HARBOUR ENERGY PLC (HBR) Q2 2026 Earnings Call Transcript

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, Aidan. Good morning, everyone, and welcome to Harbour Energy 2026 half-year results course. We have presented today our CEO, Linda Cook, our CSO, Alexander Crane, and our Chief Operating Officer, Nigel Hearn. Turning to today's agenda, Linda will begin by discussing our strategy and the highlights of another strong period for Harbor. Nigel will cover operational performance, followed by Alexander, who will take you through our financial results, guidance, and outlook. We'll then return to Linda for some closing remarks before we open up the Q&A. With that, over to you, Linda.

Good morning, everyone, and thanks for joining the call. Well, for those of you who are new to Harbor, maybe just a bit of a reminder. From the beginning, we set a vision to build a leading global independent oil and gas company. Following our first acquisition nearly 10 years ago in the UK, our priority was to build scale and to diversify, which we achieved through acquiring Wintershaldea in 2024. And now with the recently completed log and Waldorf transactions, we further strengthen the portfolio's resilience and longevity. As a result of our disciplined investment capability and active portfolio management, today we're producing half a million barrels per day centered on five 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 four 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 harbor 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 three significant transactions that further strengthened and simplified the portfolio. Through the acquisition of log 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, non-core 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 log 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 three 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 five core countries, which together account for around 85 to 90% of our production, reserves and resources. 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 UK 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 learning shared across the portfolio as we continue to strengthen barrier integrity, reinforce critical controls and standardise how we work across the business. During the period, we have further reduced our greenhouse gas intensity driven by continued portfolio hydrating, 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 log assets in the US, and as performance from Norway, more than offsetting decline from the UK 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 US and Norway. This momentum has continued into July, with production averaging 510,000 pounds per day, benefiting from the addition of the ward off assets and high rates from recent new wells online in the US. Cost and capital discipline also remain 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 the cornerstone of our long-term fast flow, underpinned by a pipeline of high-value, short-cycle, infrastructure-led developments. Execution remains strong. We delivered first gas from our operating De Barlin 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 spring this year from 3 to 3, we also made good progress maturing our next set of projects, with the Eurosub C project approved during the period and five further projects targeted for FID this year. Together, these have the potential to deliver 100% reserves replacement in Norway. To support this activity, we have extended our partnership with the Transocean Norway rink, providing continuity and helping protect capital efficiency in a tightening market. At the same time, we will continue to replenish the portfolio through exploration. The Omega saw discovery as being fast-tracked for first gas in 2027, and two further exploration were expected to spread later this year, and we were awarded 9 new licences in the recent licensing round. All of this is against the backdrop of the European gas market. The TTF gas price, a benchmark for Norwegian gas, averaged circa $15 per million stc.ft 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 UK, 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 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. While 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 include the renegotiation of a lower rate for the capture FBSO contract, and our farm into Fottler, a high-return tie-back opportunity for 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. At post-period, we completed a walled-up acquisition, which added production and reserves, increased increased our interest in our operated capture field and delivers 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 CMA1 license. We also hold more than 700 million barrels of oil equivalent of 2C resource, 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 Ape, 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 have 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 vacuum water gas with access to global markets. Overall, Argentina represents a significant platform for capital-efficient reserves and production growth over the long term for Harvard. The U.S. Gulf of America is our newest business unit. It is a fully operated, oil-weighted portfolio centred around three deepwater hubs at Houdat, Buckskin and Leon Castile. Production was 33,000 barrels today in the first half and is on track to increase to 65,000 to 70,000 barrels of today by 2028. Combined with the attractive fiscal terms, we are adding high margin barrels which underpin material free cash flow growth through to the end of the decade. Here today, we have delivered the Leon 1 well, a fifth well of buckskin that has outperformed expectations and a sidetrack at Houdat with initial production rates above plan. We are also on track to improve the Houdat 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 will also see significant infrastructure-led exploration upside, with the Kings Road well expected to start later this year, and recently acquired ocean bottom load seismic data, leveraging the large 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 volume gas basin. These results reinforce our confidence about the quality of the assets and the growth potential of the portfolio. And in Mexico, Mexico represents one of our most material long-term growth opportunities with our operated Zama and Kahn projects capable of adding reserves equivalent to almost two years of harvest production. During the first half, we continue to optimise both developments to improve returns and reduce risk. Invitations to tender for the major ZAMA fee packages are expected to be issued shortly, and we also expect to sign the preliminary agreement to secure the FBSO 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. In summary, we remain on track to achieve FID readiness of Zama and Khan 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 to 2.3 billion dollars 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 Finally, while overall production remains stable, the underlying quality of our production continues to improve, with declining higher cost UK volumes increasingly being replaced with higher margin growth in the US, new volumes from Norway and Argentina, and over time, Mexico. And with that, I will 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 and gas prices drove increased earnings, significant free cash flow generation and rapid de-leveraging post-completion of log. A clear priority for us. As a result of the strong first half and higher assumed commodity prices for the second half, we have increased our full year free cash flow outlook to 1.8 billion from 1.4 billion previously. And in line with our distribution the higher free cash flow is translating directly into material additional shareholder returns, starting with the 250 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. 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 brand WTI and 40% to European gas benchmarks. We also benefit 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, affected 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 higher netback, It delivered pre-hedge European gas realizations of $15 per MCF and $14.4 per MCF. As you can see, European gas prices continue to trade significantly above Henry Hub. Let's enter 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 at the BEX 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 log portfolio which carries higher unit operating costs near term as production ramps up. Other operating costs include a 200 million net overlay 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%. The earnings per share came in at 28 cents 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 de-risking our full-year free cash flow outlook. It's important to highlight that the first half of 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. 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 that reduction and reduce leverage following completion of the log 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 log acquisition, a leverage broadly unchanged at 0.7 times and below our through-cycle target of less than 1 times. Post-period and in July, we completed the Walworth 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. There's a chance to continue strong support from our banks and demonstrate a financial benefit of our portfolio transformation, enhance scale, and stronger business. Let's look at free cash flow outlook and shareholder distributions. We have increased our full-year free cash flow outlook to $1.8 billion. That is three times 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 those are FX headwinds, primarily the stronger Nokia which increases the U.S. dollar value of our Norwegian tax payments and a modest working capital output. So what does this mean for shareholders? Well, in March, we introduced a new distribution policy to return between 45 and 75 percent of free cash flow to shareholders, including a minimum annual dividend of 16.10 cents per share, equating to approximately $300 million. This allows our shareholders to benefit from periods of strong free cash flow like we are seeing today, while enabling us to continue to reinvest in the business, delever and pay competitive shareholder returns through the commodity price cycle. For 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 have 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. 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 for a full year 2026 unit apex and topics 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 $16 per MCF. 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 three 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 by investing around 2 to 2.3 billion annually from 2027 in high-return growth projects, increasingly in low-tax, lower-cost basements. We expect to sustain high-margin cash-generative production at scale well into the next. And finally, we will continue to deliver competitive shareholder returns through the cycle. As you 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, The 250 million share buyback announced today is therefore just the start and with at least a further 250 million. So with that, thank you for your attention. I will now hand you back to Linda for some closing remarks.

