Horizon Oil Limited · ASX:HZN

Horizon Oil — Shareholder Meeting (November 2015)

46 slides from Horizon Oil's shareholder meeting presentation, Nov 20, 2015

  1. Slide 1: Corporate Presentation - AGM cover letter to ASX

    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 For personal use only 20 November 2015 The Manager, Company Announcements ASX Limited Exchange Centre 20 Bridge Street Sydney NSW 2000 C

  2. Slide 2: Chairman's Address 2015 AGM

    CHAIRMAN’S ADDRESS 2015 HORIZON OIL LIMITED AGM Ladies and Gentlemen, 1. INTRODUCTION For personal use only Last year was a year of contrasts for Horizon Oil, with a strong operational and financial performance being largely overshadowed by adverse stock market sentiment resulting from the lower oil

  3. Slide 3: Chairman's Address: cost reductions and share appreciation rights

    (b) A hard-nosed analysis of our general and administrative costs was undertaken and steps taken to reduce these. Our net G&A expense of US$7.0 million for FY2015 is very much at the low end of the range for companies with a similar level of activities. Specifically the cash salaries, bonuses and in

  4. Slide 4: The two questions: long-term performance

    5. THE TWO QUESTIONS:- Turning now to the 2 questions: a) Firstly, how has Horizon Oil performed in the broader/longer term context of strategic positioning and key operational/financial For personal use only measures?  10 years ago Horizon Oil was basically an exploration company, with 2 potential

  5. Slide 5: Chairman's Address: portfolio strategy

    - 10 years ago our stated plan was “to build a portfolio concentrated in Asia with a balance of exploration, development and production assets”. This has indeed been achieved, with ticks in each of the exploration, development and production boxes. Notable features of the management of this well bal

  6. Slide 6: Share price, peers and debt concerns

     Obviously, and I realise it is of little - if any - comfort, Horizon Oil has been caught up in the sector wide adverse impact of the oil price drop, which is evident from the chart showing the recent share price performance of Horizon Oil’s peer group – the group is off 55-65% over the last 12 mon

  7. Slide 7: Capital management and board renewal

    assets and our PNG growth prospects. The substantive cashflows being received from the producing fields in New Zealand and China are now steadily paying down outstanding debt.  Obviously, in response to the risk averse market sentiment resulting from the oil price fall, the company’s debt gearing l

  8. Slide 8: Horizon Oil Limited Annual General Meeting

    For personal use only HORIZON OIL LIMITED ABN 51009799455 Annual General Meeting 20 November 2015

  9. Slide 9: 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

  10. Slide 10: Chairman's Address

    For personal use only HORIZON OIL LIMITED ABN 51009799455 Chairman’s Address Fraser Ainsworth

  11. Slide 11: Key performance measures – last five financial years

    Key performance measures – last five financial years For personal use only Completion of Maari Growth Project in July 2015 expected to increase The outlook for 2016 in the current oil price environment remains production in 2016 positive due to the benefit of oil price hedging Average cash cost of U

  12. Slide 12: HZN share price vs NYMEX Oil

    HZN share price vs NYMEX Oil For personal use only 20 November 2015 5

  13. Slide 13: HZN share price vs peers

    HZN share price vs peers For personal use only 20 November 2015 6

  14. Slide 14: Formal Business

    For personal use only HORIZON OIL LIMITED ABN 51009799455 Formal Business Fraser Ainsworth

  15. Slide 15: Formal Resolutions

    Formal Resolutions For personal use only Resolutions For % Open % Against % 2. To adopt the Remuneration Report 98.78% 0.16% 1.06% 3. To re-elect Mr John Humphrey as a Director 96.40% 0.16% 3.44% 4. The approval of 2015 grant of long term 92.88% 0.16% 6.96% incentives (LTIs) to Mr Brent Emmett, Chie

  16. Slide 16: CEO's Address

    For personal use only HORIZON OIL LIMITED ABN 51009799455 CEO’s Address Brent Emmett

