Harbour Energy Plc (LON:HBR) has announced that it has entered into an agreement to acquire LLOG Exploration Company LLC from LLOG Holdings LLC for $3.2 billion, comprising $2.7 billion of cash and $0.5 billion of Harbour’s voting ordinary shares. The Acquisition marks Harbour’s strategic entry into the US Gulf of America, strengthening its global portfolio and establishing another core business unit alongside Norway, the UK, Argentina and Mexico.
| Establishes top tier position in deepwater US Gulf of America[1] |
| Adds conventional offshore oil assets with significant operational control |
| Increases production, extends reserves life and improves margins |
| Delivers differentiated growth profile with significant exploration opportunity |
| Free cash flow per share accretive from 2027 |
| Material and increasing free cash flow supports competitive shareholder returns and investment grade profile |
Linda Z Cook, CEO Harbour Energy, commented:
“Today’s announcement delivers on Harbour’s long-standing ambition to establish a presence in the deepwater Gulf of America. With LLOG, we found the right combination of high-quality assets and a talented team, providing a strong strategic and cultural fit with our company. The transaction positions us as a leading player in a region with well-established infrastructure, a supportive fiscal and regulatory environment and opportunities for additional growth. The oil-weighted, deepwater LLOG portfolio enhances our production profile, provides significant operational control, extends reserve life and improves our margins. In addition, the LLOG organisation brings decades-long experience in the Gulf of America with a successful track record, creating a solid foundation for Harbour in the area.
“We are proud to build on LLOG’s strong heritage in the Gulf of America. Its advantaged portfolio and exceptional team, led by CEO Philip LeJeune, have established the company as one of the region’s most respected operators. Following completion, LLOG will serve as Harbour’s new Gulf of America business unit, which will incorporate the LLOG name in order to preserve and leverage its history and reputation.
“We look forward to completing the transaction and welcoming Philip, his leadership team, and the entire organisation to Harbour, and to the future we will create together.”
Alexander Krane, CFO Harbour, commented:
“The LLOG business complements our portfolio with a high-quality, long-life asset base underpinning strong production and cash flow growth profiles. This transaction also builds on the recently announced agreements to acquire Waldorf in the UK and divest assets in Indonesia, materially enhancing our free cash flow outlook. Consistent with our practice following previous acquisitions, our priorities following completion of the transaction will be the safe integration of assets and people, ensuring a robust and resilient portfolio, continuing to deliver competitive shareholder returns and strengthening our investment-grade credit rating profile.”
Philip LeJeune, LLOG CEO, commented:
“We are pleased to be joining an outstanding company and believe that by uniting our teams and expertise, we’re unlocking new possibilities, empowering our people, and setting the stage to achieve extraordinary results with Harbour. As we look to the future, we remain dedicated to maintaining the same high ethical and operational standards that have helped guide us for the past 48 years, but with a new partner whose shared vision of growth, innovation, and operational excellence will help us achieve significant successes through a strong collaborative culture.”
Acquisition benefits
The Acquisition provides a unique opportunity to acquire one of the most successful, privately-held operators in the US Gulf of America and is a strong strategic fit for the Company.
| § Entry into the deepwater US Gulf of America |
| – Establishes a material presence in one of the world’s most prolific offshore basins with well-established infrastructure and supplier base along with strong local and federal government support |
| – Complements Harbour’s offshore assets and capabilities in Mexico, Norway and the UK |
| – Creates supply chain synergies across the Company including in relation to Harbour’s projects in Mexico |
| § High-quality, long-life, oil-weighted assets |
| – Low breakeven assets with production of 34 kboepd[2], operating costs of $12/boe[3] and a blended federal and state tax rate of c.23%[4] |
| – Key assets include Who Dat in Mississippi Canyon, and Buckskin and Leon-Castile (recently online) in Keathley Canyon – all operated by LLOG |
| – Long life assets with 2P reserves life of 22 years[5] |
| – Production expected to approximately double by 2028 underpinned by a leading position in the prolific Lower Tertiary Wilcox play |
| § Accretive to Harbour’s key portfolio metrics |
| – Supports overall Harbour production at c.500 kboepd to end of the decade |
| – Adds 2P reserves of 271 mmboe[6], increasing Harbour’s 2P reserves[7] by 22% |
| – Enhances Harbour’s 2P reserves life from 7 years to 8 years[8] |
| – Increases Harbour’s oil weighting, OECD presence and operational control |
| – Accretive to margins and lowers Harbour’s effective tax rate |
| § Upside potential underpinned by significant drilling and lease inventory |
| – Deep inventory of high return, short cycle, infrastructure-led drilling opportunities, including the potential for 8 wells across 2026 and 2027 |
| – Operates more than 80 leases, predominantly in Mississippi Canyon and Keathley Canyon[9] |
| § Established team with leading reputation |
| – Highly experienced team with a proven track record of exploration, development and production in the deepwater Gulf of America |
| – Ability to leverage LLOG capabilities to support Harbour’s development projects offshore Mexico |
| – Expect to secure 11 deepwater leases from recent Gulf of America federal lease sale |
| § Strengthens long term financial position |
| – Free cash flow per share accretive from 2027 |
| – Intention to move distributions policy to a payout ratio approach in 2026, incorporating a base dividend and share buybacks, to align with international and US oil and gas peers |
| – Material and increasing free cash flow supports competitive shareholder distributions and deleveraging |
| – Supports Harbour’s investment grade balance sheet with enhanced scale, reserve life and free cash flow coupled with entry into US |
Consideration structure and financing
Under the terms of a Membership Interest Purchase Agreement, Harbour will acquire LLOG for $3.2 billion, comprising:
| § | $2.7 billion of cash consideration to be funded through an underwritten $1 billion bridge facility, a $1 billion term loan and Harbour’s existing sources of liquidity |
| § | 174,855,744 new Harbour voting ordinary shares issued to LLOG Holdings LLC at an agreed value of $0.5 billion or 215 pence per Harbour share |
On completion, LLOG Holdings LLC will own 11 percent of Harbour’s listed voting ordinary shares with Harbour’s current shareholders owning 89 percent (such percentages subject to adjustment resulting from Harbour’s current share buyback programme which is expected to complete in the first quarter of 2026). Of the voting ordinary shares issued to LLOG, 70% will be subject to a one-year lock-up following completion of the Acquisition.
Conditions to closing
Completion of the Acquisition is subject to customary closing conditions for a transaction of this size and nature including the expiration or termination of all waiting periods under the HSR Act in the US. Completion of the Acquisition is expected to occur in late Q1 2026.
Board of directors’ recommendation
The Harbour board of directors believe that the Acquisition is in the best interests of the Company and its shareholders as a whole.
Management will host a live online presentation for analysts and investors at 10:00 GMT on Monday 22 December. A replay will be available on our website afterwards.
[1] LLOG ranks within the top 10 companies in the Gulf of America by remaining resources based on Woodmac and Rystad data
[2] H1 2025 working interest production per management estimates
[3] Based on H1 2025 operating costs divided by H1 2025 working interest production as per management estimates
[4] Based on management estimates
[5] Based on year end 2024 2P working interest reserves divided by H1 2025 working interest production, per management estimates
[6] Year end 2024 2P working interest reserves
[7] Year end 2024 2P working interest reserves
[8] Based on year end 2024 2P working interest reserves divided by H1 2025 working interest production, per management estimates
[9] Includes 11 leases that LLOG anticipates being awarded following the Big Beautiful Gulf 1 Sale
