in today. And that brings us to the end of the session. So thank you very much indeed for updating investors this morning.

Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order for the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company.

On behalf of the management team of Harbour Energy plc, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.

Good morning, and welcome to Harbour Energy 2025 Full Year Results. Today's presentation will be hosted by Linda Cook, CEO; Alexander Krane, CFO; and Nigel Hearne, COO. After the presentation, we will take your questions. Linda, please go ahead.

Great. Thank you, Dan. Good morning all, and welcome to our 2025 full year results call. I'm Linda Cook, the CEO of Harbour Energy. And as Dan said, joining me for the presentation today are Alexander Krane, our CFO; and Nigel Hearne, the Chief Operating Officer.

Before we turn to results, I do want to first just acknowledge recent geopolitical events, which are driving extreme commodity price volatility and raising concerns over energy security. In some ways, similar to where we were just about the same time last year with Liberation Day upon us, governments and businesses around the world coming to grips with the impacts of a wide range of new tariffs and trade agreements. And of course, not that long ago, before that, we had the Russian invasion of Ukraine, a conflict that continues to this day and before that, a global pandemic, all in the last 5 to 6 years.

These are all reminders that we live and make decisions within an uncertain and at times volatile global environment. In response, it's important in a business like ours that we balance the short term with the long term and that we remain focused on the things we can control, operational excellence, capital discipline, managing risk and creating value for our shareholders.

So turning to the agenda. I'm going to start by taking you through the highlights from what was a very good year for Harbour Energy in 2025 and some changes to our portfolio. Nigel will then cover operations, including how we're driving performance. Alexander will follow with the financial results, 2026 guidance and the cash flow outlook for the near to midterm, all updated for our recent transactions and also an outline of our new distribution policy. And then it's back to me to wrap up, leaving plenty of time for questions.

So turning to my first slide. Harbour has grown from 0 to more than 450,000 barrels per day over the last decade, driven by disciplined M&A and reinvesting in the acquired assets to add value. During that time, we repeatedly demonstrated our ability to identify and secure strategic transactions and after completion, to safely and successfully integrate the acquired businesses and organizations. While past acquisitions, including Wintershall Dea in 2024, we're focused on building scale and diversification. Our more recent ones have been targeted towards strengthening the portfolio, making it more resilient and enhancing longevity.

Perhaps the best example is the acquisition of LLOG Exploration in the U.S. Gulf completed ahead of schedule just a few weeks ago. The LLOG assets, oil weighted and all under operational control, helped to secure Harbour's overall production at between 475,000 to 500,000 barrels per day to the end of the decade. And while overall production stays broadly stable, as you'll see later, replacing the declining U.K. volumes with growth in the U.S. with its attractive fiscal framework means that we'll see a significant increase over time in cash flow.

So turning first to look back to 2025. As I said, another strong year for Harbour Energy operationally, financially and strategically. We achieved record production at 474,000 barrels per day. It was up more than 80% on the prior year. And with unit OpEx at $13 per barrel, our margins were strong. This, along with strong capital discipline and cost control, resulted in materially improved free cash flow and demonstrated our ability to navigate volatile commodity prices.

We also had good momentum on our growth projects, including the transfer of operatorship of the major Zama development in Mexico from PEMEX, the national oil company to Harbour. And we continue to improve the overall quality of the portfolio through M&A. And let me just turn to that now.

In December, we announced 3 transactions, each of which advances our strategy and strengthens our portfolio. First, we agreed the sale of our mature higher-cost Indonesian producing assets and the stalled Tuna development project for $215 million, improving our portfolio quality and accelerating value. We also announced the $170 million acquisition of Waldorf, a small U.K. producer that brings around $900 million of value through tax losses. In addition, we unlocked $350 million of trapped cash upon completion, more than covering the purchase price.

Combining the benefits of Waldorf with the great work by our team in Aberdeen to reduce costs and improve efficiency means we've materially enhanced the resilience and free cash flow outlook of our business in the U.K. The proceeds from the Indonesia sale, along with the near-term cash flow uplift from Waldorf helped fund our entry into the U.S. Gulf through the acquisition of LLOG. As we said in the announcement at the time of this transaction, we're really excited about the addition of a strategic position in the U.S. deepwater.

With LLOG, we get a high-quality growth portfolio in one of the most prolific oil and gas producing basins in the world, along with one of the best teams in the Gulf, and we're more than thrilled to have them join our Harbour team. So each transaction was strategic in its own way. And collectively, they have a material impact on the overall quality of our portfolio.

So the next slide takes us to a snapshot of Harbour today, and I'll illustrate that point about the improved quality of the portfolio here. With the divestment of Vietnam in 2024, the announced sale of most of our Indonesia assets and our entry into the U.S., our geographic footprint is shrinking and the portfolio center of gravity is shifting to the West. We've divested from mature positions in Southeast Asia with declining production and high unit costs acquired 5 years ago through the Premier Oil transaction and added strategic positions in Norway, Mexico, Argentina and now the U.S., all with significant running room from a subsurface point of view, demonstrating, I think, that portfolio management is alive and well within Harbour.

Like in the past, if we can't see a route to scale or the assets can't compete for capital in our portfolio, they become divestment targets. And with the LLOG acquisition, the bar to compete internally for capital has got that much higher. The outcome is a higher quality portfolio with higher margins and as Alexander will show, increasing free cash flow over time. He'll also talk about the new distribution policy details, which aim to strike a balance, enabling a sustainable dividend and resilient balance sheet across commodity price cycles while supporting investment in future production and enabling shareholders to benefit as that cash flow growth materializes or if like today, we have an unexpected spike in commodity prices.

Turning to my last slide. I've mentioned our shrinking geographic footprint, meaning that today, we're focused on 5 key countries: Norway, the U.K., Argentina, Mexico and the U.S. As you can see, these account for 90% of our company, however you cut it: production, cash flow, reserves, resources. As Nigel will explain, each of these countries has its role to play in Harbour. And while together, they support flat production over the coming few years, the portfolio evolution continues, and that's hinted out in the bars on this page.

While the U.K. is responsible for 1/3 of our production today, it represents only a bit over 10% of our combined reserves and resources. With Norway production expected to be flattish, the U.K. decline is replaced by investing in projects in the Americas: the U.S., Mexico and Argentina. And this, over time, has positive implications for after-tax margins and cash flow. So now over to Nigel, and he'll take you through each of these countries in more detail, followed by Alexander.

Good morning, and thank you, Linda. Today, our portfolio is more focused, competitive and resilient. Across the business, we're aligned on delivering against 4 key priorities to drive total shareholder return: operating safely and reliably, expanding our margins through cost and capital efficiency, converting our resources into reserves and into production profitably and competitively and growing our free cash flow sustainably. I will shortly take you through how each of our core business units is delivering against those priorities and how the actions we've taken over the past year has put us on a path to stronger, longer, higher quality cash generation.

First and always first is safety. Nothing matters more than protecting our people, our assets and the communities in which we operate. We did see a slight increase in our recordable injury rate in 2025 as we expanded into new countries, but we continue to be a top performer in personal safety. In process safety, we delivered a reduction in Tier 1 and Tier 2 loss of containment events, but unfortunately, recorded one Tier 1 event in Mexico. Safety is an area we will never be satisfied. We actively promote the learnings from our incidents and are strengthening our focus on risk assessment, prevention and assurance activities.

We've also delivered a step change reduction in our greenhouse gas emissions intensity, creating a more resilient portfolio. 2025 was a year of record production, delivering at the very top of our guidance. This reflects a full year's contribution from Wintershall Dea, but also a strong year of execution across our expanded portfolio. We brought new wells online and completed new projects ahead of schedule in Norway, the U.K. and Argentina. Reliability across our asset base continued to be high at greater than 90%. And we made structural improvements in our cost base with unit OpEx down 20%, driven by lower cost barrels from Wintershall Dea, actions taken in the U.K. to reduce our cost by 10%, our exit from the higher cost Vietnam volumes, and we captured early synergies as we leveraged our increased scale. Together, these actions improved our earnings and cash margins, strengthening our competitiveness and resilience.

Turning to our core business units. As the second largest Norwegian gas exporter to Europe and Harbour's largest producer, our Norway business is central to our long-term cash flow. Our strong pipeline of infrastructure-led developments sustain profitable production into the next decade. At the end of 2025, we completed the Harbour operated Maria Phase 2 project, the first of 6 developments due online in the next 24 months. This project was delivered on time and within budget and is performing well. Our operated Dvalin North is on track for completion mid-2026. All subsea infrastructure was successfully installed in 2025 and development drilling is underway.

We're also maturing our next set of projects, and we continue to explore. Earlier this week, we announced the Omega Sor discovery, where we have a 24.5% share. The estimated size of the discovery is between 25 million and 89 million barrels of oil equivalent of gross recoverable volumes, exceeding our pre-drill estimates and extending the Snorre field's lifetime beyond 2040. Our Norway business continues to exemplify our ability to profitably and efficiently turn resource, to reserves, to production.

Despite continued fiscal headwinds, the U.K. delivered a strong performance in 2025. This was underpinned by high production efficiency and strong turnaround execution at our operated assets, structurally lowering our cost base. We shortened cycle times through near-field development and delivered best-in-class capital efficiency through the 2025 wells program. Joscelyn South was brought on stream in March, just 3 months after discovery. Strong subsurface performance at Talbot and successful intervention campaigns led to the J-Area producing at rates not seen for over a decade. We are now bringing that same level of focus and discipline to our U.K. decommissioning program. In addition, the Waldorf acquisition, as Linda said, once completed, will deliver meaningful financial synergies. As a result of these actions, we've materially strengthened the U.K.'s cash flow outlook.

Now turning to the Americas. Argentina provides both low-cost and long-term production, underpinned by our significant reserves and resource position. Today, the majority of our production comes from the conventional CMA -1 license. Phoenix is a great example of the tieback opportunities that supports a stable, low-cost production from this asset. We hold over 700 million barrels of oil equivalent of 2C resources, primarily in the vast of Vaca Muerta shale play.

We are progressing the unconventional oil license at San Roque with a 16-well program expected to start later this year. We are scaling up gas drilling at APE and our gas resource development will be optimized through our participation in the Southern Energy LNG project, where export permits and incentives are secured, 80% of the first vessel offtake is now contracted and the fabrication of the spur line and conversion of the second vessel is underway.

First LNG production remains on track for the end of 2027. We continue to focus on drilling and completions efficiency as we increase the scale and pace of our Vaca Muerta development.

Argentina is a cornerstone for future flexible and capital-efficient reserve replacement. Our newest core business unit, the Gulf of America, add scale and growth through to the end of the decade. It is a 100% operated oil-weighted portfolio centered around 3 deepwater hubs at Who Dat, Buckskin and Leon-Castille. Production is expected to double by 2028, supported by low breakeven drilling targets at our production hubs and ramp-up at Leon-Castille. Combined with the attractive fiscal terms, we are adding high-margin barrels that fuel free cash flow growth through to the end of the decade. And with more than 350 million barrels of oil equivalent of 2P reserves and 2C resources, plus 0.5 billion barrels of prospective resources and success in the recent bid round, we have lots of running room in this prolific oil and gas basin.

Our team have a proven track record of profitably and competitively converting resource to production, ranking best-in-class among global peers when it comes to development cycle time. They're also responsible for 1/3 of all discoveries made in the Gulf since 2014. Over the next 3 years, we expect to allocate around $400 million a year with 10 to 15 wells planned. This includes development wells with internal rates of return in excess of 40% and low-risk infrastructure-led exploration wells with a short cycle time to production, if successful. The Gulf of America business unit is transformative and raises the bar for capital competition within Harbour.

Finally, Mexico represents one of our most material long-term growth opportunities. Through the Zama and Kan shallow water hubs, we are building a scaled advantaged business with tieback potential. As newly appointed operator of Zama, we've submitted a simplified phased development plan designed to lower breakevens, improve returns and lower risk. At Kan in 2025, resource was upgraded by 50% to 150 million barrels of oil equivalent gross. Together, Zama and Kan have the potential to deliver reserves equivalent to more than 2 years of group production.

As operator of both hubs, we have the opportunity to capture synergies across design, drilling and operations. Both projects are expected to enter FEED this year. Subject to partner alignment, securing FPSOs and regulatory approval, we're targeting both to be FID ready within an 18-month horizon and possibly one project as early as year-end. We also see additional upside through the alignment with our Gulf of America business unit, using key capabilities and talent that we now have to help successfully deliver Zama and Kan.

Mexico builds long-life, high-margin oil exposure with strong operating control. So putting this all together, what does it mean for our CapEx and production outlook? We expect to spend $2 billion to $2.3 billion per year from 2027, which we believe is the right level given our portfolio and opportunity set. With over 3 billion barrels of oil equivalent of 2P reserves and resources, we will prioritize the most competitive projects, continuing to high-grade the portfolio. This level of investment allows us to sustain production between 475,000 and 500,000 barrels of oil equivalent per day through the end of the decade.

