Horizon Oil Limited · ASX:HZN
Horizon Oil — Shareholder Meeting (November 2018)
37 slides from Horizon Oil's shareholder meeting presentation, Nov 28, 2018
Slide 1: Corporate 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 28 November 2018 The Manager, Company Announcements ASX Limited Exchange Centre 20 Bridge Street Sydney NSW 2000 CORPORATE PRESENTATION
Slide 2: Chairman's Address
CHAIRMAN’S ADDRESS 2018 HORIZON OIL LIMITED AGM Ladies and Gentlemen During the 2018 financial year, we saw the impact of the Company’s year on year oil sales growth coupled with strengthening oil prices. Annual revenue exceeded US$100 million and the resultant free cashflow from the Company’s high
Slide 3: Highlights of financial year 2018
The highlights of financial year 2018 are summarised in the slide. Annual oil sales of 1.65 million barrels represented a 16% growth from the 2017 year which, with an average realised oil price of US$60.65/bbl, generated over US$100 million in revenue and EBITDAX of US$68.5 million, up 52% on the 20
Slide 4: Chairman's address: production, hedging and WZ 12-8E development
well, such that our current oil sales entitlement is approximately 6,200/day from Block 22/12 and Maari/Manaia. The Company continues to implement its policy of hedging commodity exposure at prudent levels, with approximately 800,000 barrels hedged in the 2019 financial year. During the year CNOOC p
Slide 5: Western LNG and Stanley project plans
the project. Over the coming 12 to 18 months, we will work with our joint venture partners and the PNG government to progress planning for the Western LNG development as well as the reactivation of the Stanley condensate recovery project. While we advance our planning for Western LNG, it is worthwhi
Slide 6: PDL 10 notices and debt refinancing
As we have previously advised, Repsol, the operator of PDL 10, is of the view that the notices are without merit and are procedurally invalid. Based on external legal advice, Horizon Oil supports this view. While we have initiated the independent arbitration process established under the gas agreeme
Slide 7: Management transition
of the Company’s long standing management team and the professional manner in which they approached the task. Brent and Alan have led and been instrumental in building Horizon Oil’s tremendous asset base, have stewarded the Company through challenges encountered in recent years and have established
Slide 8: Board renewal and new Chairman
time as a director to work with a consistently high calibre board which has been considered, responsive and understands its role of stewardship. On my retirement, I am pleased to advise that the board has invited Mike Harding to join as a director and Chairman of Horizon Oil. Mike is a highly experi
Slide 9: Chairman's conclusion
and resources; and ‐ low and reducing debt and an increasingly strengthening balance sheet The company’s board and management have considerable confidence that your company has the existing production capacity and financial resilience to deal with the current oil price volatility while progressing t
Slide 10: Annual General Meeting
HORIZON OIL LIMITED/ ABN 51 009 799 455 Annual General Meeting 28 November 2018
Slide 11: Disclaimer
Disclaimer 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 projections and any estimated
Slide 12: Formal business
HORIZON OIL LIMITED/ ABN 51 009 799 455 Formal business John Humphrey
Slide 13: Formal business
Formal business Notice of Meeting Chairman’s Address Items of Business Closure of Meeting CEO’s Presentation Questions AGM November 2018 4
Slide 14: Chairman's Address
HORIZON OIL LIMITED/ ABN 51 009 799 455 Chairman’s Address John Humphrey
Slide 15: FY 2018 key achievements
FY 2018 key achievements • Oil sales volume of 1.65 million barrels 16% higher than FY 2017 • Sales revenue of US$100.0 million 46% higher than FY 2017 • EBITDAX of US$68.5 million 52% higher than FY 2017 • Net cashflow from operating activities of US$57.6 million 62% higher than FY 2017 • Low opera
Slide 16: Items of Business
HORIZON OIL LIMITED/ ABN 51 009 799 455 Items of Business
Slide 17: Formal resolutions
Formal resolutions Resolutions For (%) Open (%) Against (%) 2. To adopt the Remuneration Report 98.36% 0.18% 1.46% 3. To re‐elect Mr Gerrit de Nys as a Director 80.58% 0.22% 19.20% 4. The approval of 2018 grant of long term incentives 97.91% 0.27% 1.82% (LTIs) to Mr Michael Sheridan, Chief Executive
Slide 18: Closure of Meeting
HORIZON OIL LIMITED / ABN 51 009 799 455 Closure of Meeting
Slide 19: CEO's Address
HORIZON OIL LIMITED / ABN 51 009 799 455 CEO’s Address Michael Sheridan 10
Slide 20: Presentation outline
Presentation outline • Company overview • Investment proposition • Key achievements – 2018 • Commodity price • Debt outlook and hedging • Asset review – Beibu Gulf fields, offshore China – Maari/Manaia fields, offshore New Zealand – Western LNG, onshore Papua New Guinea • Outlook for 2019 • Q&A AGM
Slide 21: Horizon Oil (ASX:HZN) snapshot
