Harbour Energy Stock

Thank you very, very much for joining us what is the 40th Barclays Energy and Power.

I haven't been here for all of them.

So I am delighted to be joined by Linda Cook, CEO of Harbour Energy. And Linda, thank you for joining us again. I say it's not the 40th one, but we've been doing. And what I love about our conversations with you is that you and the Harbour team are so busy. There's always a lot to talk about.

And so I'm going to start with some big picture strategic questions, and then we'll get into the asset base and go through that a little bit. And I think just to take a step back, it is hard to believe that the first acquisition for the group was nearly 10 years ago, I think, in the U.K. And obviously, Harbour has grown rapidly since that point, both in scale and in the geographic presence. So can you talk us through where you see Harbour standing now, particularly given the LLOG and Waldorf transactions in the past year. You had an Indonesian divestment. So I guess what I'm going to do, what is Harbour now? Where are we today?

So as you said, we did our first acquisition now almost 10 years ago. We started out as a private company based in the U.S., and we raised money at a time when most people were actually spending money on nonproducing U.S. onshore shale acreage. And we decided the smarter thing to do at that point in time was to do the opposite, which was a contrarian, of course, but to buy conventional producing assets outside the U.S. because they were out of favor at the time. And we felt like there was a space in the market for another global independent because a number of them had been disappearing. So if you think about -- for those of you who have been in the business for a while like I have, the Anadarkos of the world, Enterprise Oil, names that were sort of household names back at the time were all being acquired by major oil and gas companies, and we felt like it was creating an opportunity for us to go down that path.

And today, I think we've largely achieved that. We've now gone from 0 in terms of production through a series of acquisitions to 500,000 barrels a day. So I think we produced 509,000 barrels a day during the first half of this year. We have a good mix of oil and gas. We'd always set out to be diverse, not to be in a single country or basin so -- and also not to be just oil or just gas. So we have about 40% of our portfolio is oil. And I know many people in the U.S. when I say that, they're thinking, oh, that's too bad. You don't have more oil exposure. And then I go on to tell, actually, we also have 40% exposure to European gas, and that's trading at $130 per barrel today. So -- I think we hit $25 or $26 per MMBtu this morning. So that's a good balance for us in terms of the Brent exposure and the oil exposure. And then the other 20% is various domestic gas markets around the world.

We're in 5 core countries. We like that amount of diversity from a geography standpoint. So it's Norway, U.K., U.S., Mexico and Argentina. And that feels good to us, and all of them have interesting opportunities, and we'll probably talk about some of them. We have an investment-grade balance sheet, which has also been a name of ours. And we have what we think is a really competitive shareholder distribution policy that allows our shareholders to benefit through distributions when we're in times like we are today with commodity prices being elevated.

And I love what you talked about, there is the ability to capture the higher prices through both the oil side and the gas side. And when you take a step back and look at the portfolio now and the transactions that you pursued from what was the U.K. originally how important was it for you to add lower cost, lower tax jurisdictions as well?

Yes. That was definitely the driver behind our latest acquisition, which was the LLOG transaction in the U.S. that we always wanted to be in the U.S. conventional offshore production to the Gulf of Mexico at the time. Now Gulf of America made perfect sense for us. But it just had not found the right opportunity, even though we had kicked a lot of tires over the years. Portfolios were either non-operated or they were small without a lot of built-in growth. Maybe they had a lot of decommissioning. Maybe they were non-operated mostly gas. And what we were looking for was a set of assets that was oil-weighted and a lot of operational control and a really fantastic team, and we felt like we found that with the LLOG acquisition.

And as you said, lower tax jurisdiction so that as our production growth in the Gulf of America, and as our production in the U.K. declines, we're lowering the average effective tax rate across our portfolio and improving cash margins. So that was a big one of the many drivers of that transaction.

And when you think about a LLOG transaction, the timing was remarkable.

Yes. Thank you very much. For those who aren't familiar, we announced the deal in December of last year and then completed it in February. So it happened very quick, but it was literally just about 3 weeks or so, 2 weeks before the conflict broke out in the Middle East, so we got the timing just right on that one.

And how do you think about the prices that you have to pay to enter a new basin and in fact, the when you're making that decision, what metrics and how you think about that for CapEx for what is the sort of portfolio?

Yes. I mean we look at things from a lot of different ways, and it's always starting with asset quality. And what gap it is we're trying to fill in our existing portfolio or where we're trying to take the portfolio over time. At the very beginning of Harbour's journey when we had nothing, it was about how do we get to scale in at least 1 basin, and that opportunity happened to present itself in the U.K., which is why we started there. We didn't have a goal to be a U.K. oil and gas producer. We had a goal to be a global diversified one, but you have to start somewhere. So we saw an opportunity to get to scale in the U.K., which we did.

Then the focus really became on becoming more diverse and not having all of our eggs in the U.K. basket that drove the Premier Oil transaction in 2021. Barclays helped us with that. So thank you. I see some of your team here in the room. Then we set out to get scale outside of the U.K. And when we became publicly listed, sorry, with that transaction 2021, then we set out to get scale in some other countries, and that's what drove the Wintershall DEA data transaction, again, with some help from your team. It's an $11 billion deal that we completed, I think, 3 years ago now, and got us around 400,000-plus barrels a day and gave us scale in Norway, which was, I think, one of the big prizes.

There were 2 most important assets in that transaction with the Norwegian portfolio, which is hard to buy on its own because there's so much competition for pure Norwegian portfolios. But with Wintershall DEA, we were able to get -- I think we're in the top 10, top 5 maybe producers in U.K. -- Norway today, but we were able to get that through a package transaction. But actually, the most important asset for us in Wintershall DEA were billions of dollars of investment-grade bonds. And that gave us because we ported those into Harbour that gave us the investment-grade balance sheet that we have today, which has been extremely useful. So that was kind of the driver behind that one.

And then we've gone on to do LLOG, which I've already talked about. So they each have their own sort of personality, but we look at returns for sure, levered and unlevered returns. We look at the breakevens and the returns on the follow-on investment opportunities because it be a shame to buy something and pay for a lot of undeveloped reserves only to find they don't rank in your portfolio when you do your annual budget. And so we make sure we're testing to say that the returns are going to be durable and that these are things that are going to attract capital going forward.

And also important for us now keeping the oil and the gas mix, somewhere close to 50-50, improving our cash margins, lowering our effective tax rate or drivers and then making sure we're maintaining that investment-grade balance sheet, which was it's hard to get. And once you get it, you don't want to lose it.

Yes. When -- if I'm going to go into the LLOG side, a little bit difficult because not just if I think about there's a lot to different parts of the portfolio, you talked about for us to get into in a bit. But I'd like to spend a bit of a time there. Now you have the assets and most importantly, the people, what has pleasantly surprised you?