During this period, operated CapEx rises to 60%, giving us more control over cost, schedule and performance. And while overall production remains stable, we are replacing the declining higher cost U.K. production with higher margin growth in the U.S. and over time, Mexico. We have a strong history of reserves replacement, and we expect that to continue. For 2026, we anticipate at least 150% reserves replacement, supported by the LLOG and Waldorf additions. Historically, we've grown reserves through M&A. Going forward, more will come organically from our large, diverse 2C resource base. The quality of our reserves also improves, more oil-weighted, more operated and increasingly positioned in lower cost, lower tax basins.

In summary, we are and will continue to have a laser focus on operating safely, reliably and with discipline, expanding margins, lowering breakevens and improving capital efficiency, converting resources into production profitably and predictably and building a portfolio with scale, longevity and rising free cash flow. This is how we continue to strengthen Harbour.

I will now hand over to Alexander for the financial review.

Great. Thanks, Nigel. And again, good morning to everyone dialing in this morning. We've delivered another strong set of financial results, reflecting a full year's contribution from Wintershall Dea, excellent operational performance and strict capital discipline. As a result, we improved our operating margins. We generated $1.1 billion of free cash flow, beating our guidance for the year, and we reduced our net debt.

At the end of last year, as Linda mentioned, we announced the Indonesia divestments and the U.K. Waldorf and U.S. LLOG acquisitions, materially improving our free cash flow outlook. We increased 2025 declared shareholder distributions to approximately $0.5 billion and also announced in December our intention to update our distribution policy, better aligning distributions to our cash flows.

2025 was marked by significant geopolitical and macroeconomic volatility, driving uncertainty in commodity markets. 2026 is proving no different. Recent events in the Middle East have pushed spot prices higher, but concerns around oversupply persists with the possibility of materially lower prices from here. Against this backdrop, Harbour is well positioned, particularly following the LLOG and Waldorf transactions. We have a large scale, diverse portfolio, including by product with 40% of our production exposed to Brent and 40% to European gas, a structurally lower cost base, greater operational control and investment-grade credit ratings, supported by our prudent financial policy.

As a reminder, we hedge 2 years forward, targeting 50% of economic exposure in year 1 and 30% in year 2, targeting even split between swaps and collars. This protects around half of our downside exposure while preserving meaningful upside participation. And we continue to hedge through the recent volatility this week, securing attractively structured colors, especially for European gas.

Turning now to the income statement. Thanks to the hedging results, we realized prices broadly in line with global benchmarks for oil despite slight grade differential on liquids and above benchmarks for our European gas. Revenue and adjusted EBITDAX increased by 65% and 77%, reflecting higher production and stronger gas realizations, partly offset by lower realized oil prices.

Now as Nigel outlined, we lowered our unit operating cost by 22% to $12.8 per BOE despite the significantly weaker U.S. dollar. Net financial items reflected $0.5 billion of foreign exchange losses, partly offset by $0.2 billion of FX hedging gains.

Profit before tax increased to $2.8 billion or $3.4 billion on an adjusted basis. While we reported a loss after tax of $0.2 billion, driven by a more than 100% effective tax rate, adjusted profit after tax increased to $0.6 billion, up over 60%. Adjustments reflected 3 main items: $0.4 billion of impairments, including as a result of license exits and write-offs in our Mexico, North Africa and CCS portfolios; $0.2 billion of intercompany FX losses; and $0.3 billion related to the U.K. EPL extension to 2030, the latter 2 already reported at our half year results. The adjusted effective tax rate was 82% compared to 106% reported, more in line with the 78% statutory tax rates we now have in Norway and the U.K.

Turning to cash flow. During the period, we generated $7.3 billion of operating cash flow, invested $2.3 billion on total capital expenditure, and we paid $3.5 billion of cash taxes, substantially in the U.K. and Norway. This resulted in free cash flow generation of $1.1 billion, materially higher than in 2024 and significantly above what we expected at the outside of the year once normalizing for commodity prices. This increase was driven by strong operational execution and rigorous capital discipline.

Now turning to net debt on the next slide. Net debt reduced over the year to $4.4 billion. This reflects strong free cash flow of $1.1 billion, of which approximately $0.5 billion was returned to shareholders with the balance going towards debt reduction. The impact of the weaker U.S. dollar, which increased the value of our pre-swap euro-denominated bonds by $0.6 billion was partially offset by net $0.4 billion increase in cash balances from the issuance and repayments of subordinated loans.

Post period end in February 2026, we completed the $3.2 billion LLOG acquisition funded through a combination of $0.5 billion of equity and $2.7 billion of cash, including a $1 billion bridge facility and a $1 billion 3-year term loan with existing relationship banks and a few new banks joining our syndicate. Now as a result, net debt increased to $7.2 billion on completion.

Having prefunded 2026 maturities through senior and hybrid bond issuances in 2025, we now have greater flexibility around the timing of the bridge takeout. Consistent with our approach on previous acquisitions, we aim to delever using cash flow to repay the term loan over the next 3 years.

We have updated our 2026 guidance to reflect LLOG completion in February and the expected closing of the Waldorf and Indonesia transactions by end Q2. Production guidance is increased to between 475,000 and 500,000 BOE per day, while unit OpEx is expected to be slightly higher at approximately $14.5 per BOE with LLOG and Waldorf increasing near-term unit OpEx. Here, LLOG OpEx is expected to be $19 per BOE in 2026, then expected to decline to approximately $12 per BOE by 2030, primarily as a result of production increase impacting unit operating costs.

Total CapEx is expected to increase to $2.2 billion to $2.4 billion, driven mainly by LLOG with also approximately $0.1 billion related to Waldorf. At $65 Brent and $11 European gas prices, we expect to generate approximately $0.6 billion of free cash flow, reflecting investment in the LLOG portfolio and Waldorf synergies starting in 2027. Post completion of the LLOG acquisition, we are now more sensitive to oil prices. A $5 per barrel move in the average oil price for the full year impacts free cash flow by some $170 million, while a $1 change in European gas prices impacts free cash flow by approximately $150 million. Forward curves are moving a bit this week. But if I use today's curves for the entire year, we would expect free cash flow to be closer to $1.4 billion.

Now looking through to the end of the decade, we expect materially increasing free cash flow, driven by the continued transformation of our portfolio. Higher cost Southeast Asia exits and declining production in the U.K. are being replaced by higher-margin volumes, primarily in the U.S. Gulf alongside Norway and Argentina and over time, Mexico. We expect our effective tax rate to fall quite significantly, reflecting a strategic shift in profitable production towards lower tax jurisdictions.

In the U.S. Gulf, a 23% tax rate and the ability to depreciate the log purchase price means we expect to pay very little tax there in the coming years. In parallel, we expect CapEx to reduce to around $2.0 billion to $2.3 billion from 2027, reflecting continued portfolio high grading and disciplined capital allocation. As a result, free cash flow is expected to increase to $1 billion in 2028, mainly supported by increasing production in the U.S. Gulf and significant financial synergies from the U.K. Waldorf acquisition from 2027. Beyond that, we see further cash flow margin upside towards the end of the decade, driven by continued growth in the U.S. Gulf and as our Mexican projects come on stream.

Let's turn now to the shareholder distributions and our revised policy. We communicated our intention to update our distributions policy in December and believe that now is the right time to pivot, linking shareholder distributions directly to cash flows and strengthening our capital allocation framework across the commodity price cycles. In the past, we've returned on average around 40% of free cash flow to shareholders each year. We are now target returning 45% to 75% of annual free cash flows, including an initial base dividend of $0.161 per voting ordinary share equivalent to approximately $300 million.

By tying distributions directly to our cash flows, the new policy builds in the opportunity for shareholders to benefit from the growing cash flow outlook I just showed and from periods of higher oil and gas prices like the ones we're experiencing today.

So how will this work? Well, when leverage is above 1x, we expect the payout will be towards the lower end, enabling us to prioritize debt reduction. However, when leverage is below our target of 1x, we expect distributions to be at the upper end of the payout range. As such, our new policy supports a sustainable base dividend across the commodity price cycles and allows us to share the upside with our shareholders alongside near-term deleveraging and disciplined investment for future growth.

In line with the new policy, the Board has proposed a final dividend of $0.0805 per share, equivalent to $150 million, representing a 45% free cash flow payout for 2025. For 2026, at $65 per barrel Brent and $11 per Mcf European gas, we'd expect to distribute $300 million to shareholders. Then just to illustrate the benefits of this updated policy. If we again use $75 per barrel and $14 Mcf for the full year, closer to today's forward curve, a 45% minimum payout would get us to around $600 million of distributions.

My final slide is a reminder of our 3 capital allocation priorities, which we look to balance through the cycle. First, we remain committed to maintaining an investment-grade balance sheet. Following every major transaction, we have consistently prioritized debt reduction and with the additional leverage from recent transaction, we intend to do so again. Under our outlook price forecast by 2028, supported by stronger free cash flow, we'd expect to have repaid $1 billion of debt with leverage returning below our through-cycle target of less than 1x.

We also aim to maintain a robust and diverse portfolio. By investing $2 billion to $2.3 billion per year, we expect to be able to deliver increasingly high-margin, cash-generative production through the end of the decade. And thirdly, we will continue to deliver attractive shareholder returns through the cycle. And as you heard today, at current forward prices, there is clear potential for significantly higher distributions this year. And over time, we expect to deliver material distribution growth in line with our growing free cash flow profile.

So with that, thanks for everyone's attention, and I will hand you back to Linda for close.

Thanks, Alexander. So in summary, we've had an excellent year operationally, financially, strategically, and we've carried that momentum into 2026 with the completion of the LLOG acquisition and with production off to a good start. Our portfolio actions have transformed the outlook for Harbour, and we're seeing the benefits of our increased scale and resilience. And now the organic opportunity within the portfolio means we can sustain production and generate material and growing free cash flow to the end of this decade and possibly beyond.

Looking ahead, our portfolio, our team and our track record give me confidence that we'll deliver against these capital allocation priorities, including maintaining the strong balance sheet and delivering competitive shareholder returns through the cycle. So it's now time for Q&A. Alexander, Nigel and I were joined by Alan Bruce, EVP of Tech Services, and we look forward to answering your questions. So now I'll hand it back to Dan.

[Operator Instructions]

Our first question comes from Lydia Rainforth of Barclays.

I actually have 3 questions, if I could. I'm sorry for quite many, but there's a lot to go through. The first one was just on the cash return structure. Obviously, you said in the past, you've done a combination of buybacks plus dividends. And you've now gone with the base dividend. And then when you're looking at sort of why go for 100% base dividend? And when you're going forward, when you look at sort of where the current cash prices are, do you split it between a special dividend plus buyback just to give us an idea of how you're thinking about that?

The second question was on the LLOG integration. I just wonder if you can just walk us through a little bit more of that, whether culturally how that works and how that -- you feel like that's going at the moment? And then the third one, is that just more of a how do we actually work today question. So obviously, we've got a lot of volatility. Just in terms of when you're seeing this level of volatility, how as Harbour do you react? Are there things -- the levers that you can pull in terms of additional production? Are you seeing conversations with customers? I'm just kind of working through what -- how you're actually seeing practical impacts of the current disruption?

Lydia, thanks for the 3 questions. I'll turn to Alexander first to just say a few words about how we think about buybacks in the context of our distribution policy. And then I'll take the last 2 about log and then the -- yes, how we deal with volatility. So Alexander?

Yes. Thanks for the question, Lydia. Yes, I think when it comes to the distribution policy, we've tried to strike a good balance here between a base dividend that we're comfortable through the cycle and then what the added shareholder distributions are going to be on top. You've seen us in the past do quite a bit of share buybacks when we thought that was timely and a good thing to do. And going forward, it's probably going to be a mix of both higher dividend levels and share buybacks.

And we and the Board will probably assess closer to time which of the 2 and what that mix is going to be. But I think for today, our point here is to set that base dividend level, the percentage of how do we think about sharing the extra free cash flow that we expect to see. And also how would you -- how do we balance this with debt levels. So hopefully, the guidance that we've provided today and what I talked through is helpful in that regard and gives a bit of insight into our thinking. But yes, it's probably going to be a mix of the 2.

Yes. Thanks, Alexander. I agree with that. I think it will just depend on the circumstances at the time, what's going on with commodity prices, our outlook for cash flow, et cetera, et cetera. So a bit hard to answer hypothetically, I think.

Going to the other 2 questions. So LLOG integration, going really, really well, I think. And one of the reasons why I think we were successful landing this transaction was the fact that both sides saw what we believe will be and so far has proven to be true, a good cultural fit between their organization and ours. And that always helps make an integration go more smoothly, and we're just 3 weeks in and so far, so good.