Horizon Oil (ASX:HZN) snapshot A focused portfolio of conventional production, development and exploration assets in Asia‐Pacific region, including : • 26.95% interest in Beibu Gulf oil fields, offshore China • 26% interest in Maari/Manaia oil fields, offshore New Zealand • 30% interest in Western L
Slide 22: Horizon Oil as an investment proposition
Horizon Oil as an investment proposition Strong, long‐lived production profile and strong cash flow generation • Current production entitlement is > 6,000 bopd of net oil sales from developed, offshore, conventional oil fields • Strong net operating cash flow from China and New Zealand, FY2019 forec
Slide 23: FY 2018 key achievements
FY 2018 key achievements • Oil sales volume of 1.65 million barrels 16% higher than FY 2017 • Sales revenue of US$100.0 million 46% higher than FY 2017 • EBITDAX of US$68.5 million 52% higher than FY 2017 • Net cashflow from operating activities of US$57.6 million 62% higher than FY 2017 • Low opera
Slide 24: Oil price and recent geopolitical events
Oil price and recent geopolitical events • Reimposition of Iranian sanctions were anticipated to cause reduction of 1.3 – 1.7 mb/day of exports from 5 Nov 2018 to end Q1 2019 • Saudis/OPEC pressured by Trump to increase production in anticipation of sanction impact • Khashoggi death strains US‐Saudi
Slide 25: Debt outlook and hedging
Debt outlook and hedging • Senior debt facility for US$95 million finalised in November 2018 (ANZ, WBC and ICBC) • Proceeds used to repay subordinated debt and previous senior facility • Improved terms and tenor under senior facility – Interest 2.75% plus LIBOR – PNG assets outside lender security p
Slide 26: Beibu Gulf, China (26.95%)
Beibu Gulf, China (26.95%) • Production from multiple fields via 18 wells, currently approximately 11,500 bopd; recent 2 infill wells continue to produce at over 3,000 bopd • Further infill drilling opportunities identified for 2019/2020 • Customary petroleum contract, with remaining cost recovery o
Slide 27: Beibu Gulf - near-term development project
Beibu Gulf ‐ near‐term development project Leased mobile production platform (MOPU) • Development plan (ODP) for integrated development of WZ 12‐8E and associated fields to be submitted for Government approval in 2018 • Three stage development, with first production target in 2020 • Platform on WZ 1
Slide 28: Maari / Manaia fields, New Zealand (26%)
Maari / Manaia fields, New Zealand (26%) • Gross production currently ~ 6,000 bopd from 9 production wells • Joint venture focus on production optimisation and operating cost reductions able to be derived from ownership of FPSO • Continued evaluation of opportunities for improved production and over
Slide 29: Western Forelands Region, PNG
Western Forelands Region, PNG • Horizon Oil holds material interests in all four fields that will supply the proposed Western LNG project and has an ~30% interest in the total gross audited resources including 64 mmbbls of condensate and ~2,200 PJ of sales gas • Proposed PNG Gas Policy to enable thi
Slide 30: Western LNG resources distribution and ownership
Western LNG resources distribution and ownership • Significant exploration and appraisal activity by HZN and its partners, including 19 wells and 11 production tests, has enabled independent certification of a material resource in the Western Foreland Region • Flow tests confirmed capacity for Stanl
Slide 31: Western LNG development scheme
Western LNG development scheme WLNG development ‐ 1.5 mtpa sales capacity Aggregated raw gas production profile ‐ 2C resources 300 250 Wellhead rate (mmscfd) 200 150 100 1C resources profile 50 ‐ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Production year PRL 21
Slide 32: 2019 Outlook
2019 Outlook Financial Continued strong operating cash flows supported by developed, low cost, conventional oil fields Progressive reduction of debt Block 22/12, China Continued higher production entitlement (~35% share of production) through FY 2019 Final investment decision of the proposed
Slide 33: APPENDICES
APPENDICES 24
Slide 34: FY2018 Financial overview
FY2018 Financial overview (US$ million) FY 2018 FY 2017 ∆ ∆ (%) • Material increase in sales volumes Sales Volume (mmbbl) 1.65 1.42 0.23 16% • Robust and increasing EBITDAX and cashflow generation at field level Revenue 100.0 68.5 31.5 46% • Underlying profit before tax of EBITDAX 68.5 45.2 23.3 52%
Slide 35: FY 2018 key cashflow drivers
FY 2018 key cashflow drivers 140 US$m 120 100 (25) 75 (8) 100 (9) 58 (17) 80 (13) 60 (8) (17) 40 24.5 27.6 20 0 Opening Revenue Opex Net Corporate & Interest Net cash Acquisition Investment Exploration Debt Closing cash cash balance operating tax inflows from of oil & gas in oil & gas expenditure re
Slide 36: Performance and FY 2019 forecast
Performance and FY 2019 forecast1 1. Assuming US$70/bbl Brent average annual oil price AGM November 2018 27
Slide 37: Contact
Level 6, 134 William St Woolloomooloo NSW 2011 Australia info@horizonoil.com.au +612 9332 5000 www.horizonoil.com.au For more information please contact: Horizon Oil Limited Michael Sheridan Chief Executive Officer 28