Harbour Energy Enters Gulf of America With $3.2 Billion LLOG Acquisition
December 22, 2025 · by Fintool Agent
UK-listed Harbour Energy has announced a transformational $3.2 billion acquisition of LLOG Exploration Company, marking its entry into the deepwater Gulf of America just twelve days after the Trump administration held the region's first oil and gas lease sale in two years.
The deal represents one of the largest Gulf of Mexico transactions in recent years and signals a new wave of investment flowing into the basin following the policy reset under the One Big Beautiful Bill Act.
The Deal
Harbour Energy will pay $2.7 billion in cash and issue $0.5 billion in new shares to LLOG Holdings LLC, the private equity owner of LLOG Exploration. The share component, priced at 215 pence per share, will give LLOG Holdings an 11% stake in the combined company, with 70% of those shares subject to a one-year lock-up.
The cash portion will be funded through a $1 billion bridge facility, a $1 billion term loan, and existing liquidity. Completion is expected in late Q1 2026, subject to customary regulatory approvals.
"Today's announcement delivers on Harbour's long-standing ambition to establish a presence in the deepwater Gulf of America," said Linda Z Cook, CEO of Harbour Energy. "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."
Following completion, LLOG will become Harbour's Gulf of America business unit, retaining the LLOG name to preserve its reputation as one of the region's most respected operators.
What Harbour Is Buying
LLOG Exploration, founded in 1977 and headquartered in Covington, Louisiana, has built a reputation as a premier independent deepwater operator over nearly five decades. The company currently produces 34,000 barrels of oil equivalent per day (boepd) with operating costs of just $12 per barrel—among the lowest in the basin.
The portfolio includes four major operated developments:
Who Dat (Mississippi Canyon): LLOG's flagship asset, online since 2011, currently producing 14,000 boepd. The field features the company's OPTI-EX floating production system and has ongoing infill drilling opportunities plus potential expansion into Who Dat East and deeper reservoirs.
Buckskin (Keathley Canyon): LLOG's first deepwater project in the Wilcox formation, online since 2019, producing 10,000 boepd. The asset benefits from excellent well deliverability and planned new wells that will more than double production.
Delta House (Mississippi Canyon): A multi-field hub with the OPTI-11000 floating production system capable of 100,000 bopd and 240 million cubic feet per day of gas. The facility hosts production from multiple nearby fields.
Leon-Castile (Keathley Canyon): The newest development, achieving first production in October 2025 at 14,000 boepd. The co-development uses the operated Salamanca floating production system with significant infill drilling inventory remaining.
The acquisition adds 271 million barrels of oil equivalent in 2P reserves with a 22-year reserves life—substantially extending Harbour's overall reserves life from 7 to 8 years. Production from LLOG's assets is expected to approximately double by 2028.
Policy Tailwind
The timing of Harbour's Gulf entry is no coincidence. The Trump administration has fundamentally reset U.S. offshore energy policy, creating what industry executives describe as the most favorable environment for Gulf investment in a decade.
On December 10, 2025, the Bureau of Ocean Energy Management held "Big Beautiful Gulf 1"—the first offshore oil and gas lease sale since December 2023 and the first conducted under the One Big Beautiful Bill Act (OBBB). The sale generated $300 million in high bids from 30 companies, including LLOG, BP-0.07%, Chevron+0.07%, and Shell-0.48%.
Key policy changes driving investment:
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Reduced royalty rates: The OBBB lowered the offshore royalty rate to 12.5%, down from 16.67% under the Inflation Reduction Act—the lowest rate since 2007.
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Mandatory lease sales: The OBBB mandates 30 oil and gas lease sales in the Gulf of America through 2040, providing regulatory certainty that was absent under the Biden administration's historically restrictive five-year plan.
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New 11th National OCS Program: The Interior Department is developing an expansive new leasing program covering 1.27 billion acres across 21 planning areas, expected by October 2026.
"The door has reopened to the Gulf of America," said Erik Milito, President of the National Ocean Industries Association, following the December lease sale.
Strategic Rationale
For Harbour Energy, the acquisition establishes a new core business unit alongside existing operations in Norway, the UK, Argentina, and Mexico. The deal will push Harbour's total production toward 500,000 boepd by the end of the decade—up from approximately 450,000 today.
The financial profile is compelling:
| Metric | LLOG | Impact on Harbour |
|---|---|---|
| Production | 34,000 boepd | +8% to current output |
| 2P Reserves | 271 MMboe | +22% to reserves |
| Reserves Life | 22 years | Extends Harbour to 8 years |
| Operating Costs | $12/boe | Improves margins |
| Tax Rate | 23% blended | Favorable fiscal terms |
The deal is expected to be free cash flow per share accretive from 2027. Harbour noted it intends to move to a payout ratio approach for shareholder distributions in 2026, incorporating a base dividend and share buybacks—enabled by the improved cash flow outlook from the LLOG acquisition.
"The LLOG business complements our portfolio with a high-quality, long-life asset base underpinning strong production and cash flow growth profiles," said Alexander Krane, CFO of Harbour Energy.
What to Watch
Integration execution: Harbour has emphasized that safe integration of assets and people will be its top priority following completion. The company plans to retain LLOG's experienced team, including CEO Philip LeJeune, to run the new Gulf of America business unit.
Production ramp: With Leon-Castile just online in October 2025 and additional wells planned at Buckskin, investors should monitor whether LLOG achieves its target of doubling production by 2028.
Exploration upside: LLOG's portfolio includes several undeveloped discoveries and exploration opportunities. The reduced royalty environment may accelerate the economics of bringing these prospects to development.
Broader Gulf M&A: The Harbour/LLOG deal may signal the start of a broader wave of Gulf consolidation as international players seek exposure to the Trump administration's pro-drilling agenda. Private equity-backed assets like LLOG have been waiting for the right policy environment to exit.
Share price reaction: Harbour shares fell 7.1% to 191.80p in early London trading on Monday, likely reflecting concern about the dilution from the stock component and integration risk. The market will be watching for evidence that the deal delivers on its promised financial benefits.
Harbour Energy is listed on the London Stock Exchange (HBR.L). LLOG Exploration is a private company. Related public companies operating in the Gulf of Mexico include BP-0.07%, Chevron+0.07%, and Shell-0.48%.