Horizon Oil Limited · ASX:HZN
Horizon Oil — Investor Presentation (March 2017)
28 slides from Horizon Oil's investor presentation, Mar 22, 2017
Slide 1: ASX cover letter - Investor Presentation
Horizon Oil Limited ABN 51 009 799 455 Level 6, 134 William Street, Woolloomooloo NSW Australia 2011 Tel +61 2 9332 5000, Fax +61 2 9332 5050 www.horizonoil.com.au 22 March 2017 For personal use only The Manager, Company Announcements ASX Limited Exchange Centre 20 Bridge Street Sydney NSW 2000 HORI
Slide 2: Horizon Oil Investor Presentation March 2017
For personal use only Horizon Oil Investor Presentation March 2017 HORIZON OIL LIMITED ABN 51 009 799 455
Slide 3: Disclaimer
Disclaimer For personal use only Statements contained in this material, particularly those regarding the possible or assumed future performance, costs, dividends, returns, production levels or rates, prices, reserves, potential growth of Horizon Oil Limited, industry growth or other trend projection
Slide 4: Horizon Oil (HZN) at a glance
Horizon Oil (ASX:HZN) at a glance Sydney-based public company listed on Australian Securities Exchange (ASX) For personal use only Portfolio of exploration, development and producing assets in Asia-Pacific region Current production net to Horizon Oil from Maari/Manaia fields in New Zealand is
Slide 5: Corporate information as at March 2017
Corporate information as at 15 March 2017 For personal use only Shareholders Private Shareholders > 5m 11% Institutional Investors 16% Private Shareholders < 5m 40% Management & Board 3% 1,302m shares IMC 30% Board of Directors John Humphrey Chairman Brent Emmett Chief Executive Officer / Managing D
Slide 6: Horizon Oil as an investment proposition
Horizon Oil as an investment proposition For personal use only 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
Slide 7: Costs – continuing emphasis on cost control and spending discipline
Costs – continuing emphasis on cost control and spending discipline For personal use only Continuing reductions delivered in operating cost per barrel Further reduction in Beibu operating cost achieved in first half of CY2017 when 13.9 mmbo production milestone reached Annual E&D spend reduced
Slide 8: Production and income – stable production and operating income to continue
Production and income – stable production and operating income to continue For personal use only Continued increase in sales volumes, despite deep cuts to E&D capex Sales, including benefit of China cost recovery and WZ12-8E development, expected to continue around current level through CY2022
Slide 9: Block 22/12 production and cost recovery is driving cash generation
Block 22/12 production and cost recovery is driving cash generation For personal use only Horizon Oil’s Block 22/12 production entitlement increased from 26.95% to ~35% of production, following the commencement of its entitlement to preferential cost recovery Horizon Oil’s unrecovered cost recov
Slide 10: 2017 Free Cash Flow breakeven at ~$33/bbl provides capacity for debt repayment
2017 Free Cash Flow (FCF) breakeven at ~$33/bbl provides capacity for debt repayment For personal use only Continued focus on cost reduction and low opex in China drives down the breakeven price Low breakeven price mitigates against potential oil price volatility, particularly in low oil price e
Slide 11: Continued debt reduction in low oil price environment
Continued debt reduction in low oil price environment Horizon Oil’s proven, For personal use only developed and producing Beibu Gulf and Maari fields provide substantial existing debt capacity in a challenging environment for small and mid-cap companies to access debt from commercial lenders Hor
Slide 12: Independent valuation and peer market multiples point to HZN share price re-rating
Independent valuation and peer market multiples point to HZN share price re-rating For personal use only HZN shares are undervalued with respect to Grant Samuel independent valuation report and peer multiples With improving oil market fundamentals, lower gearing and with PNG moving to FID stage,
Slide 13: Strategic imperatives
Strategic imperatives For personal use only Total audited reserves and contingent resources of 116.1 million barrels of equivalent 1. Maintain cashflows from Maari and Beibu 8% developed / 92% undeveloped – 29% oil / 71% gas Gulf fields at current levels over the next five years by optimising the ex
Slide 14: Asset review
