Buyback fires up FTSE 250 energy stock

New-look Harbour Energy (LSE:HBR) today stepped up its pace of shareholder returns by announcing a buyback that will take distributions for this year to an estimated 55% of free cash flow.

The leading oil and gas independent updated its projections following strong operational delivery in the wake of its transformational acquisition of upstream Wintershall Dea assets.

• Invest with ii: Top UK Shares | Share Tips & Ideas | Cashback Offers

Last year’s $11.2 billion (convert) deal added positions in Norway, Germany, Argentina, Mexico and North Africa, trebling Harbour’s production to the 488,000 barrels of oil equivalent per day in today’s half-year results.

The Wintershall acquisition was the fourth in the company’s 10-year history, having acquired Chrysaor Holdings and a package of UK North Sea assets from Shell for $3 billion in 2017.

This was followed in 2019 by the acquisition of ConocoPhillips UK North Sea for $2.7 billion, making the company the UK’s largest oil and gas producer. In 2021, the all-share merger between Chrysaor and Premier Oil resulted in Harbour securing a London listing.

The Wintershall deal means that Harbour now has Woodside, US-based Hess and Aker BP in its peer group.

• Daily Trading Flash: 10 most-traded shares 7 August 2025
• eyeQ: time to fill up on BP?
• BP, L&G and Rolls-Royce - the City gives its results verdict

In today’s results, Harbour tightened annual production guidance to 460-475,000 barrels following a strong performance so far this year.

The company’s estimate on unit operating costs, which fell 30% in the first half due to the addition of the lower-cost Wintershall Dea portfolio, has also been improved. 

Having sold its high-cost Vietnam business, Harbour also took the decision in May to reduce its Aberdeen-based organisation by 25%. This is in line with reduced levels of UK investment due to the “challenging domestic fiscal environment”.

Its exploration focus is on its two largest operated hubs in the UK, J-Area and the Greater Britannia Area, as well as existing production hubs in Norway and Argentina. 

Harbour said it generated $1.36 billion of free cash flow in the first half, reflecting strong production and second-half weighting of tax payments and summer maintenance. 

This cash flow was directed towards the $227.5 million payment of its 2024 dividend and reduction of debt by $900 million to $3.8 billion at the end of June.

Based on assumptions for a Brent crude price of $68 a barrel, Harbour today increased its free cash flow outlook for this year by $100 million to $1 billion.

• Growing tax hike rumours overshadow interest rate cut
• FTSE 100’s flying, but fund investors aren’t buying
• Is it time to sell this FTSE 100 high-flyer?

It also announced a new $100 million share buyback programme and an interim dividend of 13.19 US cents worth $227.5 million, taking distributions for the year to a projected 55% of free cash flow.

The FTSE 250-listed shares jumped 17.6p to their highest since March at 221.9p.

Chief executive Linda Cook said: “We remain confident in our ability to deliver on our capital allocation priorities.

“These include further debt reduction and additional shareholder returns via share buybacks, as demonstrated by the new $100 million buyback programme announced today.”