It's not that complex of an integration for us if we compare it to the Wintershall Dea transaction where we had, I don't know, 7 countries we were adding and multiple different onshore and offshore production, operated assets and nonoperated assets, dealing with works councils in Germany, et cetera, buying a single business unit, if you will, in a country where we don't currently have operations. So there's no overlap. We're not dealing with 2 different offices who's going to do what. This one from that standpoint is actually fairly straightforward.

I was there a couple of weeks ago. We have staff there. This week, we call them ambassadors. It's part of our integration toolkit where we send people more experienced in Harbour to new locations, and they just sit there and answer questions for 2 or 3 weeks so that people say, how do I get X, Y or Z done, somebody can tell them who to call or where to look, et cetera. So all going really smoothly. The staff there seem excited to be part of Harbour and curious to see what's going to come next.

Volatility. Well, never a dull moment in our industry, Lydia. It wasn't -- even as recent as last week, right, there were new reports coming out from experts trying to convince everyone that oil is headed to $50 per barrel. I know you weren't one of those, Lydia. So you were a bit of an outlier there, which we've always appreciated. But you know now here we are with oil, I don't know where it is right now, but $80. So I think it's just another proof point that we live in a volatile world and our sector, in particular, can be quite buffeted by that. And when that happens, we just have to focus on controlling what we can control.

In terms of what we do this year, I mean, production this year, CapEx this year, these are things that have largely been decided months or even years ago or driven by decisions we've made in the past. So not a lot actually to do, in particular, with production this year. There are some knobs we can play on CapEx. But no one believes that the conflict is going to be long-lived or at least we can't assume that in our planning. And so what we have to assume is that at some point, prices come back to a more normal range. What is that? Who knows? But we're certainly not making any decisions today that assume prices are going to be $80 or higher for years to come.

Our next question comes from Alejandra Magana of JPMorgan.

Excellent. As a follow-up to how you're responding to the Middle East developments, would you consider any changes to your hedging program to potentially accelerate your path to sub 1x leverage? Or does maintaining cash flow stability remain the priority? In your prepared remarks, you gave illustrative examples of what the cash flows could look like on today's forward curve, which were encouraging. So I'm curious how you're thinking about that trade-off today?

And my second question is on your portfolio. You've discussed 5 core countries, which implies regions like Germany and North Africa could ultimately be candidates for disposals. How are you thinking about those assets today? What are market conditions like for potential divestments? And does your deleveraging time line assume any disposals? Or would these just simply accelerate the path?

Yes. Thanks, Alejandra. I'll turn to Alexander first to talk about hedging. I mean you know the phrase, never waste a crisis, kind of comes to mind. So I'll say a few words about that, and then I'll talk about divestments.

Yes. Thanks for the question, Alejandra. Yes. So on hedging, I mean, the starting point is that we've I think, now for several years, had a fairly consistent hedging policy where we do try to get to 50% and then 35% hedged for the following year. Then what's developed over the last year or 2 is just how we think about the mix here. Instead of doing consistently swaps, we've transitioned into doing more and more of these collar structures.

So trying to lock in a floor typically above what the rating agencies are using in their cash flows and then without giving away too much of the upside. So what are we doing today? Well, we are, as you would expect, actively engaged looking at sensible structures in today's environment as well. What has been quite unique is when you get this type of volatility, it impacts the pricing of color structures. So what we call the SKU on the put and the call.

And one thing is on the crude side, where there's been, for us as producers, a positive SKU here, but also -- and more impactful is the skew here on natural gas. And what we've been doing this week is putting quite a bit of structures in place here on the gas side, not enormous amounts, but we're putting quite a bit of hedges in place where we saw the opportunity to lock in $15, $14 type dollar puts and then participating in the upsides, way up in mid-20s or so.

So the skew on what we've seen here has been, how should I say, unusual and something we've been trying to benefit from. So yes, we remain very active monitoring this, but of course, not participating and doing way too much as you shouldn't do at the point risk point in time. But yes, those -- volatility impacts those type of opportunities, and we try to be awake and see what's possible to do there.

Thanks, Alexander. Now coming to your question, Alejandra, about divestments. So we do have active track record of portfolio management, and we expect that to continue. It's just a foundation or one of our keystones of our strategy. Given what we've announced today, we will have nearly exited Southeast Asia. That leaves, as you said, Europe and Americas as core, the bigger producers there at least.

And then what's outside of that ring would be Germany and MENA. So a small position in Libya, also relatively small in Algeria and then in Egypt. And we have really good assets in those countries and fantastic teams that do amazing things and they generate positive cash flow for us. So today, certainly doing no harm and providing some benefit to the portfolio. But we look at the portfolio rather dispassionately and the criteria remain the same.

If we can't get to scale in a country, we don't see -- if we're not at scale today and we don't see a profitable path to scale or if investments in the country are struggling to compete for capital, then it may be more valuable in someone else's hands, and we would consider divesting. And that remains the case. So what does that have to do with the forecast we presented today?

The production forecast only really includes transactions that have been announced more or less. So there's none built into the forecast. That doesn't mean we won't continue active portfolio management, but there's none actually built into that. And in terms of proceeds, the free cash flow forecast that we give excludes divestment proceeds. But if there are some, I think what we -- the question was what we would do with them, and I think it just depends on the circumstances at the time. What's leverage -- as you said, what's leverage at the time we get those proceeds? What are oil and gas prices doing? What's our outlook for free cash flow at the time? And then depending on the circumstances and the amount of the proceeds, the Board will decide what the best use of those are and whether they go towards leverage or shareholder distributions or some other use. Thanks for the question, Alejandra.

Our next question comes from Chris Wheaton of Stifel.

Two questions, if I may. Firstly, can I come back to the point on 2027, 2030 CapEx. Guidance there of $2 billion to $2.3 billion at DD&A rates of $15, $16 a barrel. That doesn't suggest you're replacing all your production in that period of the late 2020s. And that then suggests to me that you're going to see decline post 2030, which is kind of in forecast already as you see Norway roll over.

I just wondered why a CapEx number that low because that doesn't seem enough to sustain this business post 2030. And my second question was on G&A cost. The G&A cost now $470 million for 2025. Yes, there's $70 million odd of transaction costs in there, but it feels those restructuring costs are a feature of your business year-on-year. Comparing you to, example, for Woodside, that's a pretty similar number to Woodside, but Woodside is 25% bigger. What are you doing about controlling G&A costs? Because it feels like the business is getting more complex, not less, and G&A costs seem to be rising -- risen quite substantially. I was going to throw in a third question on windfall tax. But after this week chaos, I'm not going to bother. I think I'll stop there.

Thanks, Chris. Let me turn to Alexander to talk about the CapEx levels. I think what we did lay out was our projection around reserve replacement ratio over the coming years and our current forecast that includes that CapEx projection or range that you talked about and does support a reserve replacement ratio during that period of over 100%. So we feel good about that and flat production towards the end of the decade. But Alexander, do you want to say a bit more about that in G&A?

Yes. No. Thanks, Chris. I was almost expecting a question on EPL. So I'm not going to say I'm disappointed, but we can take that offline. Yes. So on CapEx, I mean, the point today, Chris, is to show what this enlarged portfolio is now capable of doing. And how can we sustain production through the decade with these assets on hand.

And also what you've seen from Nigel's bit is a very significant 2C basket as well. And there's also some exploration in here, which is, of course, not necessarily booked in any of these categories. And we'd expect to do exploration both in Norway and the U.S. Gulf. So I mean, again, we think this is sort of the right level of CapEx to keep production at these rates. And the point is here that we do think that we can high grade this and margins will increase over time as well with the new jurisdictions, with lower cash taxes coming there as well. So fairly flat production, but margins increasing, and that's what we expect, and that's why we are making the statements about free cash flow growing over time as well.

And on G&A, anything to add, Alexander?

Yes. I mean I appreciate the comments around this and how G&A has been increasing. And there's obviously a few one-offs in terms of being acquisitive and going through all of this process that we are. So I think our target remains the same to get to $2 per BOE or hopefully lower. Yes, we have been and we will be hard at work to ensure that we're operating just as efficiently as we can, not having too much overhead or too much process and losing the agility that we think we still have in this company. So I mean that is the target, and we'll be hard at work to keep that under control and hopefully reduce that as well.

I would just add that the Wintershall Dea integration was a particularly complicated and therefore, expensive one to do and that we had a 12-month TSA in place that we were paying almost every month last year, at least 9 months last year. And so that's now gone away. And in fact, we're getting a bit of rebate on that because we had overpaid. So if we adjust last year's G&A for that, I think $30 million or something comes off of that, Chris, but that will be helping us this year. And as Alexander said, targeting to get to $2 per barrel by 2027.

And believe me, there is pressure from at least one person in the organization to get there before then. And if we think about -- your comment about are we going to continue to see those kind of costs in our G&A, the Waldorf and the LLOG transactions are both very simple, as I already commented when it comes to an integration standpoint. Waldorf, we already have a U.K. BU. It's all nonoperated. So that's very little to be done there. And then in the U.K., as I commented earlier, a single country where there's no overlap with existing operations. So that's -- I wouldn't say plug and play, but relatively simple.

And then there's still scope for all of this to come down as we continue to rationalize IT systems, and everything else over time. That doesn't happen overnight. And we're trying to be very thoughtful about does it really make sense to replace certain systems or to change operations in one country onto a system we might be using elsewhere? Does it make more sense to just keep it simple and build an interface between the 2. So we're doing that over time as it makes sense to, but should drive down costs over time. And then EPL, yes. Well, thanks for not asking the question. Thanks, Chris.

Our next question comes from James Carmichael of Berenberg.

Just going back to the distribution policy in terms of the base dividend. I appreciate it feels quite far away given where commodity prices are at the moment. But if there was a period of weakness and free cash flow dipped below $400 million, let's say, does that $300 million sort of base still hold? Or would the sort of 75% be the ceiling so potentially go below that?

Just on the U.S. quickly as well, I guess if we look at the production growth chart, there's a lot of focus on Who Dat, Buckskin and Leon-Castille, but the other bucket looks to be driving quite a bit of the production growth as well, maybe more than Who Dat and Buckskin combined. So maybe just wondering if you could give a bit of color on what's driving that or underlying in that other bucket?

And then I probably seeing as we here probably will ask about the EPL, I'm afraid. So there's obviously been a lot of discussion headlines, et cetera, around that this week's statement didn't really provide any color, but then stories around the meeting, which I guess you guys were in yesterday. So just wondering what, if anything, you sort of can say around where you think the government's head is at your level of confidence that, that comes forward, et cetera.

Great. Thanks, James. I'll turn to Alexander to talk about kind of the sustainability of the $300 million in different price environments, then to Nigel to talk about other fields where the growth might be coming from in the U.S.? And then thank you for asking a question about the EPL, and I'll be happy to take that. So Alexander?

Yes. No. Thanks, James. Yes, I mean the base dividend -- I mean, we set it at a level which we're comfortable and we think this will hold through the cycle. And we view that as an initial base dividend level. And when we're having -- again, back to Alejandra's question earlier, when we're having this type of volatility in markets, we do try to be mindful here of doing hedging, doing other things, which protects that as well. So trying to do hedging into future years to, yes, protect free cash flow there just to ensure we are above that minimum level as well.

Nigel?

Sorry, you didn't come off mute fast enough. Sorry about that. James, thanks for the question. Look, we have an active program. We're just working through right now potentially adding a second rig line in the Gulf of America. We clearly are focused on our existing hubs to grow production. There are other opportunities that you referred to in here are really around [indiscernible], which is 100% owned and then potentially beyond that post 2028 is really where we think to think about our short-cycle exploration program. But the other bucket you referred to on that chart is really driven by [indiscernible] production.

Great, James, and then the EPL. Well, Alexander had the honor of representing Harbour Energy at the meeting yesterday with the Chancellor. So after I answered, if he wants to add some color, we'll give him the chance to do that. But I guess we'd say we welcome the opportunity to engage with the Chancellor on the topic, and we welcome the statement from our office yesterday saying she'd like the EPL to come to an end and that she had hoped to announce it this week, but geopolitical events gotten the way, if you will.

And certainly, there's a lot of overlapping interest and common ground between Harbour and the Chancellor's office and between industry in general and treasury. So investment, jobs, growth, all priorities for all of us. The problem is the current fiscal environment for the U.K. oil and gas sector supports none of those things and actually has led to the opposite over the past few years, lower investment, job reductions, falling domestic oil and gas production. That's meant more imports with higher emissions, lower energy security. And now we see that it's all come in another bad time with European gas storage levels well below 5-year lows and now 20% of the world's LNG disrupted -- LNG supplies disrupted.

So we continue to believe in the potential of the U.K. North Sea. We certainly believe in our team in Aberdeen and have seen them do amazing things when it comes to recovering oil and gas in what can be a sometimes challenging environment. And we do hope to continue to work with the Chancellor now to make the removal of the EPL happen sooner rather than later, especially at this time when energy security is unfortunately back on the radar.