Thanks Alexander and Nigel. In summary, we have had an excellent first half operationally, financially and strategically. And the 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 three years have transformed the outlook for Harbor, 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 three announced transactions, integrated the log 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, Aiden, who's going to open the call for questions.

If you would like to ask a question today, you may do so by using the raise hand function on Zoom. If going in by phone, you can press star 9 to raise your hand and star 6 to unmute once prompted. I'll now pause for a second to let you raise your hands. The question comes from Alejandra Magana from JPMorgan. Alejandra, please unmute and go ahead.

Hi, good morning. Thank you for taking my questions. My first one is on production. Can you help us bridge from the 509 in the first half and 510 in July? to your four year guidance range? Is the implied step down predominant when you plan maintenance or are there any other moving pieces we should consider?

Thanks Alejandro. I am going to let Nigel take that question if you don't mind.

Yeah Alejandro, so normally for Harbour, the second half of our year is typically back and loaded with more maintenance action forecasts, 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 game through the turnarounds and hopefully we get through with very little a 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, thanks for the colour. My The second question is on capital allocation, given the very strong cash generation in the first half and essentially neutral Free Castle 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 for the question Alejandro. First, as you pointed to, and we talked a bit about it in the presentation, you'll see it in 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, Nigel talked about excellent execution in the beginning parts 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 shareholder, 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 that after the log 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 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. And we'll come back then with more details on further returns, Alejandra.

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 three 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.

Understood. Thank you.

Mark Wilson of Jefferies. Mark, if you'd like to unmute, then go ahead. And Mark, if you'd like to unmute, you need to press...

