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Horizon signs $204 mill deal with Osaka Gas - Printable Version

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Horizon signs $204 mill deal with Osaka Gas - Tree - 05-23-2013


40% of HOR stakes in PRL4 and PRL 21 for $204 mill.  Homework:  What is the $/Mcf?


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Horizon shakes on $204m PNG deal


Deal: Horizon Oil is selling 40% of its Papua New Guinea assets to Japan's Osaka Gas for $204 million
Australian independent Horizon Oil has struck a deal with Japan’s Osaka Gas to sell 40% of its Papua New Guinea assets for $204 million.

The company said Thursday that the partnership aimed to grow and develop the assets to support a mid-scale liquefied natural gas project on the coast in Western Province.

The sale agreement covers the transfer of 40% of Horizon’s stake in PRL 4 containing the Stanley field, PRL 21 containing the Elevala and Ketu fields, and PPL 259.

Under the deal, Osaka will pay $74 million in cash on completion of the transaction plus a further cash payment of $130 million upon a final investment decision for an LNG project. It would also make potential production payments where in the event that threshold condensate production is exceeded.

Osaka also has the option to acquire 40% of Horizon’s equity in PPLs 372, 373 and 430 by paying a proportionate share of costs incurred.

Horizon halted trading on the Australian Securities Exchange earlier on Thursday, stating it was on the verge of a “potential material transaction involving an asset disposal”.

The company considered Osaka the strongly-preferred bidder during the sale process, having considerable LNG engineering capability and the ability to offtake and distribute substantive volumes of LNG.

“Our upstream expertise is a good fit with Osaka Gas' experience in the LNG business and their ability to offtake the product,” chief executive Brent Emmett said in a statement on Thursday.

“They will add significant value to our already strong joint ventures and the strategic relationship will allow Horizon Oil to play its part and participate in a substantive mid-scale LNG development, which will be a large and long-term contributor to value.”

The transaction remains subject to customary consents, regulatory approvals and the grant of the development licence for the Stanley field.



RE: Horizon signs $204 mill deal with Osaka Gas - jft310 - 05-23-2013

IOC sold the Stanley field to Horizon they had better prospects they thought

RE: Horizon signs $204 mill deal with Osaka Gas - TxPm - 05-24-2013

Here is what I have so far:

Based on the article below the fields involved in the acquisition have roughly 125M BOE. Of that 125 Horizon owns roughly 45% so roughly 56Mil BOE of which Osaka just bought a 40% stake or 22.5M BOE. This means that they paid roughly $9.5 per BOE.

If those same metrics were applied to IOC our stake in E/A alone would be worth roughly $8.8Bil. Assuming we sell a 50% stake that means IOC is looking at $4.4Bil. More
Importantly if the deal is structured similar to the Horizon just concluded that means we would be looking at roughly $1.6Bil in upfront cash and $2.8Bil in deferred payments paid out over certain milestones.

Obviously these are very rough numbers and just based on one transaction but I believe it gives us a ballpark idea of the type of deal we will be seeing soon.

Feel free to critic or give other thoughts

RE: Horizon signs $204 mill deal with Osaka Gas - TxPm - 05-24-2013

Sorry I forgot to attach the article referencing the 125M BOE

http://www.proactiveinvestors.com.au/companies/news/43648/horizon-oil-in-us204m-papua-new-guinea-gas-condensate-deal-with-osaka-gas-43648.html

RE: Horizon signs $204 mill deal with Osaka Gas - sfiaes - 05-24-2013

Please, correct me if I am wrong:

Osaka is paying $204 million for 40% of Horizon's PNG assets. From the WSJ article just recently posted Horizon has found 1.2 Tcf of gas.

40% of 1.2Tcf at $1 per mcf is $480 million. So this deal equates to less than 50 cents per mcf. With $74 million or 36% up front.

What am I missing?

RE: Horizon signs $204 mill deal with Osaka Gas - TxPm - 05-24-2013

That 1.2T's is the total for the fields I believe. Horizon owns roughly 40% of those fields alongside Talisman and Kina Petroleum. I could be mistaken though. Another thing to take into consideration is the amount of condensate with these fields. As we all know the IOC fields are rich in condensate

RE: Horizon signs $204 mill deal with Osaka Gas - sfiaes - 05-25-2013

Let's try this again.

From Platts: " Horizon currently holds 50% of Stanley and 45% of Elevala and Ketu, where its partners are Canada's Talisman Energy, Japan's Mitsubishi and local company Kina Petroleum. The company's net certified reserves and contingent resources in PNG's Western province total 125 million barrels of oil equivalent."

So Osaka is paying $204 Mil for 40% of 125 million boe.

If 6mcf equals 1 boe then 125 mil boe equals 750 bcf.

40% of 750 bcf equals 300 bcf.

300 bcf at $.70 mcf equals $210 million. So call it $.69 an mcf with $74 million up front.

This is likely the best comp we have. I think it is important to get it right.

Comments?

RE: Horizon signs $204 mill deal with Osaka Gas - Petro2458 - 05-25-2013

I don't know much about it but would add a few comments:

- very small fields combined to make up this volume ( more wells likely required)
- long distances for flowlines (hi capex)
- The economics of this project seem very marginal to me....will be very tough to make money on 125 MMBOE field.

The best comp we have is the Exxon project...and I believe 25% sold to Exxon or 2.5 TCF should be worth $1.60/mcfe or $4B based on the numbers I have run.