Yes. Thanks for the question, James. And I mean, you know that we have been one of the vocal companies who said the EPL has very negative effect for the U.K. and how we think about energy policy and security here. We've spent quite a bit of resources in engaging with the U.K. government and helping us to get to a new regime in place, which was announced last year.

Now this regime would not come into play until 2030. And again, we've been vocal in saying, well, why wait. If we have a future-proof fiscal system, why wait until 2030. We believe it's in the best interest of the sector here and the country, quite frankly, to implement this sooner.

I mean we have been working quite a bit with the U.K. government, and we will, of course, continue to do that and support as best we can. And we do also think that the efforts now from the Chancellor's office do seem genuine, and we are hopeful to see some progress over here in hopefully, the not-too-distant future.

I think we have one more question maybe, Dan.

Our last question comes from Matt Smith of Bank of America.

I'd love to turn to projects a bit in LatAm in particular. So first of all, on Argentina, Vaca Muerta specifically, is there any update you could give us as to production performance versus expectations and the latest on licensing there as it relates to the oil and gas side. That would be interesting. And then second question, turning to Mexico and Zama specifically. Could you give us some more details on the latest development plan that you're working on, I guess, the overarching improvements versus the old. And I'm just wondering also how many phases we could be looking at to exploit the full Zama resource, please?

Great, Matt, and thanks for the questions, and it's nice to get questions from time to time about the project. So I'm going to turn this over to Nigel.

Matt, thanks for the question. So I'll start with Argentina. Our base production today is around 70,000 barrels a day. Bulk of that comes from our CMA-1 license. We completed a project early and ahead of schedule last year at Phoenix to plateau that production through to 2040, and we did actually extend the license. The real growth opportunities in our resource position is in the APE gas window, where we have about 22.5% equity and in the San Roque oil window. We did complete a successful pilot in the unconventional license to San Roque last week -- last year, and we've got a 16-well program started -- scheduled for the end of this year.

We're working with our key stakeholders down there and our partners really to secure the unconventional oil license towards the end of the year. So once that -- once we have clarity there, we will be progressing that program with our partners.

In APE, today, our production is around 20,000 barrels a day from 80 wells. I would say that we've got a significant number of well locations potentially to materially increase the resource. We're not going to drill for the sake of drill and grow production. It's about generating a margin. Today, the gas market has softened a little bit, and we've got less offtake and we've got more market penetration from associated gas. So that's one of the key reasons why we've invested in SESA. I think it gives us another avenue to secure a better gas price and give us options on pricing, which allows us to optimize and then underpin our development in APE.

So as you know, the LNG project is an FID we took last year with several partners. That project is underway, and that will, I think, open up avenues to continue to develop our dry gas window.

You asked a question around Zama and Kan, we have actually spent a lot of time focusing on what we want our business to look like in Mexico over time. It is about creating 2 advantaged hubs. We have actually taken some deepwater assets out of the portfolio, which we won't invest in and we will not be advancing those projects. So we're focused on Zama and Kan. We'd like to get both of those projects to FID ready over the next 12 to 18 months. The concepts are nearing completion, and we'll be entering FEED this year on both projects.

We've reoptimized the Zama development for a phased development, which we'll see $1 billion to $2 billion investment in the first phase with potentially a small waterflood, but we're really finalizing that scope. So we'll see a phased development, small number of wells to generate some early production, and then we'll come back with a more second phase on Zama. Now we're operator, we have more control and are focused on really optimizing that design and that concept. And we'll know more as we get to FEED this year and have clarity around the FID and first oil timing sometime later this year, early next year.

We're looking to secure FPSOs for both Kan and Zama. We have line of sight to narrowing the options on both of those. So it's an exciting time to be in Mexico. Both projects have matured a lot in the last 12 months. We're getting close to finalizing the concept for each. Optimizing our well locations as part of driving down our breakeven costs. We are focused not necessarily just on schedule, but just driving down our breakevens. These will be long-lived projects. We need to make sure they compete and compete over time.

So a lot of focus on maturing the projects and on driving capital efficiency into both of them. We do see some synergies if we can run them somewhat in parallel where we can optimize rig schedule, service vessels, engineering support. So a lot to get worked through this year, but both projects are now getting clearer and clearer on their path forward.

Great. Thanks, Nigel. And thanks, everyone, for joining. We really appreciate the fact that you've spent some time with us today. And as I've said, I'm really proud of what the teams delivered last year, and it's good to see that we're off to a solid start for 2026. So thanks again for joining, and have a good rest of your day.

Thanks, Matt. Good morning, and welcome, everyone. Thanks for joining the call on such short notice and probably for many of you possibly taking time away from holidays. So we appreciate that. Sharing the presentation with me today are Alexander Krane, our CFO; and our Chief Operating Officer, Nigel Hearne; and Alan Bruce, our EVP of Technical Services, is also on the call. We're going to cover an overview of the acquisition that we announced earlier this morning with just 10 slides, so it won't be too long. And after that, we'll be happy to take your questions.

Before we get started, there's a disclaimer. I think maybe we've already gone past that. But let me just draw your attention to that. It covers, amongst other things, information about forward-looking statements and other important things that we'll use in today's presentation. So if we go to this first slide, as you will have seen from the announcement, we've reached agreement to acquire LLOG Exploration Company for $3.2 billion. We've long said that the United States Gulf of America is a logical reason for Harbour to target.

It's one of the most prolific oil and gas basins in the world that has well-established infrastructure and a supplier and contractor base, a really supportive fiscal and regulatory regime. And from a subsurface standpoint, it has considerable running room. This acquisition presents a unique opportunity to secure a leading position through the acquisition of one of the region's most successful offshore operators. LLOG has a high-quality portfolio of deepwater oil assets.

And importantly, the acquisition includes the LLOG organization, an exceptional, highly regarded team with decades of experience and which we believe will be an excellent strategic and cultural fit for Harbour. Before we dive into LLOG, we can go to the next slide. Let me just set this acquisition in context of other recent activity. This is the third transaction we've announced this month, each one advancing our strategy in important ways. We're not targeting scale for scale's sake rather, we're recycling capital for reinvestment into cash flow accretive growth opportunities.

We announced the sale of our mature Indonesian production, one of the highest unit operating cost assets in the company and the stalled Tuna project for $215 million early in the month. This improves our portfolio quality and accelerates value. We also announced the $170 million acquisition of Waldorf in the U.K., which brings $900 million in value from tax losses and immediately unlocks $350 million of trapped cash, more than covering the purchase price.

So the Indonesia proceeds, along with the near-term cash flow uplift from Waldorf will help fund our strategic entry into the deepwater Gulf through LLOG. Together, these 3 transactions are expected to materially increase our free cash flow between 2026 and 2030. So a really busy month for our team, and I'm proud of what they've delivered as we near year's end.

As this next slide shows, Harbour has grown from 0 in 2014 to more than 450,000 barrels a day of production today, driven by disciplined M&A and reinvestment into acquired assets. Since our first transaction, we've repeatedly demonstrated our ability to secure strategic value-enhancing transactions and to safely and successfully integrate businesses. While past acquisitions focus on building scale and diversification, this one is about strengthening the portfolio, making it more resilient and enhancing longevity.

It establishes a major new platform for us in the deepwater U.S. Gulf, adding a fifth core business unit alongside Norway, the U.K., Argentina and Mexico. LLOG brings a strong growth portfolio with production expected to double from 34,000 barrels a day in the first half of this year, double from that by 2028. This is supported by a deep inventory of attractive drilling opportunities within existing hubs. And it enables Harbour to sustain our overall production at around 500,000 barrels a day to 2030 with meaningful exploration upside on top of that.

Importantly, the acquisition meets all of our long-stated M&A criteria and is accretive across key operational and financial metrics as well as giving us a material position in the U.S. deepwater Gulf. The acquisition extends our reserves life, which is a key priority for us by adding high-quality long-life oil assets with a reserves life of 22 years. These assets are fully operated by LLOG. So that gives us the control we prefer and allows us to add value through infill drilling, for example, and also to control the pace of investment.

The portfolio, as I said, is oil weighted, and it returns our 2P reserves mix to around 50-50 oil and gas weighting. And additionally, the acquisition lowers our effective tax rate, materially improves our free cash flow per barrel margins and critically is free cash flow per share accretive from 2027. We've kicked a lot of tires in the U.S. Gulf over the past few years, never pulling the trigger largely due to concerns over asset quality or valuation. But with this portfolio and the talented LLOG team, we're confident we found the right opportunity to enter the region.

I'm now going to hand over to Nigel, and he's going to take you through the assets.

Thanks, Linda. As Linda has said, this acquisition provides us with a premium growth portfolio in the prolific deepwater Gulf of America, a world-class team and in a supportive fiscal and regulatory environment. In short, we like the basin, the company, the assets and the portfolio fit. And we like the people and the resource inventory that they have built. The portfolio is anchored in the Miocene and lower tertiary deepwater trends, which contain the majority of the remaining resource in the Gulf of America. The attributes of the deepwater Gulf means that these are highly cash accretive, high-return barrels with low emission intensity.

This is because the infrastructure we require is already in place, and we have a strong inventory of reserves and resources to keep it full. Bringing these resources into the Harbour portfolio continues our strategic focus to high-grade our portfolio, improve our free cash flow per BOE and expand our reserves life. Overall, the portfolio adds more than 270 million barrels of 2P reserves, an increase of 22%. And with a LLOG reserves over production ratio of 22 years, it extends our reserve life.

And we expect to create synergies, including as we leverage our larger buying power with strategic offshore suppliers across the North Sea and the Gulf of America and also as we embark on major new offshore developments across the border in Mexico. LLOG's portfolio is dominated by 3 large long-life deepwater hubs with high-rate wells, Who Dat in Mississippi Canyon and Buckskin and Leon-Castile in Keathley Canyon.

LLOG currently runs 1 rig across the 3 hubs, and we plan to continue this into 2026 with potential for a second rig thereafter. At Who Dat, the focus is on infill drilling and progressing the development of the 2014 Who Dat East and South discoveries. We also see upside potential in the deeper reservoirs at Who Dat. Buckskin is a standout example of the LLOG team's operational excellence and capital efficiency. Under LLOG's operatorship, the development was delivered with half the planned wells and 1/4 of the budgeted cost.

Production performance has also exceeded expectations. Only 2 initial wells were required to deliver targeted output levels. These wells ranked among the top 10 producing wells in the entire Gulf of Mexico in 2021 and 2022. The team has since brought 4 wells online with a fifth being completed as we speak.

And finally, Leon-Castile, which successfully started up just a month or so ago in October, represents a long-term development opportunity with significant drilling inventory supporting production growth. Development of the fields was unlocked by redeploying the Salamanca floating production system, the first of its kind in the Gulf, which opens up the outboard Wilcox play and creates a platform for future high-value tiebacks.

With such a strong portfolio and talented team, there's a great deal to be excited about. The acquisition will make Harbour the fourth largest resource holder in the basin and the largest amongst independents. LLOG's production is expected to double from 34,000 barrels a day by 2028 and deliver a 25% 3-year compound annual growth rate, driven by the ramp-up of Leon-Castile and a deep inventory of drilling opportunities located near to or within the existing hubs.

In addition, we have approximately 0.5 billion barrels equivalent of prospective resource. The LLOG team bring a proven track record in project execution, deep expertise in developing the Wilcox play and one of the strongest exploration track records in the deepwater Gulf. They have drilled more than 300 wells since 2002 and are responsible for roughly 1 in 3 of all Gulf of America discoveries made since 2014.

As has been the case in our previous transactions, this acquisition raises the bar again in terms of competition for capital. Capital discipline always matters in our business. As such, only the best opportunities will be funded, helping us to deliver superior returns.

I'll now hand over to Alexander to take us through the financial elements of this acquisition.

Great. Thank you, Nigel. And again, good morning to everyone calling in today. So my first slide provides a snapshot of the transaction, which includes a total consideration of $3.2 billion made out of $2.7 billion of cash and $0.5 billion of Harbour's ordinary shares. And on the left side of this page, a summary of how we'll pay for it. The use of equity priced at [ 215 pence ] per share and existing liquidity reduced the debt requirements, and it enables the sellers to participate in the ongoing success of LLOG within our enlarged portfolio.

On completion, the sellers will own 11% of Harbour's ordinary voting shares, of which 70% will be subject to a 1-year lockup. And the way the loan facilities are structured provide flexibility and allow for efficient deleveraging. We are adding some debt to finance this opportunity, and our opening pro forma leverage is expected to be slightly higher than the through-the-cycle goal of staying below 1x. But we have a clear plan and path to deleveraging over the next few years, thanks to the enhanced cash flow generation of the business.

