Horizon Oil Limited has announced the execution of a share sale and purchase agreement through one of its wholly owned subsidiaries with Exxon Mobil Corporation which results in the acquisition of a 7.5% working interest in the E5N and EU1 development licences, onshore Thailand, which contain the producing Sinphuhorm conventional gas and condensate field, and a 60% interest in the E5 development licence, onshore Thailand, which contains the producing Nam Phong conventional gas field. The acquisition is proposed through a consortium, with Horizon to acquire 75% of the shares in Exxon Mobil Exploration and Production Khorat Inc. with Matahio Energy acquiring the residual 25% and agreeing to manage EMEPKI employees and operatorship of the Nam Phong field on behalf of the consortium.
Highlights
This a compelling opportunity which requires minimal capital to gain access to a relatively low risk suite of gas producing assets, which offer attractive returns and rapid payback with upside. The proposed transaction offers Horizon the following:
- Acquisition of 3.9 million boe of 2P Reserves as at an effective date of 1 January 2025 associated with the acquisition of a 7.5% working interest in Sinphuhorm, and 60% working interest in Nam Phong gas fields. Based on the headline consideration of US$30 million (net to HZN), this represents an acquisition cost of ~US$7.7/boe.
- Positive cash flow generation from a well-understood reservoir; stable and predictable gas production of approximately 2000 boe/d net to Horizon, based on current rates (approximately comparable with current net Block 22/12 boe/d production rates), with the asset running at close to 100% uptime in 2024
- It is anticipated that, due to the effective date of 1 January 2025 and proposed debt funding, the impact on Horizon’s existing cash reserves on completion will be less than US$10 million.
- Gas is contracted under a long-term gas sales agreement with PTT as the buyer for ultimate use in a regional power station for electricity generation.
- Represents a Thailand country re-entry and establishes a low-cost platform for growth in Thailand and SouthEast Asia, partnering with both PTTEP and Matahio as operators, at the same time providing further diversification of the Company’s production base.
- The acquired assets are exposed to limited abandonment obligations (currently estimated at c. US$5 million net to HZN).
- Potential to enhance value through life extension at both fields, infill drilling, facility upgrades and optimisations, together with additional opportunities in both assets.
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