  17. Slide 17: Presentation outline

    Presentation outline For personal use only  The macro view – supply/demand fundamentals − Outlook for oil prices − Outlook for LNG demand  Horizon Oil’s response to low oil prices  Company overview  Strategic imperative  Asset review − China − New Zealand − Papua New Guinea 20 November 2015 10

  18. Slide 18: WoodMackenzie macro oil near-term outlook (Oct 2015)

    WoodMackenzie macro oil near-term outlook (Oct 2015) (1) For personal use only  US total rig count 767 (574 oil rigs) at 13 Nov 2015, down from 1,928 (1,574 oil rigs), year-on-year  Global oil supply peaked in Q2 2015, as US unconventional oil went into decline  ~ US$280 billion globally in new p

  19. Slide 19: WoodMackenzie macro oil supply/demand outlook (Oct 2015)

    WoodMackenzie macro oil supply/demand outlook (Oct 2015) (2) For personal use only 20 November 2015 12

  20. Slide 20: Barclays global oil supply/demand outlook (Oct 2015)

    Barclays global oil supply/demand outlook (Oct 2015) (3) For personal use only The balances for 2016 are substantially tighter than 2014 and 2015, with stock draws forecast in Q4 2016 20 November 2015 13

  21. Slide 21: RBC oil price forecast Nov 2015

    RBC oil price forecast Nov 2015 (4) For personal use only 20 November 2015 14

  22. Slide 22: LNG demand vs contracted supply

    LNG demand vs contracted supply For personal use only Medium to long-term LNG demand forecasts still robust Source: Oil Search Limited 20 November 2015 15

  23. Slide 23: Response to current low oil price environment

    Response to current low oil price environment For personal use only Brent oil price  Operating income substantively maintained by oil price hedging 2014 – mid 2016  Opex reduced (down ~20% YTD in Block 22/12)  Capex for 2015-2016 materially reduced and discretionary expenditure minimised Estimate

  24. Slide 24: Strong risk management with a well established hedging policy

    Strong risk management with a well established hedging policy For personal use only Oil price hedge profile  842,500 mmboe hedged from 1 Jan 2015 through mid 2016 at average of US$95/bbl  Oil price hedging program means cash flows in 2015 and 2016 not as critically impacted by low oil prices  Pro

  25. Slide 25: Company overview – asset portfolio

    Company overview – asset portfolio For personal use only  Clear geographic focus on Asia-Pacific region  Technical focus on proven, conventional plays with scale, upside and manageable risk *  Working with experienced partners such as CNOOC, OMV, Mitsubishi and Osaka Gas  Currently producing oil

  26. Slide 26: Horizon Oil (HZN:AU) at a glance

    Horizon Oil (HZN:AU) at a glance For personal use only  Sydney-based public company listed on Australian Securities Exchange and in ASX 300 Index  Portfolio of exploration, development and producing assets in Asia-Pacific region  Shareholding: IMC (Singapore) - 29%, institutions - 38%, high net w

  27. Slide 27: Shareholder distribution and trading statistics

    Shareholder distribution and trading statistics For personal use only Nov 2015 (to date) Last $0.105 High $0.125 Low $0.105 Volume 12,639,990 12 Months Last $0.105 High $0.280 Low $0.065 Volume 780.44m Fully paid shares 1,302m 1 Partly paid shares 1.50m 2 Employee options 4.37m General options 1.0m

  28. Slide 28: Key performance measures – last five financial years

    Key performance measures – last five financial years For personal use only Completion of Maari Growth Project in July 2015 expected to increase The outlook for 2016 in the current oil price environment remains production in 2016 positive due to the benefit of oil price hedging Average cash cost of U

  29. Slide 29: Net Reserves, Contingent Resources and Prospective Resources

    Net Reserves1, Contingent Resources1 and Prospective Resources1 as at 30 June 2015 For personal use only RESERVES CONTINGENT RESOURCES PROSPECTIVE RESOURCES Proven + Probable Proven + Probable Best Estimate Total: 13.9 mmboe Total: 87.6 mmboe Total: 78 mmboe including 400 bcf gas Including 286 bcf g