As we did post Wintershall Dea, we will look to refinance the bridge facility in relatively short order with the issuance of new bonds, continuing to benefit from the access to lower cost capital that our investment-grade rating affords us. On the right of the slide, you can see the path to completion, which should be straightforward with the only third-party condition required being the expiration or termination of all waiting periods under the Antitrust HSR Act in the U.S.

We do expect to complete towards the end of Q1 in 2026. The LLOG business complements our portfolio with high-quality, long-life oil assets underpinning strong production and cash flow growth profiles. This helps secure the longevity of our portfolio. This acquisition means we can keep Harbour's overall production at around 500,000 kboe per day to the end of the decade and at the same time, deliver material and increasing free cash flow, thanks to the improving free cash flow per BOE margins.

Further, as Linda mentioned, the profile of this acquisition fits well with a near-term uplift in cash and free cash flow coming from the Indonesia divestments and the Waldorf acquisition. As a result, we now expect to generate significantly more free cash flow through to 2030, materially supporting our capital allocation priorities set out here on the right of the slide. We remain committed to investment-grade credit ratings and the transaction is structured in such a way as to retain this.

LLOG supports our investment-grade balance sheet with enhanced scale, reserve life and free cash flow coupled with entry into the U.S. Gulf of America. We're also taking the opportunity to move from a fixed dividend policy to a payout distribution policy, incorporating a base dividend and share buyback component. This will more closely align our distributions to both our cash flows and to the common practice amongst our U.S. peers and other international independents.

This does not necessarily mean a lower dividend. It just means that the amount being returned to shareholders will be based on a ratio, and it will be more closely linked to free cash flow generation. We plan to provide more detail on this along with our full year results in early March. And finally, as you've heard from Nigel just a second ago, this acquisition materially enhances the investment opportunities available to us, and it will drive further high-grading of our portfolio as we continue to be disciplined in our capital allocation.

And with that, I will hand you back to Linda for a wrap-up. Thank you.

Thanks, Alexander. I think this acquisition and the other 2 we have announced in December, other 2 transactions, really demonstrate Harbour's ability to identify unique opportunities and execute when it comes to M&A and also divestments and portfolio management in general. It will give us a top-tier position in the U.S. Gulf, strengthens our global portfolio with high-quality assets and a world-class team, and it supports our free cash flow growth and competitive shareholder returns.

So we're really pleased to be able to share the news, meets all of our criteria and builds on our existing business in a really exciting way. So thanks again for joining us again during the holiday period, and I'm now going to open the call for any questions you might have for the team.

[Operator Instructions] Our first question comes from Lydia Rainforth.

Just -- actually, I've got a couple of questions, if I could. Just in terms of the team and the assets that you're buying, it does feel like actually being able to keep the LLOG team in place and to have access to that expertise was quite an important part of the deal. Is that -- am I understanding that correctly just in terms of this wasn't just about price. This was also about the ability to access the team?

And then if I can just come back to the financial side of it. Alexander, just to be clear, so the idea is that the dividend will remain at least at the level that it is? Or am I just interpreting too much from that? And just in terms of the debt level, sort of what gets you comfortable around sort of how much debt you needed to take on with this one?

Lydia, thanks. I'll take the first bit about the people and the team and then pass it to Alexander. Yes, acquiring a team was an important aspect for us in this transaction. The U.S. Gulf is going to be a strategic new business unit for us. It's important that we have the right team and organization to support that going forward. So it was almost as equally important as the assets were. So we're excited about that.

And I think that's one of the reasons why we've been able to land this transaction that sellers had broader objectives than just price. And one of those was around making sure that they found the right fit for the team going forward. And we've spent a lot of time with management over the past several weeks. I think mutually -- I don't want to speak for them, but I think mutually came to the conclusion that we shared similar aspects of our cultures and that we would be a good home for them.

And given the fact that we have no existing organization in the United States, it gave them confidence that we were going to actually really need that team and for the long term. And I think that gave us a bit of an edge in the process. So that's a bit about the team, and let me turn it to Alexander.

Yes. Thanks for the question, Lydia. So on leverage and distribution policy, well, I think the first point to note is that LLOG and the other recent portfolio actions we've taken, they all collectively and materially enhances our free cash flow outlook, and we do expect to generate both material but also increasing free cash flow. Well, yes, leverage is expected to be just a little higher than what we have as a stated goal through the cycle of 1x.

But we think there's several options there to delever and especially given the highly cash-generative nature of the asset. So we've -- as you would expect, we've been carefully structuring transaction and how we've been thinking with the seller here just on cash versus continued exposure in equity. When it comes to distribution policy, yes, I think our current distribution policy, which has been in place for a few years now is probably an outlier with peers and perhaps outdated.

And we've seen cyclical businesses move more to payout ratios. And we think this makes sense for companies exposed to commodity price volatility. So we do think with this deal, it's the right time to sort of address this and move towards a payout ratio and aligning more to our distributions to our cash -- through our cash flows.

Our next question comes from Mark Wilson of Jefferies.

Obviously, a very interesting negative market reaction to what I have to admit, I see as a good deal. So a couple of questions here. On the strategic rationale, Linda, you outlined that you're saying top-tier assets with LLOG. Could you qualify that maybe a bit more to what the market might be missing? What is it that's top tier about these assets?

And frankly, did you face IOC major competition from these assets? And therefore, aside from [indiscernible], is there a reason that Harbour won these? My second point would be to give some -- a bit more clarity on the ramp-up to doubling production from 34, is it the -- simply the production capacity of Buckskin and Leon-Castile that we're aiming to fill here? And could you just speak to how many more wells do you expect to get there? And those will be my 2 questions.

Great. Thanks, Mark. Let me start with a bit about the strategic rationale and how we landed the deal. And then I'm going to turn it to Nigel, and he'll talk a bit more about why we're so complementary of the assets and the evidence we have, the supporting body of evidence to support the statement that production is expected to double.

So just starting with the strategic bit first. As we said, it was really a unique opportunity to acquire a high-quality portfolio and also the team and what was a limited sales process. Over the years, we've looked at and passed on multiple other opportunities in the Gulf of America, largely concluding that the assets weren't a good fit with us because they were lower quality than what we're acquiring here.

And what do I mean by that? Generally more mature, so shorter reserves life and had little embedded growth, and we didn't like the prospect of acquiring just a mature portfolio without kind of clear line of sight to how we were going to sustain and grow production over time. And the LLOG assets are essentially the opposite of that. They have a growth profile, a very long reserves life. They're 100% operated. They don't have a huge decommissioning burden, and they come with a material exploration portfolio, and all of those were strategic criteria for us.

In terms of the process, other than saying it was a very selective invitation-only process, I really can't comment on it or media reports about what might have been going on. But I can say this, we worked very hard to listen to and meet the sellers' priorities, which were not just about price. Importantly, we tried to respect their broader objectives in relation to the employees, in relation to honoring the LLOG heritage.

And I think over time, both sides became convinced of the really good cultural fit that we're going to make. And they appreciated the pace at which we were able to advance the discussions and our collaborative approach. So we're really excited by all of that and kind of look forward to welcoming them and believe that we're going to create a lot of value together going forward. Now let me let Nigel explain a bit more about why we believe that by talking about the assets.

Thanks for the question, Mark. Thanks, Linda, for covering the kind of context. And Mark, the reason we really like the assets, firstly, I think it balances up our portfolio fit with the oil index. Then you start to say, well, we've got 3 relatively mature hubs that have been developed. They're relatively new. They've got line of sight to an active drilling program. And in the next 24 to 25 months, we should see 8 wells come online as part of that production growth. They're across all of the hubs. So we've got a very -- as Linda pointed out, we've got a very clear line of sight to growth.

The other comment I would make, we've got a deep resource base behind it. I think the people that we bring into the assets, in particular, have proven their capital discipline. They can mature development concepts that are competitive and short cycle, leveraging existing infrastructure. They've been one of the most successful companies around exploration to keep that infrastructure full. That means we've got highly accretive cash-generating barrels coming in our portfolio.

So it makes it exciting to complement our existing assets. And the other one thing, I think it offers some synergies as we start to think about other development programs and major capital projects in the other side of the border in Mexico. So all told, it fits very nicely with the 3 things we look at. Does it generate free cash flow growth? Yes, it does. Does it have margin growth? Yes, it does. Does it add to resource reserves to production? Yes, it does and it does it very profitably and competitively.

So when you put all of those things and the capability that we bring in, it's an exciting asset to bring into that company, and it's a great fit and it complements with the other positions that we have around the world. So like I said, I like it. I like the deal. I like the assets and I like what they bring into our portfolio.

If I may have a follow question to Alex, you mentioned about the leverage point staying close to possibly over 1x post the deal. On the free cash flow point, would it be possible to say at point of completion of this deal and assuming those U.K. tax losses that you've got in as well at current prices, would you be deleveraging in the coming year? That would be the first question. And then second to Nigel again, could you just remind investors who might not know who are the partners in the various hubs that you're buying into?

Yes. Thanks, Mark. Yes, why don't I start and then Nigel can take your second question. Yes, I mean, that -- part of the reason why we had a slide here putting these 3 transactions into context is just because of the complementary nature of those transactions. We've announced now 3 transactions over the last 2 weeks, and they do fit really nicely together. You will see and probably appreciate just the short-term free cash flow generative nature of the 2 first ones.

And then this one, which adds quite a bit to the near term, but more so to the longer term and the longevity of the portfolio here. So we do think if you use your forward curve going forward or something similar, that will have a fairly significant free cash flow, both in the short, but also in the longer term. And we do expect, like we've done on the back of all other acquisitions to be able to deleverage from here.

So it's a complementary nature of those transactions and just the solidity and the predictability of those free cash flows, we think will be very significant. So there's other -- again, like you've seen us in the past, things we can do when we're managing the balance sheet and using hedging and other tools available to us. So yes, we do expect to deleverage from here again.

Mark, just to -- maybe I should start with our equity position. So in Buckskin, we have just over 33%. In Who Dat, we have 45%. Leon is 33% and in Castile, it's around 48%. Our primary partner is a long-standing relationship with Repsol, but also with Ridgewood, Navitas, Karoon, Thales and Westlawn across those assets. So slightly different equity in each one, but good partners that we look forward to working with.

Our next question comes from Alejandra Magana from JPMorgan.

Can you give us some color on how valuation compares with Harbour's prior acquisitions across key metrics and how this deal stacks up relative to other deals Harbour has done?

Great. Let me do that. So I think if we compare it to the Wintershall Dea acquisition, which was the most recent for the LLOG acquisition, if we look on a dollar per 2P basis, I think the number works out to around $12 per barrel. Wintershall Dea was closer to $10. And I think what you have to keep in mind was that Wintershall Dea portfolio was nearly all gas whereas we're bringing the LLOG portfolio is nearly all oil and typically valued higher.

The Wintershall Dea acquisition had a much lower reserves life. And so we're getting a lot more embedded growth with LLOG and the Wintershall Dea transaction importantly had a much higher tax burden and the effective tax rate on LLOG is a lot lower. So if we compare it to our largest and most recent acquisition, I think it compares fairly well. Maybe the other thing to point out is if you look at valuations done by third parties, Welligence, Rystad, Woodmac, I think they all value this portfolio well, well north of the $3.2 billion consideration we're paying. Thanks for the question.

Got it. And my second question is, I think you said more color will come, but could you give us any early thoughts on what constitutes as a competitive payout ratio versus peers? That would be helpful.

Yes, I can take that, Alejandra. Yes. So yes, what we've said is that it's too early today to give a lot of color on how that's going to look '26 and onwards. So our plan, Alejandra, is to provide more details on this when we announce our full year results in early March. I mean there's, of course, some varying practice among U.S. and global independents here. But we do want to move to the concept of a payout ratio with both dividends and buybacks, and we'll provide a fair bit of color when we get to early March and the full year results.

Our next question comes from Teodor Sveen-Nilsen of SB1.

Congrats on a transformative deal. A few questions from me. You say that the assets will be free cash flow accretive from 2027 onwards. But could you give some information on the CapEx profile for the acquired assets already from 2026? Second question, that is on your new shareholders. As far as I understand the current LLOG shareholders will become a significant shareholder in Harbour after a deal. Just wondering who are the LLOG shareholders right now?

And third and final question, that is on payout ratio. I know you already got a lot of questions on that. Positive to see that you actually move to a payout ratio and not a fixed dividend or like that. But is it fair to assume that, that will be a payout ratio directly linked to free cash flow? Or will it be operating cash or EBITDA or some other metric linked to that payout ratio?

Yes. Thanks, Teodor, for the questions. Let me take the one about the seller, and then I think I'll turn it over to Alexander for the CapEx and payout ratio questions. So the LLOG is privately held today. The owner is a private family originated there in Louisiana. And so going forward, they'll be the shareholder and the majority of those shares are going to be held in a private trust as part of its long-term investment portfolio.

So the shares will give them kind of ongoing exposure to the future success, we believe, is going to come from LLOG's asset and organization as well as the broader Harbour portfolio. Then let me go to Alexander.