Asset review For personal use only Focus remains on Asia-Pacific region and existing asset areas These are proven, conventional plays with scale, upside and manageable * risk Working with experienced partners such as CNOOC, OMV, Repsol and Osaka Gas Horizon Oil currently producing oil but wi
Slide 15: Beibu Gulf field production and future development areas – China
Beibu Gulf field production and future development areas – China For personal use only WZ 6-12N and WZ 12-8W fields continue producing above forecast, currently ~8,300 bopd Remaining cost recovery oil entitlement of US$105m to be received over CY 2017 – 20, unrecovered balance escalates at 9% pa
Slide 16: Beibu Gulf future development projects – WZ 12-8 Development Area
Beibu Gulf future development projects – WZ 12-8 Development Area For personal use only Integrated development of WZ 12-8E and WZ 12-3 fields (audited gross 2C resources 11.1 mmbo) envisaged; development plan (ODP) to be submitted for Government approval in 2017 Platform on WZ 12-8E will be a le
Slide 17: Beibu Gulf fields – phased development scheme
Beibu Gulf fields – phased development scheme For personal use only Phased approach to development of new reserves – use of existing infrastructure:- – reduces costs and engineering risk – accelerates timeline – enhances economics of fields already on stream 22 March 2017 16
Slide 18: Maari/Manaia fields – New Zealand
Maari /Manaia fields – New Zealand For personal use only Maari Growth Projects Program successfully completed in July 2015 Field production currently ~10,000 bopd Regular workover program to replace ESPs, clean scale and add perforations has successfully enhanced production Water injection (
Slide 19: Manaia – Maari schematic cross-section
Manaia – Maari schematic cross-section For personal use only Multiple oil accumulations on production Potential to develop Moki zone at Manaia in future 22 March 2017 18
Slide 20: Papua New Guinea – the regional picture
Papua New Guinea – the regional picture For personal use only PNG is rich in oil, gas and minerals with track record of successful large-scale development projects, notably the Kutubu oil project and the 8 mtpa PNG LNG project Stable fiscal regime and succession of “pro-development” governments
Slide 21: Horizon Oil acreage and JV partners – resource development overview
Horizon Oil acreage and JV partners – resource development overview Development of Stanley field (PDL For personal use only 10) to be coordinated with PRL 21 – Phase 1: gas-to-power for domestic customers – Phase 2: aggregation with PRL 21 PDL 10 and PRL 21 gas to be the foundation supply for a
Slide 22: Commercialisation opportunities for Western Province gas
Commercialisation opportunities for Western Province gas For personal use only Sales to domestic buyers for power generation and other industrial use – Gas-to-power for mines, industrial consumers and village/town supply – Gas for petrochemical and fertiliser production in PNG – Pipeline export to
Slide 23: Western LNG – base case for Western Foreland appraised gas development
Western LNG – base case for Western Foreland appraised gas development For personal use only PDL 10 PRL 21 PRL 28 Stanley field Elevala/Ketu fields Ubuntu field Northern Processing Hub 500 km onshore gas export pipeline Domestic gas sales Southern fields Southern PPL 235 Processing Hub Condensate Pu
Slide 24: Who owns the gas and what is the size of the prize?
Who owns the gas and what is the size of the prize? For personal use only Resource owners Horizon Oil and Repsol operate all appraised Western Foreland fields and hold a combined 66% of the total 2C resource: 2.0 – 2.5 tcf gas and 60 – 70 mmbbl condensate The prize Western LNG (appraised Western F
Slide 25: LNG demand target areas – India, China, South China Sea Rim, Indonesian Archipelago
LNG demand target areas – India, China, South China Sea Rim, Indonesian Archipelago For personal use only 22 March 2017 24
Slide 26: LNG demand forecast in target areas
LNG demand forecast in target areas For personal use only 22 March 2017 25
Slide 27: Outlook for the next months
Outlook for the next 12 months For personal use only Corporate Outlook Operating cashflows expected to increase as a result of additional revenues earned from China production entitlement through cost recovery of remaining US$105 million (net to Horizon Oil) Continued focus on reduction of overa
Slide 28: For personal use only
For personal use only Please visit:- www.horizonoil.com.au for:- Detailed Investor Presentation Latest Announcements Contact details:- Level 6, 134 William St Woolloomooloo NSW 2011 +612 9332 5000 Fax: +612 9332 5050 info@horizonoil.com.au 22 March 2017 27