Horizon Oil’s Q3 FY26 production dipped due to scheduled maintenance and deferred oil liftings, yet the company pressed ahead with development projects and a strategic takeover offer for Cue Energy.
- Q3 production impacted by Maari maintenance and deferred liftings
- FY26 interim dividend of AUD 1.5 cents per share paid
- Development projects progressing in China, Maari, Thailand, and Mereenie
- Off-market takeover offer for Cue Energy announced and advancing
- Net cash position improved by US$13 million to US$3.3 million
Production and Revenue Impacted by Scheduled Maintenance and Deferred Liftings
Horizon Oil Limited (ASX:HZN) reported a 6.1% drop in group production to 542,983 barrels of oil equivalent (boe) in Q3 FY26, primarily due to a planned five-yearly maintenance shutdown at its Maari field and associated well workovers. Sales volumes were even more affected, falling 32.5% quarter-on-quarter to 382,781 boe, reflecting deferred oil liftings from Maari and Block 22/12 that were completed in April, shifting revenue into the subsequent period. This deferral generated approximately US$24 million in April revenues, benefiting from a higher oil price environment.
Production revenue for the quarter was US$17.2 million, down 37.2% from the prior quarter, while net operating cash flow fell to US$5.3 million. Despite the dip, Horizon maintained cash operating costs at a competitive US$19 per boe, helped by its low-cost Thailand assets. Cash reserves stood at US$59.4 million at quarter end, with a net cash position improving by US$13 million to US$3.3 million. The company also retained a commodity hedge covering 320,000 barrels at around US$70 per barrel through December 2026, focused on near-term scheduled liftings at Maari and Block 22/12.
Development Projects Progressing Across Multiple Regions
Horizon pressed ahead with several development initiatives, targeting investment decisions in the second half of 2026. In China, feasibility studies continued on a potential multi-well drilling program at the WZ12-8E field, with an investment decision aimed for Q4. At Maari, the company is advancing a multi-well drilling opportunity alongside routine maintenance and well interventions, with a similar decision timeline. Thailand’s Nam Phong and Sinphuhorm fields saw steady progress on projects like the Booster Compressor and Pad-D developments, expected to boost gas production reliability and capacity later this year.
Meanwhile, the Mereenie joint venture in Australia reported a 9% increase in production to 27.5 terajoules per day (TJ/d), driven by operational improvements stabilising liquids handling. However, the planned infill drilling program was paused after the expiry of a Letter of Intent with the Northern Territory’s Power and Water Corporation, reducing Horizon’s 2026 capital expenditure forecast by approximately US$5 million. Despite this setback, planning for future gas development wells remains advanced, with contracts and long-lead items in place to enable rapid resumption if market conditions improve. This development pause aligns with recent decisions to suspend drilling at Mereenie following the expiry of gas sales talks Mereenie infill drilling suspended and Mereenie drilling capex cut.
Cue Energy Takeover Offer Advances Strategic Growth Ambitions
In a significant corporate move, Horizon announced an off-market takeover offer for ASX-listed Cue Energy Resources Limited (CUE), viewing the acquisition as a strong strategic fit that complements its regional asset base and diversifies its portfolio. The offer, launched in March and due to close in June 2026, includes a pre-bid agreement to acquire a 19.99% stake in Cue at AUD 0.115 per share. Horizon anticipates potential synergies and increased scale from the combination, with multiple regulatory and joint venture approvals still pending. This takeover bid builds on Horizon’s strategy to expand its footprint across Australasia and South-East Asia, leveraging its existing production and development pipeline. The approach follows earlier announcements of a premium offer for Cue shares Cue takeover bid premium and Cue takeover bid launched.
Operational Resilience Amid Geopolitical Uncertainty
CEO Richard Beament highlighted the strategic importance of Horizon’s South-East Asian and Australasian assets amid global energy market disruptions caused by escalating Middle East conflicts and the Strait of Hormuz blockade. These events have elevated oil prices and intensified focus on regional energy security, positioning Horizon’s oil-weighted portfolio as vital for supplying reliable, locally sourced energy. While the company’s portfolio has diversified into gas, oil and oil-linked production still represent around 70–75% of group volumes, informing a hedging strategy that balances cash flow protection with exposure to favourable market prices.
Horizon remains committed to operational reliability, disciplined capital management, and targeted growth, with several development projects primed for investment decisions in the latter half of 2026. The company’s ability to navigate deferred liftings and maintenance shutdowns while maintaining a solid balance sheet and shareholder returns underscores its resilience in a structurally tight oil market increasingly shaped by supply chain risks and regional supply priorities.
Bottom Line?
Horizon’s Q3 production hiccups underscore the challenges of maintenance and lifting timing, but its advancing development projects and Cue takeover bid signal a strategic push for growth amid volatile energy markets.
Questions in the middle?
- Will Horizon’s Cue Energy takeover secure the regulatory approvals needed to close successfully?
- How will deferred oil liftings and maintenance cycles affect Horizon’s revenue visibility in coming quarters?
- Can the Mereenie joint venture resume infill drilling if new gas sales agreements materialise?