Yes. Thanks for the question, Teodor. Yes, I think on CapEx, yes, because we're going or you're doubling production here in 2 years' time. I think on average, we're looking at around $300 million per year over the next 5 years. But needless to say, it's probably a bit more in the earlier years when you take that average across.

When it comes to payout ratio, yes, again, we'll be providing more details when we get to full year results. But free cash flow is probably the one we've used most frequently in our market communication. So that could be a good alternative and linking it more to free cash flow generation.

Thank you for your questions. We've had some questions come in from Matt Smith. These will be our final questions. First one, could you remind us of the attractions that you see in the U.S.? And do you expect this to be a stepping stone to further growth in the region?

Second question is, how do you assess fair value for the assets on both an absolute and relative basis to harvest current equity value? And Matt's third question is, deleveraging has been a near-term priority post previous transactions. Should we accept the same again? And how does this link to the CF -- sorry, the FCF outlook in 2026 and the new shareholders' distribution policy?

Yes. Thanks for the questions, Matt. I think when it comes to fair value, as we normally do, we look at valuation from lots of different lenses. In particular, in this case, we had access to very, very extensive diligence on the technical side and access to the team, also finance, tax, legal, as you might expect and got very, very comfortable with the valuation and of course, assessed it across a wide range of oil and gas prices as well.

And so it's kind of our normal process for that. And of course, kind of triangulated that with other sort of external assessments also, but in particular, relied on our own internal diligence and the access we had to the company. Let me turn it over to Alexander to answer, I think, your last question and then come back to me to talk about the attractions overall of the acquisition and the U.S. So Alexander?

Yes. Thanks, Matt. And again, the answer will be, as I've said a couple of times that yes, the plan will be just based on the free cash flow generation that we now see from the enlarged portfolio, we do expect to again be deleveraging on the back of the announced transaction.

Yes. And then back to your first question, Matt, we have a long-time ambition to enter the U.S. Gulf of America. You'll know, right, it's a prolific oil and gas basin, well-established infrastructure. But why is that important? It gives you the opportunity for near-field exploration, which the LLOG team has proven very successful at. You can quickly tie those into existing infrastructure and you get better returns than in a basin where the infrastructure isn't present or there's not access to it or there's no capacity.

Also really strong service sector, which we can appreciate synergies with our operations in Mexico, a lot of subsurface running room. And in relation to that, the track record the LLOG team has when it comes to exploration is really second to none. And then, of course, you'll appreciate this as well, just the support of fiscal and regulatory environment and the fact that it is set up to support oil and gas activities in the region and great local support for the industry as well and the low tax rate. So the margins on the barrels and the cash flow from the barrels very, very attractive relative to what you might get in other areas.

So that's why it's been attractive. We're excited that we landed this opportunity. LLOG has been on our kind of wish list for many years, but it was just never available. And so we were honored to be invited to what, as I said earlier, was a very selective process this year. I'm very pleased to have landed this transaction as we near the end of 2025 and look forward to completing it. And our anticipation is that, that will happen before the end of the first quarter of next year, so in less than 3 short months from now.

So I think Matt said that was the last question. So we're going to close there. Again, we appreciate everyone taking the time during the holiday week to join the call. And if you have more questions, feel free to just reach out to Elizabeth and our IR office, and we'll be happy to address those. And finally, before we sign off, just warm wishes for the holiday period from all of us at Harbour. Thank you.

Good morning, and welcome to the Harbour Energy 2025 Half Year Results. Today's presentation will be hosted by Linda Cook, CEO; and Alexander Krane, CFO. After the presentation, we will take questions.

Linda, please go ahead.

Good morning. Welcome to our first half results call. With me today is our CFO, Alexander Krane. Turning to the agenda. I'll walk you through our operational performance. Alexander will cover our financial results, and then it's back to me to wrap up, and we're aiming to leave plenty of time for questions. But first, let me hit the highlights for the first half.

Today's strong results reflect the continued execution of our strategy. The Wintershall Dea transaction, which completed 11 months ago, has significantly enhanced the scale, the resilience and the longevity of our business. Perhaps the most obvious evidence of this is our production in the first half at 488,000 barrels per day. It's almost 3x where we were 1 year ago. These results are also supported by excellent underlying operational performance. Production efficiency was strong. Our approved capital projects are on track, and we made progress maturing our substantial 2C resources.

At the same time, we demonstrated discipline when it comes to costs and CapEx, taking action to protect cash flow in response to a very volatile commodity price environment earlier in the year. We also strengthened our financial position, addressing near-term maturities and materially reducing net debt.

The progress made in the first half enabled us to improve our cash flow outlook for the year to $1 billion. As a result, we're pleased to announce that in addition to our interim dividend, the Board approved a new $100 million share buyback. This will bring our expected total shareholder distributions for 2025 to $550 million.

Moving on to operations. Safety remains core to everything we do in Harbour Energy. With respect to occupational safety, while we continue to be better than peer average, our incident rate has increased since completion of the Wintershall Dea transaction in September of last year, reflecting the different levels of performance in some of our new countries. And in process safety, we're running about average so far this year. So clearly, as always, more work to do in both areas.

A key part of our integration process that follows each acquisition is to assess the safety processes, systems, competencies and culture in newly acquired locations. This helps us to identify any areas that are not up to Harbour standards and to prioritize actions for improvement. For the Wintershall Dea acquisition, this process is now complete, and we're taking steps to address the identified gaps and strengthen performance, in particular, in new operations in Germany and Mexico. While it will take time to see real results, I am encouraged by the strong commitment demonstrated by our team across the company.

In terms of emissions, the Wintershall Dea acquisition actually helped deliver a step change improvement in our greenhouse gas intensity, which is now down by more than 1/3 to 12 kilograms per barrel, taking us below the peer average.

Now on to production. As mentioned earlier, we averaged nearly 0.5 million barrels per day in the first half, split roughly 35% Norway, 33% U.K. and 15% Argentina, with the remainder from Germany, North Africa, Mexico and Southeast Asia. The results, of course, reflect the acquisition, but they also reflect the impact of new projects and wells on stream, including in Norway, the U.K. and Argentina, and also improved reliability. In particular, we benefited from strong delivery at our largest operated hubs in the U.K., including from the Talbot project that started up in late 2024 and also from high local gas demand in Argentina.

While some of our annual planned maintenance in the U.K. is now behind us this year, the majority is set for the third quarter across both the U.K. and Norway. As a result, second half production is expected to be lower than first half. Also contributing to this is the divestment of Vietnam, which closed on July 9 and which averaged 5,000 barrels per day in the first half. But with a solid 6 months behind us, the uncertainty around our 2025 forecast is now reduced, and this gives us confidence to narrow our full year production guidance upwards for the second time this year, this time to 460,000 to 475,000 barrels per day.

Turning to the next slide. Unit operating costs reduced by more than 30% to $12.40 per barrel, reflecting the addition of the Wintershall Dea portfolio, strong production volumes and an increased focus on costs, which more than offset the impact of a weaker U.S. dollar. Notably, our U.K. team has done a great job delivering top quartile unit cost performance. Unfortunately, however, as previously announced, we are again reducing our Aberdeen workforce. This is to align with lower levels of U.K. investment going forward given the ongoing challenging fiscal and regulatory environment in the country. The reorganization will complete later this year and deliver cost savings from 2026.

In terms of the acquisition integration, it's going well. We now have the keys to various Wintershall Dea IT systems and are running those ourselves, and we remain on track to exit the transition services agreement by the end of this quarter. And then the second phase begins, the rationalization of these with Harbour's legacy systems, removing duplication and making us more efficient. While most of this effort will lead to savings only over 2026 to '27, I'm pleased that we've already been able to leverage our increased scale with a couple of key contractors to capture supply chain synergies, and there's likely more to come over time as additional contracts come up for renewal.

Given the first half performance and outlook and the exit from Vietnam, which was the highest unit operating cost country in our portfolio, we're lowering our full year OpEx guidance from $14 per barrel to $13.50. This is despite the not insignificant FX headwinds, which Alexander will talk about in a moment.

Turning to the next slide on our capital program. We spent $1.1 billion in the first half and are on track to meet our previously narrowed CapEx guidance of $2.4 billion to $2.5 billion. Looking at CapEx on a per barrel basis, if we compare our full year 2025 outlook to the first half of 2024, which was before the acquisition, it's down 33%.

In terms of focus, the money we're investing this year is largely aimed at converting 2P reserves into production, predominantly in Norway, the U.K. and Argentina. In Norway, first half highlights include start-up of the Harbour-operated Maria Phase 2 project in May and solid progress with other subsea developments currently in the execution phase, including Solveig Phase 2, a 3-well tieback to Edvard Grieg due online in the middle of 2026, our Harbour-operated Dvalin North project, where we recently completed installation of the umbilical and pipeline, keeping us on track for first gas late next year.

And importantly, after 1 million hours worked, there were no recordable safety events, something our team is rightly proud of. And at Aasta Hansteen, Equinor recently installed a new topsize module in preparation for receiving gas from the Irpa development towards the end of next year as well.

In the U.K., we continue to focus on quick payback opportunities around our largest operated hubs, J-Area and Greater Britannia, or GBA. Here, we've significantly improved drilling efficiency. Our 2 J-Area wells online in the first half both delivered best-in-class performance.

And in Argentina, at the Aguada Pichana Este or APE concession onshore Vaca Muerta, we drilled 9 3,000-meter lateral wells in the first half with a 10th well drilled since then. And we successfully completed and connected 6 new wells, each with 50 fracs. Here, the operator continues to improve performance and has reduced total well costs compared to the 2024 campaign. We've now paused drilling on the license until early 2026, with sufficient gas from the existing wells to keep the processing plant at capacity and to meet local gas demand.

In another success story, we also drilled a CO2 storage appraisal well in Norway. The well was a commitment well entered into by Wintershall Dea when securing the Havstjerne storage license. It was drilled safely and under budget with top quartile performance and was also successful in terms of proving up the license CO2 storage capacity. So we're now moving on to explore various potential commercialization options.

Turning to our 2C resource base, which includes a balance of short-cycle near infrastructure investments, the scalable Vaca Muerta shale in Argentina and longer-term conventional offshore growth projects. We're prioritizing efforts to focus on our best projects, enabling the high grading of the portfolio and to underpin long-term cash flow.

In Norway, we prioritize the Gjoa Subsea projects, where we target FID in mid-2026, and also development concept studies for the Cuvette, Adriana/Sabina and Storjo discoveries. In the Vaca Muerta, we've booked 600 million barrels of 2C resource, but see the potential to almost triple this.

At APE in the gas window, we have 90 producers and 500 million barrels of booked 2C resource, but there's potential to significantly increase this with line of sight to 1,300 locations. What's needed, however, is a market for the gas, and that's why we've entered the Southern LNG -- Southern Energy LNG project.

The 2-vessel 6 million tonne per annum project took FID on the first vessel in May, making it the country's first LNG export project. It will provide our Vaca Muerta gas with access to global markets as well as through the new RIGI legislation access to investment incentives and offshore U.S. dollar revenues. Start-up of the first vessel is expected around year-end 2027, while start-up of the second vessel approved by partners yesterday is anticipated around year-end 2028.

Our second license in the Vaca Muerta San Roque is in the oil window. Following a successful 4-well pilot, we're preparing to apply for the unconventional license, and once received, it will enable development activities to commence. With around 1,000 potential well locations, we believe there's more than 500 million barrels of net resource to target, of which less than 100 million barrels is on our books today.

In Mexico, our stakes in the conventional shallow water Zama and Kan projects together could yield reserves equivalent to more than 2 years' worth of our production, illustrating why these are priorities for us. After the recent successful appraisal drilling at the Harbour-operated Kan discovery, we increased our gross resource estimate by 50% to 150 million barrels. Today, we're focused on development concept selection so we can move into the FEED phase as soon as possible. And at Zama with a 32% interest in gross resources of 750 million barrels, discussions with partners are underway around a potential phase development.

Before I hand over to Alexander, it's worth underlining that the Wintershall Dea acquisition not only delivered a step change in scale of our production, but also in the resilience and longevity of our cash flow. Over the next few years, we expect new production in Norway and Argentina to substantially offset the managed decline in the U.K. with additional support from Mexico from 2030.

As a result, we're confident in our ability to continue to produce at scale and generate material cash flow well into the next decade. This is supported by our nearly 20-year reserve and resource life with additional potential not captured here in respect of exploration success and M&A.

And now let me hand over to Alexander.

Great. Thank you, Linda, and good morning to everyone dialing in this August morning. I will start with a few financial highlights. Against a challenging macro environment, we delivered a strong set of financial results, reflecting a full 6 months contribution from the Wintershall Dea portfolio and excellent operational performance. We materially increased the underlying earnings of our business, generated significant free cash flow and we reduced our net debt.