I would say there's no pleasant surprises because we expected it all, and it's all been good, and we expected good. So the people are fantastic. We knew that going in. They had a great reputation in the Gulf. They have, I think, the best exploration track record over the last 10 years in the Gulf of America. I think they've been responsible for 1/3 of the discoveries in the last 10 years. They've proven ability to develop deepwater projects. They have a good set of partners and relationships with their partners. They have a good portfolio of follow-on investment opportunities, so near infrastructure developments to lead to filling up the existing infrastructure. We've had success already in the last 2 licensing rounds in the U.S. that have taken place since we've completed the acquisition that we've been pleased with that, and has all given us enough confidence to make the decision to pick up a second rig, which just showed up and now under our control, I think, in the last few days, and we should be spudding our first well with that second rig here in the coming weeks. So -- so good so far.

And the integration has been relatively smooth. We're used to integrating acquisitions. This one was relatively easy because it was a single country acquisition in a country where we had no existing staff or organization. So there was nothing in the country to integrate it with. And we took the existing team intact as they were. And all we had to do is kind of build the interface between them and our London headquarters from a financial reporting controls certain corporate standards and policy standpoint. So relatively easy and so far, so good.

And so, we should be watching that well, sort of to see what happened with that one.

Yes, the first well one the second rig is called King's Road and happens to be an exploration well. So we're always...

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There's nothing more exciting, right, in our industry than drilling an exploration well, I think getting the phone call in the middle of the night...

We shall watch that we're keeping eye on that one. And we are in the U.S. So I do have to ask what are your thoughts on a U.S. listing? And you do now have U.S. production. We kind of -- we've added that there, this will become more Americas focused through time. So what are your thoughts there?

Yes. We get the question. We've had it in every meeting so far today that we found at this conference and it comes up in almost every investor meeting. And I understand the drivers for the question that all the data shows, similar companies trade better and that they're listed in the U.S. and in the U.K. And there are -- and we've looked at the case studies of companies that were U.K. listed and have moved their listing to the U.S. And I think what most of them have in common is that they have a large base of operations in the U.S. before they made that move. And until February of this year, we didn't have assets in the U.S.

So we now can check that box with a little checkmark maybe. Today, it's just around 35,000 barrels a day out of a portfolio of 500,000. So I wouldn't say it's necessarily a huge center of gravity for us yet. But as you mentioned, as our production in our U.K. declined, and we shift more investment to the western side of the Atlantic, our center of gravity is moving west. And I think as that happens, it becomes more and more viable of an opportunity or at least something for us to consider.

And I get -- obviously, we talked a lot about the U.S., and I've tried to focus on the U.S. because we're here. But there are a lot of contributors to Harbour as a whole. And I do want to spend a bit of time on the operational performance because it has been exceptional, actually. And with the 2Q results, the team listed the guidance again coming through. So can you just talk us through where we are on current guidance? And what has been behind the strength and performance for you?

Yes. It's -- my hats off to the team, and I'm really proud of the team that we've built in Harbour Energy, and they've done a phenomenal job from an operations standpoint. A lot of people start -- when they start a new oil and gas company, they focus on non-op because it's easier. Again, we did something about it, we decided to take the opposite approach with harder road but we felt like having operational control was important, and I'm really proud of the track record that the team has established in terms of reliability and efficiency and the targets we've set for ourselves around greenhouse gas emissions and our safety performance.

And first half of this year was no exception from that. We had extremely high reliability, in particular, across our operated assets around the globe. We've delivered some new developments in Norway ahead of schedule, and we completed the LLOG acquisition a bit sooner than we had anticipated. So the combination of all of those things led us to be able to upgrade our production guidance at mid-year to 490,000 to 500,000 barrels a day, which was fantastic.

And then we also give guidance for free cash flow, and we were able to upgrade that this improvement was a little bit more startling, I think are impactful. At the beginning of the year, if you think back to where we all were in January and February, other than you, most people were saying that the bottom was going to fall out of oil prices at the time. And we had a conservative -- like everyone did a relatively conservative outlook for commodity prices for 2026, and we established our first free cash flow guidance for this year at $600 million. At our midyear results, we upgraded that to $1.8 billion. So we tripled it with the combination of the good operational performance that we saw and the upgrade to our production outlook, but also, of course, the tailwinds created from what commodity prices have done over the last 6 months.

So the combination of those two things. If we use the -- I was saying earlier today, if we use today's forward curve, and I realize it's not right. If we use the forward curve from sometime last week, instead of $1.8 billion free cash flow this year instead will be around $2.3 billion or upwards of $2.3 billion. So we're quite leveraged to that. And it's quite exciting for us on a number of fronts, both from standpoint of shareholder distributions and the ability to pay down debt.

And those are extraordinary numbers, when you think about where you were at the start of the year to what you've been able to do is actually quite remarkable. So yes, we get that to achieve that. And just part of our -- I'm going to bring back a little bit to the operational side and because Harbour is a very different scale company to what it was even 2, 3 years ago, whether it was Wintershall DEA, the LLOG side, have you and the team have to change how you run things internally within that?

Yes. I mean, of course, we did from going -- from being a single-country company to now having 5 core countries. In particular, I've had to break down and bring in a COO because I can't do it all myself even though I would like to, but he's fantastic. So that gives us additional executive capacity. But I'd have to say nearly everyone on our senior team that we've built like myself, spent a lot of their career at global oil and gas companies, if not major oil and gas companies. And so we're actually used to running and managing more diverse global portfolios. And it's funny because when I thought about this particular point, what comes to mind is actually what I find harder is making sure that we don't turn ourselves into a mini major by implementing too many global processes and controls and introducing unnecessary bureaucracy.

So I probably spend more time making sure we're keeping ourselves lean and nimble, letting the individual country business units get after what they can get after best and us staying out of their way, but providing them support and making sure the necessary, but only the necessary controls are in place. So it's a balance between the two.

And that idea of sharing things across great and best practice. It allows you to do a little bit of that.

Yes. We focus a lot on that. We get the business unit leaders and technical teams together regularly. We've already had people from Covington, Louisiana, where our LLOG operation, our U.S. Gulf operations run out of in Aberdeen, people in Aberdeen there, we're sharing ideas across between Gulf of America and Mexico or offshore Mexico projects. And in particular, when it comes to working with supply chain on projects in both just across the country line in the Gulf. I think there's a lot of synergies we can get as we go to our developments in Mexico by working with contractors across both jurisdictions. So I think we'll get and continue to get a lot of benefit out of that.

