Horizon Oil’s enlarged portfolio delivers a record cash-generating quarter

Cue acquisition powers a record production quarter

Horizon Oil Limited (ASX:HZN) has opened its enlarged portfolio with a record quarter: production reached 631,892 barrels of oil equivalent and sales hit 683,533 boe, increases of 17% and 25% respectively on the June quarter. The result included the first full-quarter contribution from Horizon’s 57.03% controlling interest in Cue Energy Resources, which brought additional exposure to Maari, Mereenie, Palm Valley, Dingo, Mahato and Sampang.

“Palm Valley gas production averaged approximately 5.6 TJ/d (gross), consistent with expectations, and was sold under fixed-term take-or-pay contracts.”

Underlying revenue, a non-AASB measure that includes Horizon’s Thailand investment and excludes Cue’s non-controlling interest, rose 37% to US$47.6 million after hedging. Net operating cash flow increased 47% to US$34.8 million. The result gives substance to the multi-country production platform outlined in the company’s Cue acquisition growth platform, although the quarterly figures remain unaudited and are not a forecast for the full year.

Cash position strengthens despite dividend payment

Cash reserves stood at US$50.4 million at 30 September, up from US$37.4 million three months earlier, with another US$11.9 million due from a late-September China oil lifting. Horizon reported net cash of US$1.3 million before paying its approximately US$12.8 million FY26 final dividend, including the AUD 1.0 cent per share distribution paid on 23 October.

The balance sheet improvement came alongside US$4.1 million of quarterly capital expenditure, concentrated in Australia, Indonesia, New Zealand and Thailand. Horizon carried US$49.2 million of debt at quarter-end, while its hedge book remained modest at 50,000 barrels through December at an average of about US$76 a barrel. The next Maari cargo, scheduled for the second half of November, has been sold at a record premium to Dated Brent, according to the company.

Thailand projects move from construction into production

“Thailand delivered a higher contribution during the quarter, with net production of 187,422 boe (approximately 2,037 boepd), up 7.7% on the prior quarter, as the Sinphuhorm Pad…”

Thailand contributed 187,422 boe during the quarter, up 7.7%, after the Sinphuhorm Pad D tie-in and Nam Phong booster compressor entered service. Horizon now puts its Thailand contribution at approximately 2,300 to 2,500 boepd. The Nam Phong compressor lifted September gas sales to about 8.2 TJ a day from roughly 5.5 TJ a day, while PH-14 at Sinphuhorm delivered first gas in mid-August, 50 days ahead of the original schedule. That follows the Nam Phong compressor rollout, which had been reported as lifting gross field gas sales when it entered service earlier in September.

Horizon’s Thailand interests generated quarterly revenue of US$8.4 million, supported by stronger HSFO-linked gas pricing, while operating costs fell 28.1% to US$1.0 million. The next step is less glamorous but commercially important: managing produced water at Nam Phong to maximise the compressor uplift. Through MH Energy Thailand, Horizon has also approved a three-well Sinphuhorm drilling program for 2027, with drilling currently planned for the first quarter.

Workovers and new wells lift the regional portfolio

China’s Block 22/12 averaged 6,539 gross bopd during the quarter, rising to 7,125 bopd in September and about 7,550 bopd in early October after a multi-well workover campaign. Horizon recorded US$19.6 million of revenue from 197,632 barrels of sales, although operating costs increased as wells were converted to closed-loop water injectors.

“Gross oil production averaged 6, 539 bopd gross during the quarter (1,762 bopd net to Horizon).”

Caption and image © Horizon Oil Limited. From “Quarterly Activities Report”, 29 Oct 2026.

In Indonesia, the first quarter of Cue’s contribution produced 27,863 boe net to Horizon and generated US$2.4 million of revenue. At Mahato, PB-41 and PB-42 came online alongside workover activity, while Sampang’s Grati compressor increased gross gas sales by about 28%. Australia added 139,257 boe, up 34.2%, but Palm Valley’s PV-14 is currently flowing at approximately 0.5 TJ a day and the joint venture is still evaluating how wellbore conditions and reservoir pressure may be affecting performance as PV-15 drilling continues.

Maari recovery brings both cash and obligations

“Gross production averaged 4, 341 bopd gross during the quarter (approximately 1,252 bopd net to Horizon, including its share of Cue’s interest), up 16.2% on the previous quarter.”

New Zealand production rose 16.2% to 4,341 gross bopd after the Maari MR3 workover, with September field production averaging 4,919 bopd. An August lifting delivered 142,418 barrels net to Horizon and US$13.6 million of revenue. Oil production continued while the seawater injection flowline remained offline following an integrity issue, leaving restoration of water injection as an operational priority.

Maari also carries a longer-dated financial and regulatory question. The marine consent application was confirmed complete on 30 September, while the joint venture agreed to establish an escrowed sinking fund for future decommissioning obligations. Horizon’s December-quarter momentum will therefore be measured not only by whether higher production rates persist, but also by how effectively the company converts its enlarged asset base into cash while funding the work required to keep those assets productive and eventually retire them.