We also successfully prefunded all maturities to 2028, further strengthening our financial position, and have increased our full year free cash flow outlook to $1 billion. As a result of all of this, we are well placed to continue to deliver against our capital allocation priorities and have, therefore, announced additional shareholder returns with a new $100 million share buyback program.

Let's start with some market context on Slide 13. The first half saw significant oil and gas price volatility driven by geopolitical and economic factors. Brent was 15% lower than that of the same period last year, averaging $72 per barrel. In contrast, European gas prices were 40% higher, averaging $13 per MMBTU or approximately $80 per BOE for those that prefer that. We continue to hedge our commodity price risk and we were able to capture particularly attractive gas hedges during the period, whilst also taking advantage of brief periods of oil price spikes to hedge some crude.

We also saw a significant depreciation of the U.S. dollar, which has weakened by almost 15% versus the euro, making it the worst start to the year for the U.S. dollar in more than 20 years. This impacted our financials as we report in U.S. dollars. As such, a weaker U.S. dollar incrementally improves our free cash flow as more of our revenue is in local European currencies than costs. However, the weakening of the U.S. dollar also increases the U.S. dollar value of our euro-denominated debt, which you will see later.

In summary, we expect continued volatility and uncertainty. As you can see from the graphs here, July was no exception with U.S. dollar strengthening again. And it is at times like these, a diverse portfolio, a prudent approach to risk management and an investment-grade balance sheet are critical.

Turning now to the income statement on Slide 14. For the first time, we are reporting adjusted performance measures, which we believe provide a more meaningful comparison of the underlying performance of our business and brings us more in line with peers. You can read more about these adjustments in our financial statements.

Post hedging, we realized prices broadly in line with global benchmarks for our oil and European gas for the first half of 2025. Our realized European gas prices for the same period last year were impacted by lower legacy hedges, the last of which expired in the first quarter of this year at less than GBP 0.50 per therm.

Our reported revenue and EBITDAX for the first half more than doubled, reflecting the step-up in production and significantly higher realized gas prices. This was only partially offset by lower realized oil prices. In terms of costs, as Linda mentioned, our unit operating costs have reduced by over 30% year-on-year to $12.4 per BOE, supporting resilient margins. This reflects the addition of the lower cost Wintershall Dea portfolio, strong volumes and good cost control, offsetting the weaker U.S. dollar.

Net financial items were impacted by the U.S. dollar movements I mentioned on the previous slide, resulting in foreign exchange losses of $0.5 billion, partly offset by gains on foreign exchange forward contracts to hedge our FX exposures of approximately $0.3 billion. There's a detailed Note 6 to the financial statements for anyone looking for a breakdown of these financial items.

Adjusted profit after tax for the period increased to $410 million, while adjusted earnings per share doubled to $0.22 per share compared to the first half last year. Now in terms of adjustments, there are 3 main items to note. First, impairments, which totaled $186 million and are predominantly related to a small number of mature U.K. oilfields, reflecting lower near-term oil price assumptions.

Secondly, foreign exchange losses of $193 million due to the revaluation of intercompany balances driven by the weaker U.S. dollar. And to be clear, this is a purely intercompany effect we are adjusting for. And thirdly, we've adjusted for the $300 million charge related to the extension of the Energy Profit Levy in the U.K. So collectively, these 3 adjustments resulted in an adjusted tax rate for the period of 80%. This is more in line with what you would expect given the 78% statutory tax rates in Norway and the U.K.

Turning next to cash flow. During the period, we generated $3.8 billion of operating cash flow. We spent $1.1 billion on total capital expenditure, and we paid $1.4 billion of taxes. We also benefited from a $0.2 billion working capital movement. This resulted in a very healthy free cash flow generation of $1.36 billion for the first half, significantly derisking our improved $1 billion full year free cash flow outlook.

Further, our dividend is now covered down to prices of $35 per barrel Brent and $8 mscf (sic) [ $8/mscf ]European gas in the second half of the year. The first half weighting of our free cash flow reflects the Q3 planned maintenance programs, higher CapEx in the second half with increased activity in Norway and then expected part reversal of the positive $200 million working capital movement. However, the largest driver is timing of U.K. tax payments, with first half tax payments equating to around 40% of the total expected payments for the group for the year.

We've also been proactive with our debt refinancing, with net bond issuances amounting to $1 billion during the period and repayment of our RCF such that we were undrawn at the period end.

I will now turn to the bond issuances in more detail on Slide 16. During the first half, we issued $0.9 billion of senior notes and EUR 0.9 billion of subordinated notes, concurrently repaying $0.3 billion of legacy high-yield bonds and EUR 0.6 billion of the subordinated notes. This means we were able to effectively prefund all our senior debt and subordinated note maturities to 2028 and strengthening our balance sheet with an additional layer of subordinated notes.

Thanks to the very strong free cash flow generation in the first half, we reduced net debt by $0.9 billion to $3.8 billion and leverage to 0.5x, comfortably below our internal 1x target. The impact of the weaker U.S. dollar, which increased the value of our pre-swap euro-denominated bonds by $0.7 billion, was partially offset by the net addition to cash balances of $0.4 billion from the subordinated notes issuance and repayments.

Now further, at June 30, we benefited from a $0.2 billion mark-to-market gain on our cross-currency interest rate swaps. This offsetting gain is not included here in the net debt calculation. Whilst we only have about 20% of our debt denominated in U.S. dollars, on a post-swap basis, our debt exposure to U.S. dollar is now around 60%. This mimics our U.S. dollar versus euro and British pound revenue with approximately 40% of our production being European and U.K. gas. We ended the first half with over $5 billion of liquidity. And having prefinanced all maturities to 2028, we're in a strong financial position.

Moving to our free cash flow outlook for the rest of the year on Slide 17. We've increased our free cash flow outlook to $1 billion, driven by our continued strong operational delivery across the board, further offsetting the impact of lower commodity prices. As a result of this and our strengthened financial position, we are pleased to announce a new $100 million buyback. Along with our $455 million annual dividend, this means that roughly half of our free cash flow in 2025 is expected to go towards reducing our net debt and the other half to our shareholders. And our sensitivity to movements in Brent and European gas prices for the year remains the same.

Before I move to our guidance, a quick look at our commodity hedging on Slide 18. Our strong financial position and balance sheet is supported by the diversity of our revenue mix. In addition, we aim to hedge approximately 50% of our economic exposure to commodity prices in year 1 and 30% in year 2. We use both swaps and nonlinear structures. This helps to protect our cash flow through the commodity price cycle whilst maintaining upside participation.

For the 18 months through to the end of 2026, we've hedged approximately 40% of our economic exposure to Brent and 50% of our economic exposure to European gas prices. As you can see from the graphs on the right here, we've locked in some good pricing above the forward curve, leaving us with a pretax mark-to-market position of around $0.4 billion as of June 30.

So what does this mean for our guidance and outlook? Well, we've lifted the lower end of production guidance for the second time this year, now set at a range of 460,000 to 475,000 barrels of oil equivalent per day. This reflects continued high reliability across the portfolio, increased production from our operated U.K. portfolio and strong volumes from Argentina, collectively more than offsetting the impact of the Vietnam divestment.

OpEx guidance has been lowered to $13.5 per BOE despite a weaker U.S. dollar. This reflects strong cost control year-to-date and the sale of the higher cost Vietnam business post period end, as mentioned by Linda. We are reiterating our previously narrowed total CapEx guidance of $2.4 billion to $2.5 billion as we continue to challenge our portfolio and high grade it. And as mentioned a couple of times already, we have increased our full year outlook for free cash flow by $100 million to $1 billion, enabling us to increase expected shareholder distributions to $555 million for 2025.

Now my last slide is just a reminder of our capital allocation priorities, all unchanged from our update earlier this year. We will continue to invest in our business to improve our portfolio, prioritizing our best and most competitive projects. We will deliver attractive through-cycle shareholder returns as further evidenced by today's $100 million buyback announcement, meaning we will have returned $1.8 billion since listing in 2021, and all of this while maintaining financial discipline.

So thank you. That's all for me, and I will now hand you back to Linda.

Thank you, Alexander. So we've had an excellent start to the year, both operationally and financially and enter the second half in a strong position. We're seeing the benefits of the execution of our strategy, the expanded portfolio and the additions made to strengthen our team globally over the past year. This progress gives us continued confidence in our asset base and in our ability to meet our capital allocation priorities, including maintaining our investment-grade balance sheet and delivering additional shareholder returns through buybacks.

With that, I'm going to hand it back to Matt, and we'll open the call for questions.

[Operator Instructions] Our first question comes from Lydia Rainforth from Barclays.

Two questions, if I could. The first one, just Linda, when you think about the integration with the Wintershall Dea assets, that's clearly been going very well. I'm just wondering if you can talk about things that -- about how far you think you are through that integration process now in terms of getting the best out of the assets. Are we all the way done? Are we 50% of the way done? So just that sense of how much more you think the portfolio can give you relative to what you were hoping?

And then secondly, if I can come back to the free cash flow guidance. So this is the second improvement that we -- that you've given us over the last couple of updates. And I think the underlying improvement is about $300 million, which is significant. Should we think about that rolling into next year and into '27 versus where the plan was? And what I'm thinking about there is like the buyback for today, does that actually -- is that something you think about, that level should be what we should be thinking about going forward subject to where prices are?

And then sorry, one final one. Just on Argentina, we did see TotalEnergies yesterday sell part of their exposure for about $10,000 an acre. When you think about the potential of the Argentina business, is that something that you would think about in terms of the valuations that you would look at – or, effectively, would you -- is that a fair valuation from your side?

I'll take the first and the last one and then turn it over to Alexander for your second question. So the first question was how do we think about how far along the integration journey we are following completion of the Wintershall Dea transaction, which was just 11 months ago as we think about it. I would say we're on track with where we thought we'd be.

And the biggest milestone is getting off the transition services agreement, which I said we're on track to do here in the coming weeks. And that means that we already have the keys to the IT systems. That's all gone very well. That just happened less than a week ago, I think. So far, no issues with that. And have taken that time to hire the people we need to support us going forward and replace those in the old Wintershall Dea RemainCo that sort of still exists in Germany. So that's all going well and on track.

I think the -- and operationally, everything is going well. If we think around the business units we've acquired, no surprises technically or operationally other than probably we're a bit more excited about Argentina than we had anticipated pre-acquisition. And I think all of that's demonstrated and comes through in our first half results with what we've seen with production, operating costs, emissions, et cetera.

I think where we're in the really early stages, though, is in driving the cost efficiencies through the expanded company. So we have to wait for a lot of contracts that we've assumed to come up for renewal. At that point, we can consolidate them with existing contracts we may have with the same suppliers. We need to rationalize systems. So we've taken on hundreds of new, for example, IT applications, and we're going through those and trying to rationalize and decide which ones we really need, because once we add them together with the applications we already had in Harbour Energy, there is duplication. And all of that just takes time.

So I think we'll finally get to a run rate on all of that or where we need to be probably over the course of the next couple of years, is how we think about it. And that's similar to the experience we've had with other acquisitions in the past. So early days from a rationalization and driving improvement standpoint, but so far, so good.

The Argentina question, Lydia, yes, we saw the news just yesterday, and I honestly haven't seen all of the details yet, but maybe just note a couple of things. The license that Total sold was in the volatile oil wet gas window of the Vaca Muerta. So if we think about how that might relate to our position in that play, our San Roque license, which is also operated by Total and is not a license that they've marketed, which I think is probably telling. So they're keeping that.

It's in the -- solidly in the oil window in the Vaca Muerta. So better position from a hydrocarbon phase standpoint. And we're actively working with Total and the other partners on what a development plan might look like. And we're anxious to start development once we get access to the unconventional license, which we're in the process of applying for.

Yes. I'll take the free cash flow guidance one, Lydia. Yes, I think it's fair to say that we're happy with performance in the first half of the year, and, of course, we're happy to be able to increase the free cash flow guidance again here. I mean it's only 4 months or so since we had the Capital Markets update, where we laid out our expectations over the 3-year period.

And yes, of course, it's a good start to that 3-year period, and it does give us confidence in delivering those targets that we set out, whether it's production or it's on the spending side. And the free cash flow guidance we gave at that point still holds true for us. So yes, I think it's been a strong first half. We've sort of tried to control the things we can control, whether it's taking care of the balance sheet or whether it's hedging or revisiting costs here. So yes, there's really no change here, Lydia, from what we said earlier in the year.

Our next question comes from James Carmichael of Berenberg.

You talked about sort of a payout ratio of 55% this year based on current free cash flow guidance. Just wondering if you're sort of thinking about introducing some form of cash flow-linked payout in the future? Or are you going to stick with the flat dividends topped up by the buyback?

And then maybe just a clarification on the buyback. I appreciate you giving yourselves until 31st of March, but a lot of the footnotes referenced are assuming it's completed by the end of the year. So what should we think about on timing there?