And you did touch on Aberdeen there. And in the U.K. it's been an area of operational performance for you, which is on the one hand, a really good sign. But the fiscal regime stability in the overall environment is still challenging. So how are you thinking about that U.K. business? Obviously, you talked about the EPL changes, and how it sits within the Harbour portfolio, particularly given the Waldorf acquisition?

Yes. So it is a shame given the changes there to the fiscal regime but we deal with the cards that were there. We play the cards that were dealt. And so while we continue to lobby the government for -- to accelerate a change to a more sensible fiscal framework because it's coming, it's just not coming until 2030. We continue to advocate to bring that forward. But while there's not necessarily any real signs of that happening, we continue to do everything we can on the self-help front. And so the team does a fantastic job there. on the cost structure, we've been able to drive cost down from, I think, they were $20 a barrel 3 or 4 years ago. They were $18 last year, and our aim is to keep them there, if not lower, as long as we can. That gets harder and harder to do as you pull CapEx, pull investment out of the country and take your cash flow and invest it elsewhere.

But they're doing what they can, means production will continue to decline for us in the country. And we're taking the cash flow and we're reinvesting it into countries where the tax rate is more favorable. And because of that, we have higher return opportunities. It's a difficult thing to do, but that's the role the U.K. plays for us today, is continue to get as much cash flow as we can out of the existing assets, and we can redeploy it elsewhere.

And that links a little bit back to the point earlier, actually creating a business that has lower tax and lower cost ultimately...

Yes. So if we think about our production outlook going forward, we think we can keep production relatively flat at around 0.5 million barrels per day for the next several years with our existing portfolio. But that is happening while the U.K. production is declining. So that means we're replacing that with growth in production from the U.S., where we just picked up the second rig. So we'll have accelerated growth from there over time. Projects in Mexico, additional growth in Argentina as well.

And actually, watch Argentina. It is one of the areas that I am most excited about specially, monetization of that 2P [indiscernible] is actually, I think, a key catalyst for you. So can you just talk about the progress that you've made so far in Argentina and what we should be looking for as we go through the next 12 months?

Yes. So we're quite excited about Argentina, I think everybody who's there is excited about it at this point in time, it's hard not to drink the Kool-Aid, if you will, while you're there. But hopefully, we are pretty clear eyed about it all, and we're keeping our size of our investment there. Is kind of the right scale for a company of our size.

So what we have today is about 70,000 barrels per day of conventional -- mostly conventional production. The majority of it is coming from conventional producing assets offshore Tierra del Fuego natural gas that feeds the domestic gas market. And in addition to that, and that goes really well. It's Total operated. The team there does a fantastic job bringing new existing discoveries on stream in order to keep the existing infrastructure full. So kind of a high return, good margin business.

But the exciting part in the future is all around Vaca Muerta. And we have an interest in two really large licenses and oil license in the heart of the oil fairway, and we're in the final stages of negotiating the terms around that unconventional license with the local government. And once that's finalized, hopefully, in the coming weeks, we'll be picking -- the plan is to pick up a rig and start drilling in the oil fairway of the Vaca Muerta early next year. So that will be a big new milestone for us and something we're excited about.

And then second, our second license in the Vaca Muerta is in the gas fairway, we already have a 1-rig program going there now. The gas is going into the domestic market. Wells are getting cheaper to -- every well we drill is getting cheaper and better than the well before. So the learning curve with in the U.S. is alive and well in Argentina and more and more contractors are showing up with more and better equipment. Infrastructure is being built, new oil pipelines under construction or new gas pipelines under construction. So that's happening. And in addition, the first of what will be to at least 2 LNG projects in the country is under construction. We have a 15% stake in it. It's called Southern Energy LNG, it will consist of 2 leased Golar Floating LNG, vessels, total of 6 million tonnes per annum. And as I said, we have a 15% stake.

And why that's important for us is it gives us access to global gas markets for our gas instead of being confined to what the Argentinian gas market needs. And it enables us to -- we've applied for the project to be qualified under what's called the RIGI investment incentive regime and it was approved. So this is a big package of investment incentives. And in addition to the tax breaks, you're able to keep your revenues from the project offshore. So when you hear about people in the past getting burned in Argentina because they generate a lot of revenue in the country and they're unable to give -- get it out without taking a big discount on the exchange rate. If you're qualified under the RIGI, you can keep your revenues, which for us on the LNG project will be in U.S. dollars to be able to keep those out of the country and we reduce that sort of country risk that some people might think about when they think about Argentina. So a lot of milestones coming up and a lot of things we're really excited about.

And just -- I think just listening to you now is the idea of obviously, we've got LLOG with the growth coming through. We've got Argentina with growth coming through. This is really setting up for growth in free cash flow towards the end of the decade, I guess, coming, exactly. But the other part, and I want to say in Latin America, is Mexico because obviously, that's again a big growth area for you with Zama and Kan. So can you just talk through where we are on that now?

Yes, we have 2 discoveries in Mexico that we're now the proud operators of, which wasn't the case before. But we picked up interest in both through coincidentally, two different acquisitions that came as packages so that together, we're now the biggest private interest holder in both of those projects. We have a 70% interest in Kan, and we have a 27% interest in Zama. Zama is the largest undeveloped discovery in Mexico, it's shallow water, oil. Both of these are oil and both are in shallow water. And in Zama, we have Pemex also as our partner. And Pemex was the operator until late last year when they agreed to transfer operatorship to Harbour.

Both projects are making some good progress now. We're about to enter FEED in both of them. And if all goes according to plan, both will be FID ready towards the end of next year. And then we'll see once we get final cost estimates in to understand what the schedule really looks like. Hopefully, then we'll be able to take positive investment decisions. But for us, these are big projects, in total, almost 350 million barrels of reserves harbor share across both of those projects together, developing them simultaneously or in close timing with each other allows us to capture some synergies, in particular, through the contracting strategy. We have a common partner in Grupo Carso in both of those projects, that's the Carlos Slim upstream oil and gas sort of entity there in Mexico. So a really strong aligned and well connected partner there. And then we also have Talos as a partner in Zama. So really strong partnerships as well that we're excited about.

There is that idea of free cash flow growth and being able to go out towards the end of the decade. But if I bring all of this together, you've got a very solid production base and really resources in place. Where ultimately do you want to take Harbour going forward? Is it harder in the current macro environment as well? Because obviously, it gives a lot of cash flow, but it gives you a lot of choices.

Yes. If you're talking about M&A, definitely harder in the current macro environment. And we have tried and fairly successfully to avoid buying high, if you will. I think what we feel good about, though, is that with the portfolio we have today, we are able to keep production flat organically, and we don't rely on our need to go out and do an acquisition right now, because of the strength of the existing portfolio. So we really like that. And there are a lot of catalysts coming towards us in the next 1.5 years that are going to help keep us that way. And I've talked about a lot of more projects coming on stream in Norway, 1- and 2-well tiebacks, multiples of them in the pipeline, the second rig in the U.S. Gulf, the projects in Mexico heading to FID and then the opportunities we have in Argentina are all very exciting.