That threw me. Good morning. Very impressive results, I mean your UK 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 of into migration to higher growth, lower cost jurisdictions as a continued the new strategy in the market.

Okay, Mark, thanks for the question. Glad you got the star six this time and were able to get through to us. Yeah, the question about the BP announcement recently is one of course we expected might come up, but you know, we don't comment on specific portfolio matters or future M&A prospects. But I think, you know, reflecting on it, what BP has said makes sense. It's the same reason why Harbor has increased 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 UK 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. that, strengthening our cash returns and production as best we can under the somewhat difficult circumstances.

Thank you for that. 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 one times, your 800 million as a minimum return is 45% of that pre-cash flow guidance upside to the upper end or further in that 45-75% range depending on how the year pans out.

Thanks for that, Mark. Again, we put some part into the distribution policy, what we announced at 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 are 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 UK and other places but also financially thinking how to optimise that balance. We obviously de-risked the four-year estimate quite a bit by sitting at $1.8 billion of free cash flow at the halfway mark, but it is at the half-year mark. 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 where I mentioned and commodity prices somewhat volatile at all so up in that range we'll have good discussions with our board and others and that full year free cash flow is being very clear, thank you, congratulations

excellent results.

The student comes from Theodore Spine-Milson of SB1. Theodore if you would please unmute and ask your question.

Good morning, I expect my questions also come to rest on strong results. Two questions from me. First, on the increased guidance for free cash flow up to 1.8 billion dollars 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 increased buybacks you announced today. Why don't you pay that as cash given? What are the considerations between cash given versus why I've actually increased distributions?

For the question, on the 1.8 billion outlook for the year, this is obviously a mix of having having delivered production at the 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 half a billion of oil and gas prices, the performance, Nigel and the team have had at another 100 million, but then there are some adjusting items just on FX, working capital, that takes just a pat down as well. And you've probably seen the strong local currency in Norway, which is somewhat ahead then 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 pop it up with, well, even more dividends or buybacks or participating in any blocks for major shareholders, as we've seen in the past three to four months. So, yeah, trying to find that balance, we think it's wise to be in the markets supplying extra liquidity and buying back our stock, especially when we've seen some larger plus from some other shareholders coming out. And we think that is the most value-accreative right now for our shareholders to be consistently in the market there with the bid. So that's the thinking behind that, Sildur. Okay, understood.

That's clear. And if I may just want to find a question on the EU, this is Sama, could confirm that first oil on Sama's daily plan for 2029?

First oil on Sama, why don't we let Nigel comment on that one, please? thanks for the question um our current focus is getting into feed uh here before year end um decision gate and then into fid we'll be targeting uh depending on development concepts and early phase production which uh per our schedule should be towards uh the end of 2029 so um a lot of work to do ahead of us um but we're doing what we can to make sure we have the most capital efficient development of that project that we can oh yeah thanks definitely As a reminder, if you'd like to ask a question today, a quick reminder that you can do so

by using the raise hand function on Zoom, or if you're standing in by phone, you can press star 9 to raise your hand and star 6 to unmute once. The next question comes from James Carmichael of Berenberg. James, please unmute and ask your question.

Hi, morning, guys. Just coming back to the UK, you obviously touched on the BEP situation, but 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 the UK'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 non-core parts of the portfolio, I guess you talked about sort of North Africa and others previously, just what the market's like for selling assets, which might be less of a priority for the business it's 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 $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 non-core question first. We do have five 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's 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 we wouldn't put it all up just to luck but we're pleased with the timing of our log 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 you know 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 UK government and 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 Desnes, Secretary of State for Desnes 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 UK energy. But 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 UK projects are to compete for capital within companies that have opportunities outside the country. And if that capital is going to drive jobs and secure value for the UK 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. And including not just energy security but in its wider re-industrialization agenda. So we'll continue to do what we can to influence the situation. And then the last question was that timing and distribution.

Yes, thanks for that James. 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 have seen so far and the de-risking that we have already done, We are very pleased to be accelerating this now into August of 2026 already. And like I said, the 250 million buybacks, well that's just this large. And if you keep these assumptions related to free cash flow generation for the year, it would be another 500 million coming back to shareholders then as a minimum. So, you know, we will continue to do the buyback now this year. Whether some of it will end up being returned in 2027, yeah, that probably will. It's a full year estimate with a full year cash flow for the year. So, but I think it's a really strong start. It's really pleased to be out accelerating and doing this buyback now already. And it will take it from there.

Yeah, 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.

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.