Horizon Oil Limited · ASX:HZN
Horizon Oil — H1 FY2017 Earnings Presentation
24 slides from Horizon Oil's earnings presentation, Feb 27, 2017
Slide 1: Half-Year FY2017 Financial Results
For personal use only Half-Year FY2017 Financial Results HORIZON OIL LIMITED 27 February 2017 ABN 51 009 799 455
Slide 2: 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 3: Half-year highlights
Half-year highlights For personal use only Gross profit of US$8.8 million Profit & Loss Statutory loss after tax of US$5.1 million EBITDAX of US$18.4 million Net cash from operating activities of US$19.7 million Cash US$18.3 million cash on hand at 31 December 2016 Repayment of US$58.8 million conve
Slide 4: Operational results
Operational results For personal use only Lost Time Injury Frequency Rate (LTIFR) of 0.0, Total Reportable Injury Frequency Rate (TRIFR) of 0.0 at HSSE 31 December 2016 over a 12 month rolling period (~25,000 manhours) Continued strong production during the period from combined WZ 6-12 and WZ 12-8W
Slide 5: Profit and loss
Profit and loss For personal use only Production affected by Maari scheduled water injection and platform repairs and natural decline Strong sales volumes maintained demonstrating substantial benefit of preferential cost recovery oil entitlement in Beibu Gulf, offsetting impact of natural produc
Slide 6: Cash flow
Cash flow For personal use only 1H 2017 1H 2016 ∆ ∆ (%) Strong operating cashflows have (US$ million) enabled further debt reduction Operating cashflow 19.7 28.6 (8.9) (31%) Investment Activities (4.2) (15.6) 11.4 73% Disciplined and focused approach to Repayment of borrowings (13.3) (22.3) 9.0
Slide 7: 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 8: 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 9: 2017 Free Cash Flow breakeven at ~$33/bbl provides capacity for debt repayment
2017 Free Cash Flow 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 break even price Low break even price mitigates against potential oil price volatility, particularly in low oil price envir
Slide 10: Continued debt reduction in low oil price environment
Continued debt reduction in low oil price environment For personal use only Forecast Horizon Oil’s proven, developed and producing 195 120 Beibu Gulf and Maari fields provide substantial existing 160 debt capacity in a challenging 120 120 120 environment for small and mid-cap companies to access 1
Slide 11: Independent valuation points to HZN value
Independent valuation points to HZN value 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, HZN share price is expected to fill the
Slide 12: 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 13: Corporate information as at January 2017
Corporate information as at 31 January 2017 For personal use only Shareholders Share trading Private Shareholders > 5m 11% ASX Listed HZN Fully Paid Shares 1,301,981,265 Institutional 1 Investors Private Employee Options 3,866,667 16% Shareholders < 5m 2 40% Share Appreciation Rights 91,590,246 3 IM
Slide 14: Appendix – Asset Review
For personal use only Appendix – Asset Review 27 February 2017 14
Slide 15: 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 16: 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 17: 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 18: 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 27 February 2017 18
Slide 19: 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 20: 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 27 February 2017 20
Slide 21: Papua New Guinea
Papua New Guinea 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 Jurisdiction well-sup
Slide 22: Horizon Oil acreage and JV partners – resource development overview
Horizon Oil acreage and JV partners – resource development overview For personal use only Development of Stanley field (PDL 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 23: Stanley and Elevala/Ketu field development planning progress
Stanley and Elevala/Ketu field development planning progress For personal use only PDL 10 JV continued its optimisation review of project design, execution and timing prior to entering into contracts for fabrication and construction of the project facilities PRL 21 JV progressed the feasibility
Slide 24: For personal use only
For personal use only 27 February 2017 24