We want to keep the investment grade rating on our credit. Again, really important for us. We like to keep a mix of oil and gas that feels good to us. If we could dial it a bit back more towards oil. And I think that will naturally happen as we grow production in the U.S. and then bring the Mexico projects on stream because all of those are oil. So I think that happens will happen naturally or organically at least. So yes, just continuing to maintain our position as a global diversified independent 0.5 million barrels per day, investment-grade credit rating, distributing a lot of cash to our shareholders.

I think the idea of being an international E&P actually with a view of this sort of scale, I think, is important. And you touched on it right at the end there, the idea of the $1.8 billion of free cash flow guidance at the half year mark to market, $2.3 billion. What do you do with all the cash?

Yes, it's a good question. I think we have a good answer for it. I think there are 3 things we could do. We could increase CapEx, and I don't think that's the right thing for us to do. At this point in time, we have a team. They need to stay focused on what we're doing now, and we want to avoid that sort of knee-jerk reaction to changing your CapEx plans just because commodity prices might be higher or lower for 1 year to the next. So the other options we have are to return it to shareholders and pay down debt and our plan is to do both of those.

So with the $2.3 billion, if that's where we end up this year, we have a shareholder distribution policy that we recently put in place that aims to -- or that says we will pay out 45% to 75% of our free cash flow to shareholders each year. And where we land in that range will depend on where we are with leverage and debt levels. And having just completed the LLOG transaction earlier this year, our feeling now is we need to have a priority around debt reduction. So it's likely that for the full year, we'll be paying out towards the lower end of that range, precisely where? I don't know.

But if you think of, let's use 50% because it's around number $2.3 billion. It means $1.1 billion to $1.2 billion will go to our shareholders. And then we'll be able to make a big dent in our debt using the balance of it to pay down debt. We had $5.4 billion of net debt at mid-year being able to apply $1 billion to $1.2 billion or $1.3 billion against that feels like really good progress on that front.

Then on the shareholder distribution, $1.1 billion, we have a commitment to a dividend of at least $300 million. So we'll for sure do that. That leaves $800 million after that. We've already approved a $250 million buyback. So that takes us to $550 million. So we have another $550 million to decide what to do with. I think, for those of you who are familiar with Harbour, now we have a major shareholder in BASF, the chemical company. They were major shareholders in Wintershall DEA. And so as a result of that transaction, they ended up with a stake in Harbour. And they own 47% of the company at the beginning of the year. We now already have them down to 24%. So their stated intention to exit is now happening, which feels good for us because it was -- everyone was sort of waiting investors, in particular, we're waiting to see when and how that was going to take place. So through 3 different transactions, we have them now down to 24%. Hopefully, they'll continue on that journey.

But as they are executing their exit from the company. Being in the market with buybacks or having the firepower for buybacks and/or to the possibility of buying shares directly from them is also out there. And so I think that's sort of what makes sense for us in the near term.

And I think actually having them down further would be helpful as well. And I'm conscious of time. And Linda, this always happens we go far too quickly and there's a lot of things we haven't touched on. But if I can just go back to -- what your key message is for investors here in New York. If you want one thing for us to take away today?

Yes. I think it's a good time to think about investing in Harbour. What we hear from U.S. investors is that they're -- now that the U.S. onshore shale play has matured, they're looking at where to invest next. There aren't many companies like Harbour that have scale, investment-grade balance sheet and that good exposure to both Brent and European gas prices. And I think there's still room to run on European gas, and it may run for a while. And we have a proven -- the team has a proven track record of executing and delivering and operating well. And so I think we're worth taking a look at.

Absolutely, I cannot agree more. For me, there's a lot of upside potential there. And that's a brilliant way for us to end the session. And Linda, thank you very, very much, and thank you for everyone for coming.

Great. Thanks, Lydia.

Good morning, and welcome to the Harbour Energy 2026 Half Year Results. I will now hand over to Elizabeth Brooks, SVP, Investor Relations. Elizabeth, please go ahead.

Thank you, Aiden. Good morning, everyone, and welcome to Harbour Energy's 2026 Half Year Results Call. We have present with us today our CEO, Linda Cook; our CFO, Alexander Krane; and our Chief Operating Officer, Nigel Hearne.

Turning to today's agenda. Linda will begin by discussing our strategy and the highlights of another strong period for Harbour. Nigel will cover operational performance, followed by Alexander, who will take you through our financial results, guidance and outlook. We will then return to Linda for some closing remarks before we open up for Q&A.

With that, over to you, Linda.

Good morning, everyone, and thanks for joining the call. For those of you who are new to Harbour, maybe just a bit of a reminder. From the beginning, we've set a vision to build a leading global independent oil and gas company. Following our first acquisition nearly 10 years ago in the U.K., our priority was to build scale and to diversify, which we achieved through acquiring Wintershall Dea in 2024. And now with the recently completed LLOG and Waldorf transactions, we further strengthened the portfolio's resilience and longevity. As a result of our disciplined investment capability and active portfolio management, today, we're producing 0.5 million barrels per day centered on 5 core countries and increasingly weighted towards lower cost and lower tax basins with growth potential.

As we look ahead, we remain focused on continuing to execute our strategy, leveraging our scale and diverse portfolio to create value through our 4 strategic priorities: sustaining production at scale, building a competitive portfolio of reserves and resources, maintaining financial resilience and delivering competitive shareholder returns.

So now turning to highlights from our results announced earlier today. The first half was another strong period for Harbour operationally, strategically and financially. Excellent operational execution led to record production of more than 500,000 barrels per day with strong contributions from Norway and our new business in the U.S., where we've seen strong results from recently completed wells. This enabled us to improve our full year production guidance for the second time this year. We also made good progress advancing our priority development opportunities, including high-return projects in Norway and the U.S. alongside our longer-term growth prospects in Mexico and Argentina. And we completed 3 significant transactions that further strengthened and simplified the portfolio. Through the acquisition of LLOG Exploration in the U.S., we added a new core country with operated oil-weighted assets and a compelling growth profile in one of the world's most prolific oil and gas basins.

We enhanced the resilience of our U.K. business through the Waldorf acquisition, which delivers significant financial and operational synergies. And we divested our high-cost noncore assets in Indonesia following our exit from Vietnam last year, which further improved overall portfolio quality. As a result and supported by elevated prices for both Brent oil and European gas, we generated significant free cash flow during the period. Given this and our outlook for the second half, we've increased our full year free cash flow estimate to $1.8 billion. The performance has enabled us to pay down debt faster following the LLOG acquisition and accelerate delivery of material shareholder distributions, including a new $250 million share buyback program announced today.

