FTSE oil and gas player Harbour Energy (LSE: HBR) sits in an interesting spot right now. Once a mid‑sized, North Sea‑focused operator, it has transformed into a major internationally-diversified producer following its acquisition of Wintershall Dea in 2024.

It is now the largest London‑listed independent energy company, with significant positions across Norway, the UK, Germany, Mexico, Argentina, Africa and Asia. That gives it a breadth and depth of exposure that is highly unusual for a company of its size.

Yet the market still seems to be pricing Harbour as if it were the old, UK‑bound business. This has left the shares looking substantially underpriced to their ‘fair value’. And while investors wait for this gap to close, the company offers a high dividend yield to long‑term shareholders.

So, how much can I make from the stock?

Dividend yield potential?

Harbour paid a 21-cent (16p) dividend in 2025, giving a current dividend yield of 5.6%. By comparison, the FTSE 100’s present average is 3.1% and the FTSE 250’s is 3.4%. But analysts forecast Harbour’s dividend yield will rise to 6.3% by end-2028.

So, my £20,000 holding in the shares would potentially make me £17,490 in dividends after 10 years and £111,734 after 30 years. This period is regarded as a standard investment cycle for long-term investors, although a company can change in three decades, of course.

The numbers assume the forecast 6.3% yield as an average, although this can go up or down over time. It also factors in the dividends being reinvested back into the stock to capture the power of ‘dividend compounding’. This is like leaving interest to accrue in a bank savings account, and it has a turbocharging effect on dividends.

After 30 years on this basis, the total value of my holding could be £131,734. And this could be paying me an annual income from dividends alone of £8,299, but inflation will reduce its spending power.

Share price potential?

Price and value are different measures in stocks. The former is whatever the market will pay at any moment, but the latter reflects the underlying business’s fundamentals.

The difference between the two is crucial for the profits of long-term investors over time. This is because asset prices can converge to their ‘fair value’ over the long run.

A risk to Harbour is any sustained period of low oil and gas prices, which could squeeze its margins. Another is any operational disruption across its geographically diverse portfolio that could affect production.

That said, discounted cash flow (DCF) analysis identifies where any stock should trade by projecting future cash flows and ‘discounting’ them back to today.

Some analysts’ DCF modelling is more bearish than mine. However, based on my DCF assumptions — including a 7.7% discount rate — Harbour shares are 61% undervalued at their £2.88 price.

This implies a fair value for the shares of around £7.38 — more than double where they trade today.

That gap suggests a potentially tremendous buying opportunity to consider, if those DCF assumptions prove accurate.

My investment view

Given its high yield and undervalued stock — supported by analysts’ earnings growth forecasts of 34% a year over the medium term — I will add to my holding soon.

I also think the combination of global diversification and strong cash generation merits the attention of other investors.