Harbour Energy has agreed a $3.2 billion deal to acquire LLOG Exploration Company LLC, describing the transaction as delivering on its “long-standing ambition to establish a presence in the deepwater Gulf of America.” The agreement, which combines $2.7 billion in cash with $0.5 billion in new Harbour voting ordinary shares, marks a strategic entry into the US Gulf of America and creates “another core business unit alongside Norway, the UK, Argentina and Mexico.”
Harbour said that with LLOG it had “found the right combination of high-quality assets and a talented team, providing a strong strategic and cultural fit with our company.” The transaction, it added, “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 company emphasised that it was “proud to build on LLOG’s strong heritage in the Gulf of America,” highlighting its “advantaged portfolio and exceptional team, led by CEO Philip LeJeune,” which has made LLOG “one of the region’s most respected operators.” Following completion, LLOG will become Harbour’s new Gulf of America business unit and “will incorporate the LLOG name in order to preserve and leverage its history and reputation.”
Harbour characterised the LLOG portfolio as “high-quality, long-life, oil-weighted assets” with low breakeven costs and production of 34 kboepd, supported by operating costs of $12 per barrel of oil equivalent and a blended US tax rate of about 23%. Key operated assets include Who Dat in Mississippi Canyon and Buckskin and Leon‑Castile in Keathley Canyon, with production “expected to approximately double by 2028 underpinned by a leading position in the prolific Lower Tertiary Wilcox play.”
The acquisition “adds 2P reserves of 271 mmboe,” increasing Harbour’s 2P reserves by 22% and extending group reserves life from 7 to 8 years while supporting overall production at around 500 kboepd to the end of the decade. Harbour also pointed to a “deep inventory of high return, short cycle, infrastructure-led drilling opportunities,” including the potential for eight wells across 2026 and 2027 and more than 80 operated leases, predominantly in Mississippi Canyon and Keathley Canyon.
Under the Membership Interest Purchase Agreement, Harbour will fund the cash element through “an underwritten $1 billion bridge facility, a $1 billion term loan and Harbour’s existing sources of liquidity,” alongside issuing 174,855,744 new voting ordinary shares valued at $0.5 billion or 215 pence per share. On completion, LLOG Holdings LLC will own 11% of Harbour’s listed voting ordinary shares, with 70% of its consideration shares subject to a one‑year lock‑up, and existing shareholders holding 89% of the group, subject to the impact of the current buyback programme.
Harbour said the acquisition is “accretive to Harbour across key operational and financial metrics,” including a 7% uplift in H1 2025 production and increased operational control over 2P reserves from 39% to 50%, while also lowering the effective tax rate. Free cash flow is expected to be “accretive on a per share basis from 2027,” supporting an intention in 2026 to move its distributions policy “to a payout ratio approach… incorporating a base dividend and share buybacks, to align with international and US oil and gas peers.”
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Post‑completion, Harbour’s priorities 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.” LLOG, for its part, said 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,” while remaining committed to “the same high ethical and operational standards” that have guided the business for 48 years.
The company nonetheless cautioned that the acquisition is conditional on customary approvals and that completion, targeted for late Q1 2026, may not occur by the 1 July 2026 long stop date, in which case either party may terminate the agreement. It also highlighted risks including potential negative market reaction if the deal fails, increased indebtedness and leverage, integration complexity, reliance on key LLOG personnel and the sensitivity of LLOG’s business to commodity prices and extensive US regulatory and environmental requirements.