And now I'm going to turn it over to Nigel, who will take you through our operational performance.

Good morning, and thank you, Linda. We've had a strong start to the year, benefiting from a more focused, competitive and resilient portfolio, excellent operational execution and our continued commitment to driving performance across the business. In times of volatility, how we operate is where we can have the greatest influence on outcomes, and we remain aligned on delivering against 3 operational priorities: operating safely and reliably, delivering margin expansion through cost and capital efficiency and converting our resources into reserves and into production profitably and competitively.

Our portfolio is focused on 5 core countries, which together account for around 85% to 90% of our production, reserves and resources. I'll shortly take you through the role each plays within Harbour, but as always, let's start with safety. Nothing is more important than keeping our people, contractors and communities safe. Most assets performed well during the period with notable safety improvements in the U.K. and Germany. However, our total recordable injury rate has increased, driven primarily by a number of minor incidents in Norway. Process safety performance was impacted by events at our onshore facilities in Mexico and now divested Indonesian assets. The issues are understood and are being actively addressed with learnings shared across the portfolio as we continue to strengthen barrier integrity, reinforce critical controls and standardize how we work across the business.

During the period, we further reduced our greenhouse gas intensity driven by continued portfolio high grading, including the divestment of our more emissions-intensive assets in Indonesia and Vietnam.

Turning to production. As Linda said, we had a record first half, averaging 509,000 barrels per day. This was driven by the addition of high-margin LLOG assets in the U.S. and outperformance from Norway, more than offsetting decline from the U.K. and our Indonesia and Vietnam exits. Production was also supported by strong reliability across the portfolio and new wells on stream, including in Argentina, the U.S. and Norway. This momentum has continued into July with production averaging 510,000 barrels per day, benefiting from the addition of the Waldorf assets and high rates from recent new wells online in the U.S. Cost and capital discipline also remains strong, and we are leveraging our scale to help manage inflationary pressures and foreign exchange headwinds.

Looking at our core businesses more closely, starting with Norway, our largest producing business and Europe's largest supplier of gas. Norway is a cornerstone of our long-term cash flow, underpinned by a pipeline of high-value, short-cycle infrastructure-led developments. Execution remains strong. We delivered first gas from our operated Dvalin North project ahead of schedule and under budget, thanks to strong drilling performance, while accelerated project delivery has increased the number of developments expected on stream this year from 3 to 5.

We also made good progress maturing our next set of projects with the Gjøa Subsea project approved during the period and 5 further projects targeted for FID this year. Together, these have the potential to deliver 100% reserves replacement in Norway. To support this activity, we've extended our partnership with the Transocean Norway rig, providing continuity and helping protect capital efficiency in a tightened market.

At the same time, we're continuing to replenish the portfolio through exploration. The Omega Sør discovery is being fast tracked for first gas in 2027 and 2 further exploration wells are expected to spud later this year. And we were awarded 9 new licenses in the recent licensing round. All of this is against the backdrop of the European gas market. The TTF gas price, a benchmark for our Norwegian gas, averaged circa $15 per million standard cubic feet during the first half and is at elevated levels today as Europe is struggling to replenish storage in advance of the onset of winter.

Moving to the U.K. While the fiscal backdrop remains challenging, strong delivery by the team and portfolio actions have improved the resilience and free cash flow outlook of the business. Our high degree of operational control has enabled us to drive performance and maintain our position as a low-cost operator in the basin, supporting competitive margins and cash flow. Well intervention activity remains a key focus, targeting additional low-cost, short-cycle barrels with around 10,000 barrels a day of our 2026 production generated through such activities.

Other highlights of the first half included the renegotiation of a lower rate for the Catcher FPSO contract and our farming at Fotla, a high-return tieback opportunity to our operated Britannia hub with final investment decision targeted by year-end. We're also getting after decommissioning, looking to drive efficiencies through scale, collaboration, engagement with government and new technologies. And post period, we completed the Waldorf acquisition, which added production and reserves, increased our interest in our operated Catcher field and delivered significant financial synergies.

Turning now to Argentina. Production averaged 74,000 barrels per day in the first half, underpinned by stable low-cost gas production from our offshore conventional CMA-1 license. We also hold more than 700 million barrels of oil equivalent of 2C resource, primarily in the Vaca Muerta shale play. At San Roque, we continue to advance the unconventional license application, supporting plans for a potential 16-well black oil development beginning in 2027. At Aguada, which is in the gas window, 9 new wells came online in the first half with ongoing drilling and completion efficiencies continuing to drive lower well costs.

We've also seen good momentum on Southern Energy LNG, a 6 million tonne per annum LNG export project, which is on track to start up at the end of 2027 and will provide our Vaca Muerta gas with access to global markets. Overall, Argentina represents a significant platform for capital-efficient reserves and production growth over the long term for Harbour.

The U.S. Gulf of America is our newest business unit. It's a fully operated oil-weighted portfolio centered around 3 deepwater hubs at Who Dat, Buckskin and Leon-Castile. Production was 33,000 barrels per day in the first half and is on track to increase to 65,000 to 70,000 barrels per day by 2028. Combined with the attractive fiscal terms, we're adding high-margin barrels, which underpin material free cash flow growth through to the end of the decade. Year-to-date, we have delivered the Leon 1 well, a fifth well at Buckskin that has outperformed expectations and a sidetrack at Who Dat with initial production rates above plan. We're also on track to approve the Who Dat East development this month. And looking ahead, activity will accelerate through the remainder of the year with further drilling across our key hubs with the arrival of the second rig, which will support continued production growth beyond 2028.

We also see significant infrastructure-led exploration upside with the Kingsroad well expected to spud later this year and recently acquired ocean bottom node seismic data, leveraging the LLOG team's strong exploration track record to unlock further prospectivity. In addition, we secured 12 operated leases near existing infrastructure in the recent Gulf lease rounds, adding further running room in this prolific oil and gas basin. These results reinforce our confidence in both the quality of the assets and the growth potential of the portfolio.

And finally, Mexico. Mexico represents one of our most material long-term growth opportunities with our operated Zama and Kan projects capable of adding reserves equivalent to almost 2 years of harvest production. During the first half, we continue to optimize both developments to improve returns and reduce risk. Invitations to tender for the major Zama feed packages are expected to be issued shortly, and we also expect to sign the preliminary agreement to secure the FPSO for the Zama development by the end of this month, marking important steps in maturing this nationally significant project. In addition, partner alignment has been strengthened through Grupo Carso's increased participation across both projects. In summary, we remain on track to achieve FID readiness of Zama and Kan by the end of 2027.

