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Summary
- Deal includes $2.7 billion cash, $500 million in shares
- Deal may boost Harbour’s output to 500 kboepd by decade’s end
- Harbour expects acquisition to enhance free cash flow from 2027
Dec 22 (Reuters) – Britain’s North Sea-focused Harbour Energy said on Monday it would buy deepwater oil and gas exploration and production company LLOG Exploration for $3.2 billion, in a deal giving it entry into the Gulf of Mexico.
LLOG was one of the winners at the U.S. government’s first sale on December 10 of oil and gas drilling rights in the Gulf since 2023.
The acquisition will help Harbour’s overall production reach about 500,000 barrels of oil equivalent per day by the end of the decade, and be accretive to free cash flow from 2027, the company said.
Shares in the company fell 6.4%, however, which Jefferies analyst Mark Wilson attributed to investor concern over the effect of the deal on Harbour’s balance sheet.
The deal will consist of $2.7 billion in cash and $500 million in Harbour’s voting ordinary shares, the company said in a statement.
The cash component will be funded through an underwritten $1 billion bridge facility, a $1 billion term loan, and existing liquidity, it said.
Harbour had net debt of $4.2 billion as of September 30, according to the company’s trading and operations update in November.
The Gulf of Mexico remains a prime target for oil majors such as BP, Shell and Chevron because of its vast deepwater reserves, easy access to U.S. infrastructure and long-term production potential.
Its appeal has been boosted by President Donald Trump’s administration’s promotion of oil and gas exploration over investment in renewable energy.
On completion of the deal, LLOG’s parent firm, LLOG Holdings LLC, will own 11% of Harbour’s listed voting ordinary shares, with current shareholders holding the remaining 89%, it added.
Reporting by Ankita Bora in Bengaluru; Editing by Subhranshu Sahu and Emelia Sithole-Matarise
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