Harbour Energy: $388m profit on $4.3bn EBITDA – the gap absorbed by debt and depreciation

Harbour Energy reported first-half 2026 results. Revenue rose 23.4% year on year to $6,392m, EBITDA grew 20.8% to $4,307m, but net profit was only $388m at a 6.1% margin. Net debt increased from $4.4bn at end-2025 to $5.2bn on 30 June 2026, and the EV/EBITDA LTM multiple of 1.47 makes the stock look attractive on price, though the gap between operating and net profit remains the key question.

Key takeaways

— Revenue rose 23.4% to $6,392m, but EBITDA added only 20.8% – margin slipped from 68.8% to 67.4%

— Net profit of $388m at a 6.1% margin – the gap to $4,307m EBITDA is explained by depreciation and debt servicing

— Operating cash flow of $2,773m covers interest payments but not fully capital expenditure

— Net debt rose from $4.4bn at end-2025 to $5.2bn on 30 June 2026, with a net debt/EBITDA LTM ratio of 0.79

— EV/EBITDA LTM of 1.47 – the stock trades below its own history, offering a margin of safety

— The portal's model puts upside to fair value at +313%

Attractiveness

Key figures, USD bn

Revenue rose 23.4% to $6,392m, but EBITDA added only 20.8% – margin slipped from 68.8% to 67.4%

Harbour Energy's revenue for the first half of 2026 rose 23.4% year on year to $6,392m. This is a notable acceleration versus last year's dynamics, but it did not translate into proportional EBITDA growth: the metric increased 20.8% to $4,307m. The 2.6 percentage point gap means costs grew faster than revenue.

The EBITDA margin slipped from 68.8% to 67.4%. The reason is higher operating costs, not detailed in the report but visible in the difference in growth rates. The company retains a very high margin for the oil and gas sector, indicating low production costs, yet the downward trend is a concern.

For an investor, the absolute margin level matters less than the fact that with revenue up 23.4%, operating profit rose only to $2,760m. This means each additional dollar of revenue brings less profit than before. If this trend continues, pressure on profitability will intensify.

Net profit of $388m at a 6.1% margin – the gap to $4,307m EBITDA is explained by depreciation and debt servicing

Harbour Energy's net profit for the first half of 2026 was $388m, with a net margin of 6.1%. This is extremely low for a company with $4,307m EBITDA. The $3,919m gap between EBITDA and net profit is the key feature of the report.

The main items eroding profit are depreciation and debt servicing costs. Operating profit was $2,760m, meaning depreciation and other non-cash items accounted for about $1,547m. Then interest and taxes are deducted from operating profit, resulting in $388m net profit.

This structure is typical for a capital-intensive oil and gas business, but it means shareholders receive only a small share of operating cash flow. Meanwhile, operating cash flow of $2,773m exceeds net profit sevenfold, indicating significant non-cash charges and a high debt level.

Operating cash flow of $2,773m covers interest payments but not fully capital expenditure

Harbour Energy's operating cash flow for the first half of 2026 was $2,773m. This is 20.8% higher than a year earlier and fully covers interest expenses, which remain significant judging by the gap between operating and net profit.

However, after deducting capital expenditure, which is traditionally high in the oil and gas industry, free cash flow may be constrained. The company does not disclose the exact capex figure in the provided data, but low net profit and rising debt indicate that investments are partly financed by borrowings.

For shareholders, it is important that operating cash flow of $2,773m is more than sufficient to service debt, but it is not enough to significantly reduce leverage without cutting capex or seeing higher hydrocarbon prices.

Net debt rose from $4.4bn at end-2025 to $5.2bn on 30 June 2026, with a net debt/EBITDA LTM ratio of 0.79

Harbour Energy's net debt on 30 June 2026 was $5.2bn, up from $4.4bn on 31 December 2025. The $0.8bn increase over six months reflects capital expenditure and interest payments not fully covered by operating cash flow.

The net debt/EBITDA ratio for the trailing twelve months is 0.79. This is a moderate level for an oil and gas company, leaving room for manoeuvre. However, the rise in absolute debt is concerning amid falling margins and a high capex base.

Interest expenses, though not disclosed separately, remain significant given the gap between operating profit of $2,760m and net profit of $388m. At the current pace of debt growth and with hydrocarbon prices unchanged, the company may face the need to refinance or cut investment.

EV/EBITDA LTM of 1.47 – the stock trades below its own history, offering a margin of safety

The EV/EBITDA multiple for the trailing twelve months is 1.47. This is a very low level, suggesting the market values the company at a substantial discount to the value of its operating profit. For comparison, Harbour Energy has historically traded at higher multiples, though exact three-year data is not in the facts.

Market capitalisation is $5,232m, and net debt is $5,170m, giving an enterprise value of about $10,402m. With LTM EBITDA of $6,577m, this yields the 1.47 multiple. Such a low level reflects market concerns about cash flow sustainability and high debt.

According to the portal's model, which reprices EBITDA at current commodity prices and a target multiple, the upside to fair value is +313%. This is the portal's own estimate, not a market consensus, and it points to a significant margin of safety at the current price.

The portal's model puts upside to fair value at +313%

The portal's own model estimates the upside to Harbour Energy's fair value at +313%. The calculation is based on repricing EBITDA at current commodity prices and applying a target EV/EBITDA multiple to the current market capitalisation. This is not a consensus forecast or a target price, but an analytical tool showing how far the current valuation diverges from fundamental value at current hydrocarbon prices.

Such significant upside is explained by the extremely low current EV/EBITDA LTM multiple of 1.47. If the company can sustain EBITDA at the LTM level of $6,577m and the market re-rates it at a higher multiple, the shares could rise substantially. However, this requires stable oil and gas prices and a reduction in debt.

Investors should understand that the portal's model is not a guarantee but an estimate under certain assumptions. Realising this potential depends on the company's ability to generate cash flow, service debt, and return capital to shareholders. With net profit of $388m for the half-year, dividend payments remain uncertain.

Valuation on the latest reported figures

Bottom line

Harbour Energy delivered strong revenue growth of 23.4% and EBITDA growth of 20.8%, but net profit of $388m was only 6.1% of revenue. The gap between operating and net profit is explained by depreciation and debt servicing, with net debt rising to $5.2bn. The EV/EBITDA LTM multiple of 1.47 looks extremely low and offers a margin of safety, while the portal's model points to +313% upside. However, to realise this potential, the company must sustain its margin and halt debt growth. At the current price, the shares look attractive, but the key question is the ability to generate net profit, not just EBITDA.