My final slide sets out our CapEx and production outlook and highlights how the portfolio has shifted, becoming more operated and focused on lower cost, lower tax basins with significant running room. From 2027, we expect to spend $2 billion to $2.3 billion per year, which will allow us to sustain production between 475,000 and 500,000 barrels per day through the end of the decade, while driving further high-grading the portfolio as we focus on our most competitive projects. Importantly, while overall production remains stable, the underlying quality of that production continues to improve. with declining higher cost U.K. volumes increasingly being replaced with higher margin growth in the U.S., new volumes in Norway and Argentina and over time, Mexico.

And with that, I'll now hand over to Alexander to cover the financial review.

Great. Thank you so much, Nigel, and good morning to everyone dialing in. We have delivered another strong set of financial results, reflecting excellent operational performance, the benefits of recent portfolio actions and strict capital discipline. Record production, coupled with our increased exposure to higher oil and gas and European gas prices drove increased earnings, significant free cash flow generation and rapid deleveraging post completion of LLOG, a clear priority for us. As a result of the strong first half and higher assumed commodity prices for the second half, we've increased our full year free cash flow outlook to $1.8 billion from $1.4 billion previously.

And in line with our distribution policy, the higher free cash flow is translating directly into material additional shareholder returns, starting with the $250 million share buyback announced today. Together with our interim dividend of $150 million, this represents a 22% increase in shareholder distributions compared to the same period last year.

The first half of this year was marked by elevated and volatile oil and European gas prices, largely driven by events in the Middle East. Against this backdrop, Harbour is well positioned. We have a large-scale diverse portfolio with 40% of our production exposed to dated Brent WTI and 40% to European gas benchmarks. We also benefited from a competitive cost base and investment-grade credit ratings supported by a prudent financial policy. Oil realizations for the period increased to $90 per barrel pre-hedge and $84 per barrel post hedge, supported by higher benchmark prices and strong sales differentials, particularly for our North Sea crude.

Our European gas production also benefited from higher benchmark prices, further enhanced by our ability to direct volumes, particularly from Norway to the highest netback markets. This delivered pre-hedge European gas realizations of $15 per Mcf and $14.4 per Mcf post hedge. And as you can see, European gas prices continue to trade significantly above Henry Hub.

Let's turn to the income statement on Slide 19. Higher realized oil and gas prices and strong production combined to drive revenue up more than 20% and adjusted EBITDAX up by 15% compared to the first half of 2025. Unit operating costs for the period of $13.3 per BOE were up slightly from first half last year with higher volumes offset by FX headwinds, higher fuel costs and the addition of the LLOG portfolio, which carries higher unit operating costs near term as production ramps up.

Other operating costs include a $200 million net overlift position, while adjusted net financial items were higher period-on-period, driven by multiple smaller items, including increased interest costs. Now as usual, there are a number of offsetting items relating to derivative gains, losses and FX movements. Note 6 to the financial statements provides more detail on these for those interested. After taking all of these elements into account, our adjusted after-tax profit increased 37% to $562 million with a lower effective tax rate of 77%.

Adjusted earnings per share came in at $0.28 per share, up 27% compared to first half of 2025. Overall, these results demonstrate improved profitability and, more importantly, that profitability is translating into strong cash generation.

During the period, we generated $4.5 billion of operating cash flow. We invested $1 billion of total CapEx, and we paid $1.5 billion in taxes. This resulted in strong free cash flow generation of $1.8 billion, materially derisking our full year free cash flow outlook. It's important to highlight that the first half free cash flow benefited from timing of tax payments with $1.5 billion of cash taxes paid in the first half relates to 2025 tax liabilities. In contrast, second half cash taxes are expected to be 60% higher at approximately $2.4 billion, reflecting our 2026 tax liabilities. After M&A transactions and funding, cash balances doubled over the first half to $1.6 billion, resulting in increased liquidity of $4.1 billion.

Strong EBITDAX and free cash flow generation over the period helped us materially accelerate debt reduction and reduce leverage following completion of the LLOG acquisition. As a result, we ended the period with net debt of $5.4 billion, only $1 billion higher than the start of the year despite the $3.2 billion LLOG acquisition and leverage broadly unchanged at 0.7x and below our through-cycle target of less than 1x. Post period end, in July, we completed the Waldorf acquisition for $163 million, immediately unlocking more than $400 million of cash and further strengthening our balance sheet. Also in July, we refinanced our $3 billion revolving credit facility, extending its maturity to 2031 and securing improved commercial terms, including a 30% reduction in margin. This is thanks to continued strong support from our banks and demonstrates the financial benefits of our portfolio transformation, enhanced scale and stronger business profile.

Moving to our free cash flow outlook and shareholder distributions. We've increased our full year free cash flow outlook to $1.8 billion. That's 3x higher than the $600 million expected at the start of the year. This reflects a strong first half, upgraded production guidance and assumed second half commodity prices of $80 per barrel dated Brent and $16 per Mcf for European gas. Partially offsetting the FX headwinds, primarily the stronger NOK, which increases the U.S. dollar value of our Norwegian tax payments and a modest working capital outflow.

So what does this mean for shareholders? Well, in March, we introduced a new distribution policy to return between 45% and 75% of free cash flow to shareholders, including a minimum annual dividend of $0.1610 per share, equating to approximately $300 million. This allows our shareholders to benefit from periods of strong free cash flow like we're seeing today, while enabling us to continue to reinvest in the business, delever and pay competitive shareholder returns through the commodity price cycle.

Based on our updated free cash flow outlook of $1.8 billion, we expect to return a minimum of $800 million to shareholders. This includes at least $500 million of additional returns above our annual dividend, leading up to $1 billion to go towards the balance sheet. Consistent with this approach, we've announced today an interim dividend of $150 million and a new $250 million share buyback, accelerating additional returns into 2026, reflecting our confidence in the 2026 free cash flow outlook.

So turning now to guidance and outlook. We've lifted the lower end of production guidance for the second time this year, now set at between 490 and 500 KBOE per day. Full year 2026 unit OpEx and CapEx guidance is unchanged, while we've increased our free cash flow outlook to $1.8 billion, assuming Brent and European gas average $85 per barrel and $15 per Mcf for the year.

Our free cash flow sensitivity is unchanged with a $5 per barrel change in Brent impacting full year free cash flow by $170 million, while a $1 per Mcf change in European gas impacts free cash flow by $150 million. Forward curves, especially for oil remain volatile. But if I use today's curves where gas prices are higher, we would expect free cash flow to be closer to $2 billion.

