Horizon Oil Limited · ASX:HZN
Horizon Oil — RIU - Good Oil Conference 2017
27 slides from Horizon Oil's conference presentation, Sep 14, 2017
Slide 1: ASX cover letter for conference 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 14 September 2017 For personal use only The Manager, Company Announcements ASX Limited Exchange Centre 20 Bridge Street Sydney NSW 2000
Slide 2: RIU – Good Oil Conference
For personal use only HORIZON OIL LIMITED / ABN 51 009 799 455 RIU – Good Oil Conference Brent Emmett CEO 13 & 14 September 2017
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 snapshot
Horizon Oil (ASX:HZN) snapshot For personal use only • Sydney‐based public company listed on Australian Securities Exchange (ASX) • Portfolio of exploration, development and producing assets in Asia‐Pacific region, with net production of ~4,000 bopd, with free cash flow breakeven after all‐in costs
Slide 5: Corporate summary
Corporate summary For personal use only Shareholders Share Price vs Brent Crude vs ASX 200 Energy Index ‐ Rebased Board of Directors John Humphrey Chairman Brent Emmett Chief Executive Officer / Managing Director Gerrit de Nys Director Andrew Stock Director Sandra Birkensleigh Director Greg Bittar D
Slide 6: Horizon Oil as an investment proposition
Horizon Oil as an investment proposition For personal use only Strong, long‐lived production profile and cash flow • Best‐of‐peer‐group net operating cash flow from China and New Zealand, to average US$50 – 60 million pa over the period 2017 – 2022, with modest future capital spend • Free cash flow
Slide 7: Horizon Oil leads its peer group on net cash flow generation and profit margin
Horizon Oil leads its peer group on net cash flow generation and profit margin For personal use only Market Net Enterprise 2017 2017 EV/EBITDAX EBITDAX Company cap debt/(cash) value revenue EBITDAX multiple margin (A$m) (A$m) (A$m) (A$m) (A$m) Peer 1 492 ‐135 357 44 7 48.9 17% Peer 2 246 54 300 104
Slide 8: Five year performance – solid track record
Five year performance – solid track record For personal use only Good Oil Conference September 17 7
Slide 9: FY 2017 free cash flow breakeven of US$32/barrel
FY 2017 free cash flow (FCF) breakeven of US$32/barrel 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 provides stability in low oil price environment and capacity for debt repa
Slide 10: Debt reduction trajectory continuing
Debt reduction trajectory continuing For personal use only • Horizon Oil’s proven, developed and producing Beibu Gulf and Maari fields provide substantial debt security in a challenging environment for small and mid‐ cap companies to access debt • The Company refinanced the outstanding US$58.8 milli
Slide 11: Beibu Gulf producing fields and future development targets
Beibu Gulf producing fields and future development targets For personal use only • WZ 6‐12N and WZ 12‐8W fields continue producing above forecast, currently ~8,400 bopd • Remaining cost recovery oil entitlement of US$89.6m to be received over 2017 – 20, unrecovered balance escalates at 9% pa • Fixed
Slide 12: Beibu Gulf future development projects – WZ 12-8E
Beibu Gulf future development projects – WZ 12‐8E and associated fields For personal use only Leased mobile production platform (MOPU) • Development plan (ODP) for integrated development of WZ 12‐8E and associated fields (audited gross 2C resources 11.1 mmbo) to be submitted for Government approval
Slide 13: Beibu Gulf fields – phased development approach
Beibu Gulf fields – phased development approach 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 Good Oil Conference September 17 12
Slide 14: Beibu Gulf production and cost recovery driving cash generation through 2022
Beibu Gulf production and cost recovery driving cash generation through 2022 For personal use only • Horizon Oil’s Block 22/12 production entitlement increased from 26.95% to ~37% of production, following the commencement of its entitlement to preferential cost recovery in 2016 • The company’s unrec
Slide 15: Maari / Manaia fields – New Zealand
Maari / Manaia fields – New Zealand For personal use only • Field production currently ~8,000 bopd • Regular workover program to replace ESPs, clean scale and add perforations has successfully enhanced production • Water injection (WI) repairs and temporary repair to platform strut completed in Janu
Slide 16: Manaia – Maari schematic cross-section
Manaia – Maari schematic cross‐section For personal use only • Multiple oil accumulations on production diversify risk • Potential to develop Moki zone at Manaia in future – gross 2C resource 50.0 mmbo Good Oil Conference September 17 15
Slide 17: Papua New Guinea – the regional picture
Papua New Guinea – the regional picture For personal use only • PNG is a pro development jurisdiction with stable petroleum fiscal regime • Rich mineral and petroleum province with a history of successful large scale resource projects delivery eg. PNG LNG • Jurisdiction well supported by the interna
Slide 18: Horizon Oil acreage and JV partners – resource development overview
Horizon Oil acreage and JV partners – resource development overview For personal use only • Significant gas resource discovered and appraised in uncomplicated structures, with highly productive sandstone reservoirs • High level of condensate and LPG contained in the gas • Relatively easy surface acc
Slide 19: Appraised western foreland fields
Appraised western foreland fields – concentrated resource distribution and ownership For personal use only • Contingent resource (2C) : 2.0 – 2.5 tcf gas 60 – 70 mmbbl condensate • Horizon Oil and Repsol have a combined interest of 70% of the total resource and operate all the fields , which will fa
Slide 20: Western LNG development scheme
Western LNG development scheme For personal use only 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 P
Slide 21: Development scheme selection criteria
Development scheme selection criteria For personal use only • Standalone development – 1.5 mtpa right‐sized for appraised resource base • Simple concept with lowest technical and execution risk • Maximum use of standard, proven technology • System uptime consistent with global LNG projects (90‐95%)
Slide 22: LNG demand forecast in target areas
LNG demand forecast in target areas – market expected to tighten from 2023 For personal use only Good Oil Conference September 17 21
Slide 23: WLNG well-placed to supply emerging demand areas
WLNG well‐placed to supply emerging demand areas – Indonesia, South China Sea Rim, China, India For personal use only • Strong increase in demand forecast in emerging Asian economies, pointing to supply shortfalls from 2023 • Many new entrants seeking to import LNG to: ̶ Offset decline in domestic g
Slide 24: Western LNG project, PNG – key points
Western LNG project, PNG – key points For personal use only • Preliminary project economics are attractive, with 20+ year plateau production for 2C gas resource and economics strengthened by significant condensate production. • 520 km gas and condensate pipelines will connect western foreland fields
Slide 25: Outlook for financial year 2018
Outlook for financial year 2018 For personal use only Financial • Operating cash flows to continue at current levels as a result of continuing steady production at Maari and Beibu Gulf fields, including cost recovery production entitlement and ongoing control of operating costs • Continued focus on
Slide 26: Key takeaways
Key takeaways For personal use only • Existing production should continue to generate average net cash flows of US$50 – 60 million pa until 2022, retiring debt and funding significant capital costs, before production comes off plateau, with long production life ahead • Horizon Oil has a material int
Slide 27: For more information please contact
For personal use only For more information please contact: Horizon Oil Limited T: +61 2 9332 5000 Level 6, 134 William St Brent Emmett Chief Executive Officer F: +61 2 9332 5050 Woolloomooloo NSW 2011 E: info@horizonoil.com.au horizonoil.com.au Media enquiries Gavan Collery M: +61 419 372 210 Resour