Horizon Oil Limited · ASX:HZN
Horizon Oil — Shareholder Meeting (November 2014)
36 slides from Horizon Oil's shareholder meeting presentation, Nov 21, 2014
Slide 1: Corporate Presentation – ASX cover letter
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 21 November 2014 For personal use only The Manager, Company Announcements ASX Limited Exchange Centre 20 Bridge Street Sydney NSW 2000 C
Slide 2: Key messages continued and contact
second milestone payment of US$130 million from 2014 sale to Osaka Gas on LNG commercialisation decision, potentially 2016; Opportunities to refinance Horizon Oil’s March 2018 US$150 million debt facility, with strong interest from asset based debt financiers (including existing lenders) and yield
Slide 3: Chairman's Address – Introduction
CHAIRMAN’S ADDRESS 2014 HZN AGM Ladies and Gentlemen, 1. INTRODUCTION For personal use only The 4 main points underpinning this address will be:- 2014 was a year of records for Horizon Oil including production, revenue and net cash flows from operations, notwithstanding a disappointing share price
Slide 4: Chairman's Address – Stanley PDL 10 grant
In April 2014 the PNG Cabinet approved the Stanley gas/condensate development project and the Petroleum Retention Licence (PRL) 4 licensees and the State executed the Stanley Gas Agreement, which prescribes the key rights and obligations of the State and licensees in respect of the Stanley project
Slide 5: Chairman's Address – Beibu Gulf and PNG operations
The field has produced over 6.5 million barrels of oil since coming on stream in March 2013 and is on track to meet budget production for calendar year 2014. Importantly, two exploration wells were drilled in the area – both were successful, will in combination constitute a material addition to
Slide 6: Chairman's Address – Roc merger termination
region. The merged entity would also have been capable of immediately paying dividends. On 4 August 2014, Roc announced that it had entered into a bid implementation agreement in respect of a proposal made by Fosun International Limited under which it was proposed that Fosun would acquire all of the
Slide 7: Chairman's Address – Funding and strategy
Barring unforeseen events or changed circumstances, the board envisages that this exploration program and the two development projects can be financed by a combination of:- - Cash on hand; - Net cash inflows from Maari/Manaia and Beibu Gulf; and - Debt facilities maintained at existing levels (alt
Slide 8: Chairman's Address – Sustainability
As an additional prudential measure, the Company has in place loss of production insurance in respect of Maari and Beibu production, which is activated in the event of unforeseen loss or damage to the Maari or Beibu facilities. This cover will remain in place, at least until the Maari growth project
Slide 9: Chairman's Address – Conclusion
impact of production from these reserves, especially the gas and, as shareholders would expect, developing these is the number one priority of your board and management. Key to delivering on the above objectives is our staff and management team. They have performed superbly this year, executing a su
Slide 10: Annual General Meeting
For personal use only HORIZON OIL LIMITED ABN 51 09 799 455 Annual General Meeting 21 November 2014
Slide 11: Chairman's Address
For personal use only HORIZON OIL LIMITED ABN 51 09 799 455 Chairman’s Address Fraser Ainsworth AGM 21 November 2014
Slide 12: Key performance measures – last five financial years
Key performance measures – last five financial years For personal use only Completion of Maari Growth Projects expected to increase production to operator Revenue from Beibu Gulf will be maintained through 2015, despite field decline, forecast levels of ~20,000 bopd gross, more than double current d
Slide 13: Annual General Meeting
For personal use only HORIZON OIL LIMITED ABN 51 09 799 455 Annual General Meeting 21 November 2014
Slide 14: CEO's Address
For personal use only HORIZON OIL LIMITED ABN 51 09 799 455 CEO’s Address Brent Emmett AGM 21 November 2014
Slide 15: Presentation outline
Presentation outline For personal use only Portfolio assessment Asset review – 2013/2014 operational highlights Reserves, resources and production Financial and risk management Share price observations Strategic priorities Q&A 21 November 2014 6
Slide 16: Asset portfolio
Asset portfolio For personal use only Asia-Pacific geographic focus is right Could*do with more scale in Asia Working interests about right Oil (1/3 of resource base – near term) vs gas (2/3 of resource base – long term) is optimal product mix 21 November 2014 7
Slide 17: Beibu Gulf fields, China – development areas
Beibu Gulf fields, China – development areas For personal use only WZ 6-12N and WZ 12-8W fields producing above forecast Potential for higher oil recovery from WZ 12-8W Phase II WZ 12-8E development plan to be submitted for Government approval Q1 2015 Successful WZ 12-10-1 and WZ 12-10-2 exp
Slide 18: Papua New Guinea