My final slide here is a reminder of our 3 capital allocation priorities, which we have continued to deliver against. First, we remain committed to maintaining an investment-grade balance sheet. Following major transactions, we have consistently prioritized debt reduction and higher commodity prices, combined with strong operating performance means we have made some good progress here. Second, we aim to maintain a robust and diverse portfolio. By investing around $2 billion to $2.3 billion annually from 2027 in high-return growth projects increasingly in low tax, lower-cost basins, we expect to sustain high-margin, cash-generative production at scale well into the next decade. And finally, we will continue to deliver competitive shareholder returns through the cycle.

As you've heard today, our distribution policy enables shareholders to benefit from our strong free cash flow generation with 2026 cash returns to be significantly above the annual dividend. Based on our free cash flow outlook of $1.8 billion, we expect to deliver a minimum of $800 million of shareholder returns. That's $500 million above the base dividend. The $250 million share buyback announced today is therefore just the start with at least a further $250 million still to be allocated.

So with that, thank you for your attention. I will now hand you back to Linda for some closing remarks.

Thanks, Alexander and Nigel. I think, in summary, we've had an excellent first half operationally, financially and strategically. And with strong production in July and the Waldorf transaction now completed, we're carrying that momentum into the second half of the year. Our portfolio actions over the past 3 years have transformed the outlook for Harbour, delivering greater scale and resilience with production increasingly weighted towards lower cost, lower tax basins with significant running room.

At the outset of this year, we expected 2026 to be somewhat of a transition year for free cash flow as we completed the 3 announced transactions, integrated the LLOG portfolio and started shifting investment towards higher return opportunities. However, higher oil and European gas prices, together with our continued excellent execution, have brought forward the benefits of this transformation as reflected in today's strong results. This includes a significant step-up in free cash flow that has enabled the acceleration of debt reduction and also the delivery of additional cash returns to our shareholders as demonstrated by the new $250 million buyback announced today.

Looking ahead, I'm confident that the quality of our portfolio and the capability of our team both position us well to continue delivering against our strategic priorities, sustaining production at scale, strengthening our position in our core countries, maintaining financial resilience and delivering competitive shareholder returns.

And with that, I'm going to hand it back to our operator, Aidan, who's going to open the call for questions.

[Operator Instructions] Our first question comes from Alejandra Magana from JPMorgan.

My first one is on production. Can you help us bridge from the 509 in the first half and 510 in July to your full year guidance range? Is the implied stepdown predominantly planned maintenance? Or are there any other moving pieces we should consider?

Yes. Thanks, Alejandra. I'm going to let Nigel take that question, if you don't mind. Nigel?

Yes, Alejandra. So normally, for Harbour, second half of our year is typically back-end loaded with more maintenance activity. So that's what you see a little bit in the production forecast. We've got some large shutdowns to work through. You also see that in production and in some of the OpEx impact actually. And we're also holding a placeholder for potential hurricane impact in the Gulf of America. So hopefully, we don't see that, but we're holding a placeholder for both the turnaround getting through the turnarounds and hopefully, we get through with very little storm impact in the Gulf.

So that's primarily where our production is slightly lower for the second half of the year. This is all planned activity. It also includes some of the deferment of -- proactively deferring some of the activity that we had planned in the first half of the year. Given the high margin, the high price environment we saw, we took the decision to push some of that into the second half of the year.

Very clear. My second question is on capital allocation. Given the very strong cash generation in the first half and essentially neutral free cash flow implied in the second half, along with the tax lag into 2027, how are you thinking about balancing incremental shareholder returns with further deleveraging within your existing framework?

Thanks. Alexander?

Yes. Thanks for the question, Alejandra. Yes, I mean, first, as you pointed to, and we talked a bit about it in the presentation, and you'll see it from some of the materials, the cash tax payments are clearly weighted towards the second half of the year. So that is a key driver for the split between free cash flow in the first and the second half of the year.

Yes, as Nigel talked about, excellent execution in the beginning part of the year, and that translates into the strong cash flow you're seeing in the first half of the year as well. And then depending on how quick we do all the maintenance and whether there's any hurricanes or anything in the second half, that, of course, will impact free cash flow from operations in the second half of the year as well.

Now when it comes to allocating that capital to reinvesting in the portfolio to repaying debt to shareholder -- return to shareholders, again, we're trying to be predictable and in line with what you've seen from us in the past, but also living within the policy here. So repaying debt after the LLOG acquisition, a clear priority, probably doesn't surprise anyone. And then on shareholder returns, I mean, we are happy and very pleased to be accelerating the first buyback now into early August already. So that is a good start, we think. And hopefully, that demonstrates some of the confidence and we're seeing in operations and in cash flow. So that is the starting point.

And then we'll just have to see going through the second half of the year and seeing how we deliver and how markets develop in terms of pricing too, and we'll come back then with more details on further returns, Alejandra.

Yes. Maybe just to add to that, I think the one thing that we're not doing is increasing investment. So we have generated more cash flow than we originally expected for this year. And of our 3 priorities, that cash is going to paying down debt and cash distributions to shareholders, and we're holding our CapEx levels flat this year with that guidance being unchanged. And we feel like that's the right thing to do.

The next question comes from Mark Wilson of Jefferies.

Very impressive results. I mean, your U.K. production, in particular, is remarkable. And you mentioned the fiscal backdrop is challenging, but that production resilience right now suggests it could obviously grow if the shackles are removed. I think that's the truth for the global industry. You also speak, Linda, to migration to higher growth, lower-cost jurisdictions as a continued strategy. So very simple question, can we rule out any material U.K. North Sea deals to grow that because, obviously, there are some things in the market?

Mark, thanks for the question. Glad you got the Star 6 this time and you're able to get through to us. Yes. The question about the bp announcement recently is one, of course, we expected might come up. But we don't comment on specific portfolio matters or future M&A prospects. But I think reflecting on it, what bp have said makes sense. It's the same reason why Harbour has decreased investment in the U.K. in favor of acquisitions and investments elsewhere, such as the U.S., even Mexico, Norway.

The existing fiscal environment here in the U.K. means that projects -- investments in the U.K. just struggle to compete with international opportunities. And that's because of the fiscal environment. So for now, I would say our focus is on integrating the Waldorf assets. We just completed that acquisition less than a month ago and continuing to maximize the value of our existing U.K. business as best we can, and thanks for calling that out. The team continues to do a really top-notch job, both operationally, also with respect to safety, doing just that, strengthening our cash returns and production as best we can under the somewhat difficult circumstances.

Okay. Very clear. The second point, Alex mentioned the returns and the variables in the second half, not least operational hurricanes and how the market prices pan out. But at the same time, your leverage is below 1x. Your $800 million as a minimum return is 45% of that free cash flow guidance. And so one suggests there is clear upside to the upper end or further in that 45% to 75% range, depending how the year pans out. Would that be fair?