Just a quick one also on the transitional services agreement. Just wondering what that sort of means day-to-day when you exit that and whether there are any cost savings? If I could just sneak in a last one on Argentina, just the sort of steps and timing to getting that unconventional license would be helpful.

I'm going to take #3 and #1 in that order and then turn it – or, no, 3 and -- sorry, I've lost track. I'll take Argentina, then I'll turn it to Alexander. On Argentina, yes, it's -- the partners are in discussions with the provincial government around the unconventional license. So we had received approval for the 4-well pilot program a few years ago. That pilot program has now been completed. That means we move into the next stage where we apply for the actual license. Hopefully, we'll make that submission sometime in the coming months and get the license awarded not too long afterwards. It should be a pretty straightforward process.

And then Alexander, on the financial question.

Yes. So I'll take the one on cash flow and timing of buybacks and – yes, so when we introduced our capital allocation framework a bit earlier this year, you probably recognized quite a bit of it, James, from some work we had in the past, except some tweaks here and there. And I recognize that a lot of companies, they have more CFFO-linked dividend policies, but we thought it made sense to have a more fixed amount at that point in time. We're quite pleased with sticking with that somewhat more simplistic policy, if you will, and rather seeing how does this compare on a ratio at least for now.

And again, it's only been less than 6 months, 4 or 5 months since the capital markets update. So we're not really revisiting that at this point. But yes, we'll assess in the future -- in future periods if we get the mix of dividends and buybacks right or if it does indeed make sense to have fixed plus some more variable elements. But for now, there's no plans on changing that point.

So on the buyback timing, yes, I mean, there's a backstop date of March 31, which obviously feels like a long time from now. The numbers we gave, James, that was, yes, just simple math, saying that, that does assume that we managed to wrap this up by New Year's Eve, and that's how you get to the 55%. But the backstop date is end of March.

And James, your second question was on the TSA. So maybe just let me explain that a little bit. So if you think back to the Wintershall Dea transaction, we didn't buy the whole company. We bought assets, so business units owning and producing assets in a variety of countries around the world. We didn't buy the corporate center, and the corporate center was supporting all of those business units in Wintershall Dea. So that corporate center still exists, if you will. We refer to it as Wintershall Dea RemainCo sometimes.

And that corporate center, we had an agreement with them that they would continue to provide certain services to us, and we've been paying for that on a monthly basis so long as we needed them, and it expires in about a year, so in early September or by the end of September. There were, I think, maybe 11 components of that TSA. We've already completed 7 of them.

So they cover things like HR support. An example is German payroll. We don't have -- I didn't have a business in Germany before the transaction. So we didn't have a group able to do payroll or help us file German tax returns, for example. So those things continue to be provided for by the RemainCo. And then the biggest thing are all of their IT systems. So they've been providing those for us, so e-mails, technical applications, et cetera.

So during the past 11 months, we've slowly worked through all of those to be able to be in a position to run and operate all of those things ourselves and take over the administration of the contracts. I think we're through 7 or 8 of the 11 components already, have 2 or 3 to go. Everything is on track for complete handover, like I said, by -- during the third quarter, I think, by the end of September.

And the biggest one, as I said, was the IT services. So as of last week, we're now running all of those systems ourselves. We're in a period of hypercare in case we need it. So the Wintershall Dea RemainCo people are there and available for us should we need it. But so far, everything is going really well, and we're actually running and operating those systems and we have control of the contracts and are administering all of that ourselves.

So it's a process we've gone through before. I think with both the Shell and Conoco acquisitions, we did the same thing. This process, even though it was a much larger acquisition, we've done it faster than we did for those others. One of them, I think, took 18 months. So we're really proud of the capability we've built in-house to be able to understand and sort of methodically plan and then work through the integration transition process as we complete acquisitions. And that remains part of our skill set and strategy going forward.

What does it mean financially? That by the end of September, we'll stop having the cost of that transition services agreement. It doesn't completely go away, because if you think about it, we're now running those systems ourselves, so some of those costs are still going to be with us instead of them charging us for it. And we've also had to hire people to do things like German tax returns or payroll, et cetera. So we've been replacing those costs over time with our own overhead or G&A or other support.

So now that important phase is behind us. We've executed it well. But I think the really hard work begins. And I always hate to remind the team about this, but now the hard work begins, and that's rationalizing all of these systems with what we have today in Harbour. So do we need system X from Wintershall Dea and our system Y or can we consolidate those? Is one or the other the right choice for us? Or do we have to go to system Z, et cetera. So all of that work begins, and that's where we'll get real cost savings, and that will happen over the course of a couple of years.

But like I already said, we already have had a couple of good, I think, wins for us when it comes to supply chain things. So we renegotiated, for example, technical -- it was in geo modeling area -- so technical licenses with a global supplier that led us to have significant savings. We negotiated better rates on subscriptions with Microsoft, for example, so leveraging our scale, as well as subscriptions with things like WoodMac. So we're already starting to realize some of it, but much more to come. Again, we will take a bit of time.

Our next question comes from Mark Wilson of Jefferies.

We seem to be having an issue with Mark, so we're now going to hand over to Teodor Sveen-Nilsen from SB1 Markets.

A few questions for me. First, you mentioned you do see strong local gas demand in Argentina. I just want to know if that impacts the realized gas prices or if there was something you can do to capture that strong demand in terms of prices?

Second question that is on general cost inflation. One of your peers were recently pretty clear on that they see cost inflation across the industry. Could you just update us on what you are seeing on that front?

And my final question, that is on the new buyback. Did you consider to increase the cash dividend instead of announcing a buyback? And if so, what kind of consideration was made behind that decision?

I'll take, I think, the first and maybe the third one and hand it over to Alexander to talk a bit about inflation. On Argentina, we did see strong gas demand in Argentina, mainly weather-related, a little bit economy, but also largely weather-related. Pricing, our domestic gas is sold under contracts, so about half of it under long-term contracts at around $3.50 per million standard cubic feet, and the rest of it is sold into the domestic market on 1-year contracts and typically at fixed prices and generally between $3 and $4 per scf.

On the buybacks, yes, of course, we debate capital allocation and if we have excess cash flow, what to do. But as we said at our Capital Markets Day, because we view our current base dividend as relatively competitive in the market, more or less, compared to a wide group of our peers, our priority has been after focusing, of course, on debt reduction, is to return excess cash flow via buybacks, and that remains unchanged.

Alexander, a bit on inflation maybe.

Yes. No, thanks for that. And yes, just on the buyback versus dividend. I mean, we're mindful of what our peer group and others are doing as well and on our shareholder register. So it seems to be, we think, hopefully, a good balance here between the 2.

I mean on cost inflation, I mean, we're seeing some of it. But to be honest, I think the performance has been pretty good in the first half and we're able to offset much of what we've seen there with operational efficiency here. I think also for some of the bigger projects we have, they are pretty well advanced. So the cost move hasn't been -- we haven't really seen that much there. So I'm actually quite happy with the cost control that we've seen through the business.

We're somewhat -- I mean, we're somewhat exposed to FX, of course. FX for us in this business is a bit complex. So we, of course, try to look at this as holistically as we can, trying to mimic a bit of revenues coming from different currencies and where do we have costs and then, of course, balancing that with the financing. So yes, I mean, when the dollar weakens, any costs coming through in NOK, euro or pounds will, of course, be somewhat higher. But given that our revenues are significantly higher than the cost base, incrementally, that's good for our cash flow.

Our next question comes from Matt Smith at Bank of America.

A couple of questions, please, left. I think the first one, I think, clearly, the quantum and resilience of your near-term cash flow, free cash flow, is showing through very brightly by now. And I think perhaps that turns attention towards the sustainability of your production base and, more importantly, your cash projection into the next decade, as you already referenced.

So I guess on that topic, would you be able to give us a bit of an update on your key major projects, potential projects? You touched upon Kan and Zama in Mexico and also your gas discoveries in Indonesia. It sounds as though Tangkulo, in particular, the operator is moving things forward at a pace there. So any updates on those major projects would be useful.

And then the second question, please, would be on the U.K. portfolio, which is a very diversified business now, but U.K. volumes still remain very material for the group. I think at the very least, it's fair to say we're hoping to have better clarity and visibility on the U.K. sort of fiscal and regulatory framework later in the year, whatever form that may take. But do you think that will facilitate any further options to create value in that U.K. business from an M&A perspective, whether that's Harbour actually acquiring U.K. assets or potentially disposing some of them?

On the first one around key projects, yes, I touched on most of them already. So let me maybe start with Mexico. So Zama alone biggest undeveloped discovery in Mexico, extremely important not just to us, but also to the government and to Pemex. So it's getting a lot of focus and attention. Unfortunately, we're not completely in the driver's seat on this one with Pemex owning 51%. So it does involve a lot of collaboration not just with Pemex, but also with the Energy Ministry and the Finance Ministry about how we bring that forward.

We're mindful of Pemex's financial challenges, so that comes into play as well. So as you can imagine, a lot of discussion ongoing now around the design for the development, how to get to first oil as soon as we can. So thinking about things like phase developments and then trying to make sure that all partners are going to be in a position to pay their own way, if you will. So a lot of things to solve for there.

But the really -- the good news is from a subsurface standpoint, it's in shallow water. The reservoir is fantastic. Development itself and then ensuing production should be very straightforward. So we're all anxious to get to FID as soon as we can. But unfortunately, given the complexity of some of the discussions, I don't have a real clear line of sight to that. But hopefully, not in the too far distant future.

Kan, on the other hand, is a different story. We are the operator. We have 70% of the project. Total has the other 30%. Again, another high-quality discovery. Shallow water should be a straightforward development. So we're working as efficiently as we can through concept select and hoping to drive that to FID in the not-too-distant future, so possibly as early as next year, and then get it into production as soon as we can. So that one -- we're moving both forward as fast as we can and we'll see which one gets to the finish line sooner than the other.

Argentina, another big part of our 2C resources, already drilling away on the gas side on the APE lease. We'll pick a rig back up. As I said, we've taken a pause now given the increase in production. And we're at the capacity on the existing gas processing facility. So it took a pause on drilling, but we'll start back up next year on the gas license. And then at San Roque, as I've already talked about, applying for the unconventional license.

But lots of potential there, and we're really excited about how we're positioned there and also our interest in the LNG project, which --I think we're probably amongst independent oil and gas companies around the world, best positioned in the country, sitting there alongside major oil companies and, of course, the big domestic players.

In Norway, there's not a -- it doesn't get as much airtime as maybe it should because it's not a single big discovery or development going on. Instead it's this sort of steady pipeline of projects that are already in execution phase and moving towards FID over the next couple of years. And that's going to continue to be important for us as well.

And then the Andaman in Indonesia, you're absolutely right, really good gas discoveries there, multi-TCF play and a great geographic ZIP code given the growing demand for natural gas in the region. And now it's just working with our partners, Mubadala, who operate one of the big discoveries, and then ourselves, who operate the other license with a couple of discoveries on it, just working together in collaboration to find the best way forward.

Tangkulo, the discovery on Andaman South, the license operated by Mubadala, actually has the best reservoir quality. So it makes sense that, that one may be first out of the chute. So we're just working with them on how then we phase the development that also takes advantage of the discoveries over the entire area in which we're both partners to maximize value for both of us. So some movement forward there. But again, it will take some time. So those are, I think, the big ones, Matt.

Then in the U.K., yes, the consultation period on the EPL has ended. We're now waiting to hear from the government on what the outcome will be, and that probably won't be until later this year. Maybe at the autumn budget, we'll hear what the EPL will be replaced with once it expires in 2030. I think in the meantime, what we've done is make the most of what has been a challenging situation, and our team has done a great job driving down unit costs, executing the high payback or high-return quick payback opportunities we had in the portfolio.

We just successfully completed the maintenance on the J-Area in the first half of this year. So they're really firing on all cylinders in what's a challenging environment and in the midst of a redundancy program. So I give them a lot of credit for delivering what they have for us, and we really appreciate all the effort going on in Aberdeen.

Going forward, as we said, we do expect investment to decline in the country given the fiscal and regulatory conditions. That doesn't mean we don't still have some high-return opportunities. But overall, investment likely to decline and will be replaced by investment in Norway, Argentina over time, Mexico. And that in and of itself will transform our portfolio and overall give us lower unit operating costs as we replace the U.K., which is one of our highest unit operating cost countries even with the progress that's been made, and it's one of our highest tax environments as well. So that production will get replaced over time with production from other countries, and that's a good thing for us overall in the portfolio.

That was the last question. I guess, Mark Wilson, we've lost, he hasn't come back online. So we're going to close it there. Thanks to everyone for dialing in. We do know it's holiday time for some of you. So we appreciate the interest. And again, we're excited about what we've done in the first half and looking forward to continuing the delivery throughout the second half of this year and beyond. Thanks again.