Papua New Guinea For personal use only Horizon Oil acreage position ~7,900 sq km in foreland terrain, primarily in wet gas “sweet spot” 21 November 2014 9
Slide 19: Horizon Oil acreage and joint venture partners
Horizon Oil acreage and joint venture partners For personal use only Successful Tingu-1 exploration/appraisal well extended Elevala gas/condensate accumulation, increased resources in PRL 21 to about 1 tcf gas, 50 mmbbl condensate and 30 mmbbl LPG included in gas Interest in PPL 259 increased fr
Slide 20: Stanley and Elevala/Ketu field development schemes
Stanley and Elevala/Ketu field development schemes For personal use only Stanley field Petroleum Development Licence awarded in May 2014 Development drilling subsequently completed, both wells Stanley-3 and -5 met or exceeded expectations Elevala and Tingu to be developed as one field Eleval
Slide 21: PNG gas commercialisation options
PNG gas commercialisation options For personal use only Sales to regional buyers for power generation − Ok Tedi Mining Limited (OTML) and Frieda River project (when sanctioned) − Local towns and communities in Kiunga – OK Menga – Frieda River corridor − Export to West Papua: Merauke, Jayapura Mi
Slide 22: Maari/Manaia fields – New Zealand
Maari /Manaia fields – New Zealand For personal use only Maari field shut-in for 5 months in H2 2013 to upgrade, maintain and repair FPSO Raroa Raroa buoy mooring lines repaired at same time Gross reserves (mmbo) at 2P PMP 38160: 1/1/14 HZN 10% OMV 69% (Op) Produced 22.0 Todd 21% Remaining 60.0
Slide 23: Maari / Manaia upside potential
Maari / Manaia upside potential For personal use only 21 November 2014 14
Slide 24: Maari / Manaia Growth Projects Program
Maari / Manaia Growth Projects Program For personal use only Objective to reconfigure water injection scheme, access undeveloped reserves and optimise production Ensco 107 jack-up rig moved over Maari wellhead platform and commenced operations in April 2014; program is progressing Operator for
Slide 25: PEP 51313 – New Zealand
PEP 51313 – New Zealand For personal use only Western part of PEP 51313 relinquished Whio-1 exploration well dry hole; Horizon Oil fully carried on costs 74 mmbo exploration potential remaining in prospect and lead inventory PEP 51313: HZN 21% OMV 30% (Op) Todd 35% CUE 14% 21 November 2014 16
Slide 26: Net reserves, contingent and prospective resources as at 30 June 2014
Net reserves1, Contingent Resources1 and Prospective Resources1 as at 30 June 2014 For personal use only RESERVES CONTINGENT RESOURCES PROSPECTIVE RESOURCES Proven + Probable Proven + Probable Best Estimate 1 Estimated in accordance with SPE-PRMS standard; 6 bcf gas equals 1 boe; 1 bbl condensate eq
Slide 27: Forecast net production from reserves and contingent resources
Forecast net production from Reserves + Contingent Resources as at 1 October 2014 For personal use only Expect to be able to maintain oil production of 4,000 – 6,000 bpd ahead of large scale gas commercialisation PNG gas is major growth asset Includes historical production prior to 31 December 2
Slide 28: Funding the capital program
Funding the capital program For personal use only Forecast oil production stream has significant capacity to fund equity component of development program Second instalment of consideration from Osaka Gas of US$130 million is ear-marked to part fund LNG development capex Current US$150 million
Slide 29: Risk management
Risk management For personal use only Oil price hedging program in place means cash flows in 2014, 2015 and 2016 not materially impacted by US$80/barrel oil; 1.1 mmbo hedged from Q4 2014 through mid 2016 at average of over US$95/barrel Oil production from multiple fields (currently 1 in New Zeal
Slide 30: Observations on share price
Observations on share price For personal use only Share price does not reflect:- − Grant Samuel valuation A$0.49 – 0.63 − Deloitte valuation A$0.45 – 0.55 − Broker consensus A$0.39 – 0.55 Even at recent share price, market capitalisation significantly exceeds capital raised shareholder value g
Slide 31: Share price history since Jan 2001
Share price history since Jan 2001 and growth in shareholder value For personal use only 21 November 2014 22
Slide 32: ASX listed comparables – relative share price performance
Horizon Oil ASX listed comparables – relative share price performance For personal use only 21 November 2014 23
Slide 33: Horizon Oil benchmarked against Asian listed peers
Horizon Oil benchmarked against Asian listed peers For personal use only 21 November 2014 24
Slide 34: Oil Search Limited – anticipating first LNG
Oil Search Limited – anticipating first LNG For personal use only 21 November 2014 25
Slide 35: Strategic priorities
Strategic priorities For personal use only Maintain southeast Asian focus and add scale in Asia, if possible Market company to Asian equity investors - position Horizon Oil as an alternative to Asian listed peers Finalise refinancing package to demonstrate Horizon Oil’s funding capacity Oper
Slide 36: For personal use only
For personal use only 21 November 2014 27