Yes. I mean we -- thanks for that, Mark. Again, we put some thought into the distribution policy when we announced it in the beginning of the year. And we tried to be clear and link this to free cash flow generation. And we did set that range because, as you know, we're keeping one eye on the balance sheet as well and wanting to strengthen and delever. So we are working hard, not just operationally and doing what we can in U.K. and in other places, but also financially thinking how to optimize that balance.

Yes, we obviously derisked the full year estimate quite a bit by sitting at $1.8 billion of free cash flow generation already at the halfway mark, but it is at the half year mark. So we're pleased and feeling confident about progress so far, and that's why we're accelerating buybacks into August already. But there is still a few months to go this year with the items you just mentioned and commodity prices, somewhat volatile as well. So yes, where we'll end up in that range, we'll have good discussions with our Board and others on that as the year progresses. And that full year free cash flow is being derisked by the payer.

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

Also congrats on strong results. Two questions from me. First, on the increased guidance for free cash flow up to $1.8 billion per year. How much of that is driven by higher-than-expected prices for first half and how much is driven by other factors? So that's the first question.

Second question, that is on the buybacks, the increased buybacks you announced today. Why don't you pay that as cash dividend? Or what's the considerations between cash dividend versus buybacks on the increased distributions?

Yes. Thanks for the questions, Teodor. On the $1.8 billion outlook for the year, this is obviously a mix of having delivered production at elevated levels, I would say, a bit higher than what we expected. So that accounts for a bit of that. And then, of course, it's the increased oil and gas prices. They probably account for closer to $500 million or so. So if I would break it down, it would be probably up with $0.5 billion of oil and gas prices. The performance Nigel and the team have had adds another $100 million. But then there are some adjusting items just on FX, working capital that takes just a tad down as well. And you've probably seen the strong local currency in Norway, which is somewhat of a headwind for that free cash flow.

How to return this free cash flow to shareholders? Well, there are a couple of tools in our toolbox for that as well. Again, we're trying to find the right balance here of having a steady minimum dividend, and then we can top it up with, well, even more dividends or buybacks or participating in any blocks for major shareholders as we've seen in the past 3 to 4 months. So yes, trying to find that balance. We think it's wise to be in the market, supplying extra liquidity and buying back our stock, especially when we've seen some larger blocks from some of our shareholders coming out. And we think that is the most value accretive right now for our shareholders to be consistently in the market there with the bid. So that's the thinking behind that, Teodor.

Okay. Understood. That's clear. And if I may, just one final question here. You discussed Zama. Could you confirm that first oil on Zama still is planned for 2029?

Yes. Thanks, Teodor. First oil on Zama, why don't we let Nigel comment on that one, please?

Teodor, thanks for the question. Our current focus is getting into FEED here before year-end, decision gate and then into FID, we'll be targeting depending on development concepts and early phase production, which per our schedule should be towards the end of 2029. So a lot of work to do ahead of us, but we're doing what we can to make sure we have the most capital-efficient development of that project that we can.

[Operator Instructions] Our next question comes from James Carmichael of Berenberg.

Just coming back to the U.K., you obviously touched on the bp situation. I'm just wondering if you've had any further discussions with the new Energy Minister and whether there's any sort of further thoughts on how U.K.'s view on the sector might have changed. I appreciate it's early days, but just any sort of thoughts you've got around that.

Then also just the noncore parts of the portfolio, I guess you talked about sort of North Africa and others previously, just what the market is like for selling assets, which might be less of a priority for the business is like today. And then just lastly, so if I can, on the distributions again. That $800 million minimum, should we expect that to be sort of GBP 800 million cash paid in 2026? Or will some of it sort of fall over into next year?

James, I'll take the first couple of questions and then let Alexander talk a bit about what we might expect in terms of timing of distributions. Let me take your divestment question or noncore question first. We do have 5 core countries. It doesn't mean the others aren't important. They just are smaller in scale, less impactful, and we don't necessarily see the sort of competitive investment opportunities that we do in the others.

How is the market for divestments? I think we always turn to commodity prices first and foremost. The first thing I'd say is we try to avoid buying assets when commodity prices are really high, and I wouldn't put it all just to luck, but we're pleased with the timing of our LLOG exploration acquisition, which we announced late last year. I think when everyone was predicting oil prices to be in the 50s as we speak and since we've completed that transaction, I think we've averaged closer to $90 for the production there. So that timing we got good. But as you're right, the opposite is this would be a good time to sell.

And we will just -- I would just say that portfolio management remains a very active part of our strategy. And if interesting offers come along for assets, we would always reasonably consider what's in the best interest of our shareholders for the longer term.

Your first question, I think, was about the U.K. government. You're right, it's early days. So you wouldn't necessarily expect we've had a lot of time to engage with the new Energy Minister or DESNZ, Secretary of State for DESNZ or the Prime Minister yet. But I think what we have done is, through industry associations and otherwise, try to get the message across that the North Sea continues to have a vital role and can play an even bigger role when it comes to U.K. energy security. And of course, it means even more than that. It also means investment and jobs.

The key to realizing that is going to continue to be the fact that we need a more supportive fiscal framework. That's just essential, as I've already said, if U.K. projects are to compete for capital within companies that have opportunities outside the country. And it's that capital that's going to drive jobs and secure value for the U.K. from its domestic resources. So we're encouraged by some of the language we hear from the government about willing to be pragmatic. We're hoping that it recognizes the role the sector can play, including not just energy security, but in its wider reindustrialization agenda. So we'll continue to do what we can to influence the situation. And then the last question was that timing of distribution.

Yes. Thanks for that, James. Well, as a starting point, we were planning to see more of the 2027 payout relating to a full year in 2026. However, due to the strong performance we've seen so far and the derisking that we've already done, we are very pleased to be accelerating this now into August of 2026 already. And like I said, the $250 million buyback today, well, that's just the start. And if you keep these assumptions related to free cash flow generation for the year, it would be another $500 million coming back to shareholder then as a minimum. So we will continue to do the buyback now this year, whether some of it will end up being returned in 2027, yes, that probably will. It's a full year estimate with a full year cash flow for the year, but I think it's a really strong start. It's really pleased to be out accelerating and doing this buyback now already, and we'll take it from there.

Yes. And it's just a real signal, I think, as Alexander already said, and the confidence we have in our ability to deliver really strong free cash flow. Thanks, James.

Thank you. I will now hand back to Linda for closing remarks.

Okay. Great. Thanks to everyone for joining the call today. Again, we're really pleased with the strength of our first half performance and looking forward to carrying that into the second half and continuing to deliver for our shareholders. So thanks again for joining the call today.

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.