In 2025, oil prices gradually declined from the high $70s to around $60/bbl by year-end, with intermittent volatility driven by geopolitical developments. While supply discipline remained broadly intact, weaker demand growth and a more cautious macroeconomic backdrop weighed on prices. European natural gas continued to trade at a structural premium to US Henry Hub, reflecting supply constraints and reliance on LNG imports, and continued to weigh on industrial competitiveness across the region.
The broader energy investment landscape also shifted during the year. Policy momentum behind the energy transition weakened in certain regions, most notably in the US, where the change of administration led to a less supportive stance on renewables. ESG considerations also became a lower priority in capital allocation decisions. Investors increasingly prioritised assets with strong cash flow visibility and operational resilience over earlier-stage or policy-dependent technologies.
Against this backdrop, L1 Energy delivered a strong year across the portfolio.
Harbour Energy plc
2025 was another transformative year for Harbour Energy, marking the first full year following the completion of the Wintershall Dea transaction. The integration of the acquired business progressed well, and the enlarged platform delivered strong operational performance. Harbour is now firmly established as the largest London-listed independent E&P, with a diversified global portfolio. During the year, Harbour executed several strategic transactions that reshaped its portfolio.
The company entered the US Gulf through the acquisition of LLOG, a premier independent operator, gaining exposure to high-quality operated deepwater assets. It also acquired Waldorf Production in the UK, unlocking financial synergies through the utilisation of tax losses. In addition, Harbour divested its non-core Indonesian assets and assumed operatorship of the Zama field in Mexico, strengthening its position in a key development asset.
Harbour also announced and completed a $100mn share buy-back programme, reinforcing its commitment to shareholder returns.
We remain constructive on Harbour’s long-term outlook as it continues to shift its focus towards the Americas and operated assets. We believe the company’s operational performance, M&A track record and disciplined capital allocation support its ability to deliver value through the cycle.
Breakwater Energy
Breakwater delivered a strong performance in 2025, supported by continued progress across its development portfolio and solid cash flow generation. The first oil from the Leon Castille field in the US Gulf on 27 September 2025 was a key milestone and represented a significant step forward for one of the portfolio’s core assets. Progress also continued across key projects in Alaska and Brazil, further de-risking the portfolio and supporting future growth.
The company continued to optimise its portfolio. It completed the sale of assets in Indonesia and Colombia, as well as non-core positions in the US Gulf, generating approximately $900mn of proceeds. In the UK, Breakwater combined its operations with NEO to form Neo Next, creating a more focused platform in the North Sea.
Despite softer commodity prices, the business performed strongly. It also achieved investment-grade credit ratings (BBB+ from S&P and Fitch), reflecting the strength of its balance sheet and cash flow profile.
Plastic Energy
Plastic Energy delivered two large-scale plants in partnership with Total and SABIC, which are currently being ramped up. The company has continued to advance its technology roadmap and the production of virgin-grade recycled plastic to support the transition to a circular economy.
At the same time, the industry environment remains very challenging. The European petrochemical sector continues to experience a severe downturn due to structural cost disadvantages and excess capacity. This has led to liquidity pressures and reduced market appetite for allocating capital to emerging technologies with business models that remain dependent on regulatory support, including Plastic Energy.
H2scan
H2scan continued to make solid progress in 2025, delivering more than 20% revenue growth. The company strengthened its leadership team and advanced its go-to-market strategy. It operates in a structurally attractive sector, with increasing demand for preventative monitoring across energy and industrial applications. Tigo Energy L1 successfully exited its investment in Tigo Energy following the full repayment of the convertible note on 17 December 2025. This concluded the investment in a disciplined manner despite a challenging operating environment for the solar sector.
Dayim
2025 was L1’s first full year as an investor in Dayim. The business delivered strong financial performance, with more than 40% revenue growth and improved profitability. It continued to strengthen its position across core sectors and made progress in integrating its business lines.
We see further opportunities for organic and inorganic growth in adjacent verticals and markets. The business remains well positioned to benefit from continued demand across the GCC region.
