Horizon Oil reported steady Q3 FY25 production and cash flow, paid its fifth consecutive interim dividend, and announced a strategic acquisition in Thailand that promises to boost production and diversify its asset base.
- Q3 FY25 production steady at 407,778 boe; sales at 400,112 boe
- Interim dividend of AUD 1.5 cents per share paid, marking five years of consistent distributions
- Net operating cash flow rose 8.4% to US$17.8 million on higher gas prices and lower costs
- Successful Mereenie infill wells increased gas production by 20%
- Announced acquisition of 75% interest in Exxon’s Thailand upstream business for US$30 million, adding 2,000+ boe/d and 3.9 MMboe 2P reserves
Steady Operational Performance Amid Strategic Growth
Horizon Oil Limited (ASX:HZN) delivered a solid operational and financial performance in the third quarter of fiscal 2025, maintaining production and sales volumes close to the previous quarter’s levels. Total production reached 407,778 barrels of oil equivalent (boe), with sales slightly lower at 400,112 boe. This stability was underpinned by increased output from the Maari field offshore New Zealand and the Mereenie gas field in Australia, which offset the expected decline in Block 22/12 offshore China ahead of a new infill drilling campaign.
The company’s net operating cash flow improved by 8.4% to US$17.8 million, driven by higher realised gas prices and reduced operating costs, despite softer oil prices. Cash reserves remained robust at US$51.5 million, with net cash standing at US$26.4 million at quarter-end.
Mereenie Infill Wells Boost Gas Production
The Mereenie Joint Venture marked a notable operational success with the commissioning of two infill wells, WM-29 and WM-30, which came online in January and February 2025 respectively. These wells have increased field gas production rates by approximately 20%, with sales volumes consistently ranging between 28 to 32 terajoules per day (TJ/d). This uplift coincided with the commencement of new higher-priced gas sales agreements, resulting in a 38% revenue increase from Mereenie during the quarter.
The Mereenie JV also benefited from strong regional demand, with the Northern Territory Government publicly recognising the JV’s contribution to local energy security. The reopening of the Northern Gas Pipeline further enables the JV to supply additional gas volumes to East Coast markets, enhancing commercial opportunities.
Maari and Block 22/12: Mixed Operational Trends
Maari field production improved by 10% quarter-on-quarter, averaging 5,490 bopd gross (1,427 bopd net to Horizon), supported by well optimisation and high facility uptime. However, the quarter ended with the failure of electric submersible pumps (ESPs) in two key wells, with replacements scheduled in the coming months. Meanwhile, Block 22/12 experienced a modest production decline as anticipated, ahead of the commencement of a new infill drilling campaign aimed at reversing the trend and boosting output in the near term.
Strategic Acquisition Re-Entrants Horizon into Thailand
In a transformative move, Horizon executed a share sale and purchase agreement with Exxon Mobil Corporation to acquire a 75% interest in Exxon’s Thailand upstream business, including a 7.5% stake in the Sinphuhorm gas field and a 60% stake in the Nam Phong gas field. The acquisition, valued at US$30 million plus contingent payments, is expected to add over 2,000 boe/d of stable, low-risk production and 3.9 million barrels of 2P reserves to Horizon’s portfolio.
Funded primarily through debt with limited impact on cash reserves, this deal marks Horizon’s strategic re-entry into the Thai market and Southeast Asia, partnering with Matahio Energy who will manage operations. The assets benefit from long-term gas sales agreements with PTT, supplying regional power generation, and offer significant potential for life extension and optimisation.
Financial Strength and Shareholder Returns
Horizon’s financial position remains strong, with net cash increasing by approximately US$4 million during the quarter despite US$6 million invested in development activities and the Thailand acquisition deposit. The company paid an interim dividend of AUD 1.5 cents per share on 24 April 2025, marking five consecutive years of substantial shareholder distributions totaling over A$220 million. This reflects Horizon’s commitment to balancing growth investments with consistent returns.
Looking ahead, Horizon is focused on executing its 2025/26 work programs, including further infill drilling, facility upgrades, and appraisal opportunities across its asset base to sustain production and cash flow momentum.
Bottom Line?
Horizon’s steady production and strategic acquisition position it well for growth, but upcoming drilling results and acquisition completion will be key to watch.
Questions in the middle?
- How will the recent ESP failures at Maari impact production and costs in the coming quarters?
- What are the timelines and risks associated with completing the Thailand acquisition and integrating operations?
- How will Horizon re-market the gas volumes previously contracted to the Nolans Project following its FID delays?