  30. Slide 30: Forecast net production from Reserves + Contingent Resources

    Forecast net production from Reserves + Contingent Resources as at 1 July 2015 For personal use only 18,000 Assumptions 16,000  Development of WZ 12-8E, 12-10 and 12-3 fields in 14,000 Beibu Gulf, with production commencing in 2017 Barrels of oil equivalent per day 12,000  Stanley condensate start

  31. Slide 31: Strategic imperative – focus on resource development

    Strategic imperative – focus on resource development For personal use only Total audited reserves and contingent resources of 101.5 million barrels of equivalent 11% developed / 89% undeveloped – 34% oil / 66% gas 10.7 mmboe Developed oil (NZ and China) 5.4 mmboe Undeveloped oil (NZ and China) 66.7

  32. Slide 32: 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 producing above forecast  Potential for higher oil recovery from WZ 12-8W  Excellent HSE record since production start-up in 2013  Cost recovery oil entitlement of US$98m over 201

  33. Slide 33: Share of Block 22/12 gross revenue on 2P Reserves

    Horizon Oil’s share of Block 22/12 gross revenue – calculated on 2P Reserves For personal use only Forecast  The above graph demonstrates Horizon Oil’s increased share of cost recovery in the period Jan 2016 to Mar 2020, once CNOOC has recovered its share of development costs  Horizon Oil’s portio

  34. Slide 34: Beibu Gulf future development projects – WZ 12-8

    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 10.5 mmbo) plus WZ 12-10-1 and WZ 12-10-2 accumulations (audited gross 2P+2C reserves and resources 7.1 mmbo) envisaged; develop

  35. Slide 35: Beibu Gulf fields – phased development scheme

    Beibu Gulf fields – phased development scheme For personal use only Phased approach to development of new reserves – utilising existing infrastructure 20 November 2015 28

  36. Slide 36: Maari/Manaia fields – New Zealand

    Maari /Manaia fields – New Zealand For personal use only  FPSO Raroa purchased in April 2013  Maari field facilities and FPSO Raroa repaired and upgraded in H2 2013  Maari Growth Projects Program successfully completed and Ensco 107 jack-up rig released in July 2015  Field production currently ~

  37. Slide 37: Manaia – Maari schematic cross-section

    Manaia – Maari schematic cross-section For personal use only 20 November 2015 30

  38. Slide 38: Maari production forecast to 2030

    Maari production forecast to 2030 showing Growth Projects contribution and upside potential (HZN) For personal use only Actual Forecast 20 November 2015 31

  39. Slide 39: Exploration potential on Maari/Manaia oil migration path – PEP 51313

    Exploration potential on Maari/Manaia oil migration path – PEP 51313 For personal use only 20 November 2015 32

  40. Slide 40: 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  Stable fiscal regime and succession of “pro- development” governments  Jurisdiction well-supported by lenders  Horizon Oil acreage position ~7,900 sq km

  41. Slide 41: Horizon Oil acreage and joint venture partners – Papua New Guinea

    Horizon Oil acreage and joint venture partners - Papua New Guinea  Successful Tingu-1 For personal use only exploration/appraisal well drilled in 2013 extended PRL 21 gas/condensate resources materially  Development application for Elevala/Tingu/Ketu fields in PRL 21 filed in March 2014  Developm

  42. Slide 42: 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

  43. Slide 43: PNG gas commercialisation options

    PNG gas commercialisation options For personal use only  Sales to regional buyers for power generation and other industrial use − 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 Papu

  44. Slide 44: Papua New Guinea hydrocarbon production

    Papua New Guinea hydrocarbon production For personal use only 20 November 2015 37

  45. Slide 45: Horizon Oil forecast net production from Reserves + Contingent Resources

    Horizon Oil forecast net production from Reserves + Contingent Resources as at 1 July 2015 For personal use only 18,000 Assumptions 16,000  Development of WZ 12-8E, 12-10 and 12-3 fields in 14,000 Beibu Gulf, with production commencing in 2017 Barrels of oil equivalent per day 12,000 10,000  Stanl

  46. Slide 46: For personal use only

    For personal use only 20 November 2015 39

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