Horizon Oil as an investment proposition
Horizon Oil is poised for a share price re-rating off the back of:
- Strong, long-lived production profile and cash flow
- Enviable free cash flow breakeven per barrel compared to peer companies
- Stable financial position, with steadily decreasing debt position
- Strategic stake in large oil and gas development project in Papua New Guinea
o Material, stable net operating cash flow from China and New Zealand of US$50 - 60 million pa over the period 2017 - 2022
o Ongoing tight control over field operating expense, exploration and development expenditure and administrative expenses
o Positioned to withstand future oil price volatility with free cash flow breakeven of US$33/bbl; downside further protected with oil price hedging and loss-of-production insurance in place
o Stable financial position, with good track record in reducing debt; debt expected to be paid down in ~4 years
o Material upside potential attached to large, appraised gas-condensate resource in Papua New Guinea; development planning for a 1.5 mtpa mid-scale LNG scheme, Western LNG (WLNG), at an advanced stage
Outlook for the next 12 months
- Operating cash flows will continue at increased levels as a result of additional revenues earned from China cost recovery production entitlement - remaining balance US$105 million (net to Horizon Oil), escalating at 9% pa
- Continued focus on debt reduction
- Continuing policy of oil price hedging: ~50% of CY 2017 sales hedged at an average price of ~US$54/bbl
- Maintenance of low capex profile and G&A over the course of FY17
Block 22/12, offshore China
- Preparation of the Overall Development Plan for the WZ 12-8E field continues, with completion scheduled in early 2019. The audited gross 2C resources for the field (including WZ 12-10-1 and WZ 12-3-1) are 11.1 mmbo
Maari/Manaia, offshore New Zealand
- Further optimisation of oil production through workover program and installation of multiphase pumps
- Finalise insurance recoveries in relation to facility repairs and equipment upgrades associated with the FPSO Raroa's mooring system and water injection line
PDL 10 (Stanley), PRL 21 (Elevala/Tingu/Ketu) and onshore Papua New Guinea
- Progress the development concept for the Western Province gas aggregation and mid-scale LNG project (WLNG), through collaboration of the PDL 10 and PRL 21 joint ventures and work by the Joint Working Team
- Continue to enhance acreage position in advance of gas aggregation for WLNG
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About Horizon Oil Ltd
Horizon Oil Limited (ASX:HZN) (OTCMKTS:HZNFF) is an ASX-listed oil and gas exploration, development and production company, incorporated and domiciled in Australia.
Horizon Oil portfolio is comprised of petroleum interests in China, New Zealand and Papua New Guinea.
The producing assets in the Beibu Gulf of China (Block 22/12) and the Maari/Manaia Fields offshore New Zealand (PMP 38160) generate stable and significant cash flow which will continue at current levels into the next decade.
Horizon Oil also has a substantial acreage holding of some 8,000 sq km in the forelands of Western Province of PNG, which includes the Stanley field (PDL 10), the Elevala/Tingu and Ketu fields (PRL 21) and the Ubuntu field (PRL 28). These fields contain material, appraised and independently certified gas-condensate resources and the company is currently working with its joint venture partners to aggregate these resources for a planned 1.5 million tonnes per annum LNG scheme, called Western LNG (WLNG).
ContactMr Brent Emmett
Chief Executive Officer