- Revenue lifts 5.9% to US$19.0 million for June quarter 2017 (inclusive of hedge settlements), compared to the prior quarter. This results from oil sales of 378,254 bbls at an average realised oil price of US$50.21/bbl.
- FY 2017 revenue of US$68.5 million and net annual operating cash flow (see Note 1 below) of US$51.7 million (see Note 2 below).
- Horizon Oil's free cash flow break-even price, inclusive of all capital expenditure, is US$33/bbl.
- Cash at 30 June 2017: US$24.5 million.
- Voluntary prepayment of US$5 million of subordinated debt and available senior debt facility capacity increased after scheduled facility redetermination.
- Net debt further reduced to US$108.5 million. Stable financial position, with steadily decreasing debt and increased liquidity availability.
- Continued rigorous management of exploration and development costs, with capital costs of US$1.1 million in quarter incurred to progress the Western LNG project in Papua New Guinea and Maari/Manaia production enhancements.
PRODUCTION AND DEVELOPMENT
- Strong, long-lived production profile in China and New Zealand buoyed by a strategic stake in large oil and gas development in PNG.
- Sales for quarter of 378,254 bbls (see Note 3 below) (including cost recovery oil entitlement), an 8.2% increase on prior quarter. FY 2017 sales of 1.4 mmbo.
- Production for quarter of 283,442 bbls, a 3.6% increase on prior quarter. Annual production of 1.1 mmbo.
- Net production rate for the quarter in excess of 4,000 bopd, including additional priority cost recovery oil entitlement in Block 22/12.
- Average cash operating costs for the quarter of US$9.54/bbl (sales) and US$12.12/bbl (production), compared with guidance of US$12-13/bbl.
- Overall Development Plan for the WZ 12-8E field in Beibu Gulf is well advanced, with final investment decision scheduled in Q4 2017.
- Strategic enhancement of asset base. Further expansion and balancing of Horizon Oil's Western Province, PNG gas/condensate resources base with acquisitions of an additional 3.15% interest in PRL 21 (Elevala/Tingu and Ketu fields) and a 20% interest in PRL 40 (Puk Puk and Douglas fields), the latter exchanged for a 20% interest in PRL 28 (Ubuntu).
CHIEF EXECUTIVE OFFICER'S COMMENTS
The strong operational performance of Horizon Oil's assets in Block 22/12 (China) and Maari/Manaia field (New Zealand) has led to an 8% increase in sales to 378,254 bbls of oil, resulting in quarterly revenue of US$19.0 million, an increase of 5.9% from the prior quarter. The Company's revenue for the 2017 financial year was US$68.5 million.
With cash operating costs of approximately US$10/bbl sold, Horizon Oil's high gross margin and long life conventional oil fields continue to generate material free cash flow as demonstrated by improved net operating cash flow (see Note 4 below) of US$14.9 million for the quarter and approximately US$51.7 million (see Note 5 below) for the 2017 financial year.
This robust cash flow, particularly in the context of a free cash flow break-even price of US$33/bbl (see Note 6 below), enables the Company to comfortably maintain its debt reduction trajectory while progressing planning for the WZ 12-8E development in Block 22/12 in China with our partner CNOOC Limited. Because the development is incremental to existing production facilities and the mobile production platform will be leased, China field development costs will be comfortably funded from internally-generated cash flow.
In the last six months, Horizon Oil has successfully concluded a series of transactions which ensure that the Company is strategically positioned in each of the appraised gas fields composing the proposed Western LNG gas aggregation project in Western Province, Papua New Guinea. As a result, the Company has a material 28% interest in the aggregate gas/condensate resource and operates the core Elevala/Tingu and Ketu gas-condensate fields. Recent consolidation of ownership of gas condensate resources has also seen the entry of Kumul Petroleum Holdings Limited, PNG's National Oil Company, indicating strong support for the commercialisation of Western province gas fields from the PNG Government.
Horizon Oil's project team made very good progress during the quarter on planning for the three key elements of Western LNG - the upstream processing facilities, the gas and condensate export pipelines to Daru Island and the modular liquefaction facility to be located near Daru.
1. Net operating income after operating expenditure, excluding extraordinary items
3. Including Block 22/12 cost recovery oil entitlement
4. Net operating income after operating expenditure, excluding extraordinary items
6. Includes all capital expenditure
To view the full report with tables and figures, please visit:
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