Horizon takes further interest in Maari and Manaia fields

Australia-based Horizon Oil has entered into an agreement with Todd Maari Limited to acquire its 16% interest in PMP 38160, which contains the producing Maari and Manaia fields, offshore New Zealand. 

The consideration to be paid for the interest is $17.6 million, subject to customary working capital and purchase price adjustments, with an effective date of December 31, 2017, Horizon said on Monday.

The transaction is subject to New Zealand Government Ministerial approval, approval of the Overseas Investment Office, joint venture consent and other customary conditions. The PMP 38160 joint operating agreement does not provide for pre‐emptive rights.

The acquisition will be funded partly from the company’s cash reserves, which were $28.4 million as at September 30, 2017 and partly from the company’s reserves‐based debt facility

When the acquisition completes, the PMP 38160 joint venture will comprise of OMV New Zealand (operator) with 69% interest; Horizon Oil International with 26%; and Cue Taranaki with 5% interest.

Gross production from Maari and Manaia field on November 2, 2017, was 8,840 barrels of oil per day. The MR7A well was shut in for a pump change and perforation of a new reservoir zone.

Brent Emmett, Chief Executive Officer at Horizon Oil, commented: “We are pleased to increase our interest in the Maari/Manaia joint venture – we know these assets well and where the potential lies. We would hope that the larger interest will give Horizon Oil a greater say in the ongoing management of the fields, including reservoir management to maximize oil recovery and cost control.

“The additional interest will be automatically incorporated in Horizon Oil’s reserves base debt facility, increasing the available debt capacity and enabling the majority of the purchase price to be funded by debt.”

Emmett further added: “Upon completion, the acquisition will increase Horizon Oil’s net daily production from about 4,100 bopd currently to 5,500 bopd (inclusive of cost recovery production entitlements in China). Net proven and probably (2P) reserves will increase 43% to 11.3 million barrels of oil and proven and probable (2C) contingent resources will increase 9% to 140.3 million barrels of oil equivalent, based on the Reserves and Resources Snapshot set out in the 2017 Annual Report.

“Importantly, the acquisition will meaningfully increase net operating cash flow from China and New Zealand, which we expect to average $60 – 70 million over the next five years. The additional cashflow is expected to enable reduction of the company’s net debt at a more rapid rate and to enhance future refinancing opportunities on improved overall terms.

“Finally, the acquisition will significantly enhance exposure to increases in the oil price in what is beginning to look like a good time in the commodity price cycle.”

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