How Horizon Oil’s US$21.5M Debt Boosts Its Thailand Ambitions
Horizon Oil has reached financial close on a US$21.5 million amended senior debt facility with Macquarie Bank, paving the way for its strategic acquisition in Thailand. The facility enhances funding capacity for existing assets and supports future development plans.
- US$21.5 million drawn from amended senior debt facility
- Increased debt capacity for Mereenie asset to A$50 million
- Funding secured for Thailand acquisition completion
- Facility structured in three tranches with varied amortisation and interest terms
- Additional tranche available post-acquisition for development and corporate use
Strategic Financing Milestone
Horizon Oil Limited has officially closed the financial arrangements on its amended senior debt facility with Macquarie Bank, marking a significant step in its growth trajectory. The facility, totaling approximately US$21.5 million in the initial tranches, is designed to underpin the company’s forthcoming acquisition in Thailand, announced earlier this year.
This financing milestone follows Horizon’s June announcement and reflects confidence from lenders in the company’s asset portfolio and strategic direction. The funds are expected to be drawn shortly, enabling Horizon to advance the acquisition process and integrate new assets into its operational framework.
Facility Structure and Terms
The amended senior debt facility is structured as a reserves-based lending arrangement, segmented into three distinct tranches. Tranche A increases the available debt for the Mereenie asset in Australia from approximately A$40 million to A$50 million. This uplift is supported by recent positive infill well results and strategic gas sales agreements, including a notable six-year contract with the Northern Territory government. The tranche amortises through to June 2029, with interest pegged at the Bank Bill Swap Rate plus a 5% margin.
Tranche B1 provides up to US$15 million to initially fund the Thailand acquisition, secured against Horizon’s interests in Block 22/12 offshore China and the Maari asset. This tranche carries an amortisation schedule to December 2027 and an interest rate linked to the Secured Overnight Financing Rate plus 5%. Meanwhile, Tranche B2, up to US$10 million, remains contingent on acquisition completion and further technical diligence. It is earmarked for additional development of the acquired assets and general corporate purposes, with a slightly higher interest margin of SOFR plus 6%.
Implications for Horizon’s Growth Strategy
This financing arrangement not only secures the immediate capital required for Horizon’s expansion into Thailand but also strengthens the company’s balance sheet and operational flexibility. The increased debt capacity for Mereenie reflects confidence in the asset’s production potential and long-term cash flow generation, bolstered by strategic gas sales agreements.
Moreover, the structure of the facility, with staggered tranches and amortisation timelines, provides Horizon with a measured approach to managing its debt obligations while pursuing growth opportunities. The linkage of interest rates to market benchmarks like BBSW and SOFR ensures that financing costs remain transparent and reflective of prevailing market conditions.
As Horizon moves toward completing the Thailand acquisition, investors and analysts will be watching closely for updates on tranche drawdowns and the integration of new assets. The company’s ability to leverage this facility effectively will be critical in sustaining momentum and delivering shareholder value.
Bottom Line?
Horizon’s secured funding marks a pivotal step in its regional expansion, but execution risks remain as acquisition and development plans unfold.
Questions in the middle?
- When exactly will Horizon draw down the remaining tranches, especially Tranche B2?
- What are the detailed terms and expected production impact of the Thailand acquisition?
- How will the increased debt influence Horizon’s overall financial health and credit metrics?