Horizon eyes PNG sale

[admin]

Horizon eyes PNG sale

Thursday, 22 November 2012 HORIZON Oil will offload partial interests of its PNG assets in an attempt to return part of future cash flow to shareholders. Gas show at Stanley-1 Speaking to investors during Horizon’s annual general meeting today, Horizon chairman Fraser Ainsworth said that it would seek to bring in a partner to manage the cash burn. “The board has initiated a sale process of a partial interest in our PNG assets, with the intent of introducing a new participant who will add strategic value to our already strong joint ventures,” Ainsworth said. “We believe Horizon Oil has a commanding and material position in the liquids-rich ‘sweet spot’ of the Papuan foreland basin and we have had strong interest in the sale from substantive LNG industry players.” Ainsworth said a successful sale would provide certainty on future funding while providing an earlier return on investment. He also said that any sell-down would allow it to make a better judgement on potential dividends.

[freddiekingman]

"in an attempt to return part of future cash flow to shareholders.".....sweet words...too bad it says "attempt"

[Palm]

And another article in National. They are "approaching" 1.2 Ts and have great interest from many companies. Sounds like another Interoil-like scam.

INTERNATIONAL energy companies seeking a foothold in Papua New Guinea’s nascent natural gas export industry are being courted with a new opportunity.
Sydney-based Horizon Oil is seeking to sell up to half of its assets in PNG, after drilling results in the forelands region of the Southeast Asian country beat expectations and highlighted the potential for a new liquefied natural gas plant.
A deal could be worth around A$250 million based on recent transactions in PNG, which UK-based consultancy Wood Mackenzie estimated had reserves totalling at least 26 trillion cubic feet of natural gas.
Unlike rival LNG suppliers in the Middle East, shipments to Asia from PNG won’t pass through the Malacca Strait choke point near Singapore and freight charges are lower.
“We believe Horizon Oil has a commanding and
material position in the liquids-rich sweet spot of the Papuan foreland basin and we have had strong interest in the sale from substantive LNG industry players,” Ho­rizon Oil chairman Fraser Ainsworth told shareholders at the company’s annual meeting in Sydney.
A successful sale would balance Horizon’s oil and natural gas portfolio
Ainsworth said it includes producing and developing assets in New Zealand and China, with financing for advancing its PNG project and would also enable the company to firm up plans to pay dividends in future, he said.
Horizon Oil had hired investment bank Lazard to lead the partial sell down of its PNG assets.
Horizon’s sale process comes just weeks after France’s Total made its first foray into PNG through an exploration deal with Oil Search in the Gulf of Papua.
However, PNG isn’t immune from headwinds such as currency swings buffeting its bigger neighbour Australia, where US$180 billion of investment is currently being ploughed into gas-export projects and several more developments are on the drawing board.
Earlier this month, ExxonMobil said the cost of its PNG LNG project in PNG had blown out to US$19 billion, in part due to exchange-rate movements.
It also blamed local landowner disputes and torrential rain for the overrun from its earlier budget of US$15.7 billion.
Analysts and investors seeking to put a value on Horizon’s assets will likely look to the acquisition by Japan’s Mitsubishi in February of stakes in several natural gas discoveries and prospects in PNG from Canada’s Talisman Energy for US$280 million.
Talisman is a joint venture partner of Horizon Oil in the PRL 4 and PRL 21 tenements, which respectively contain the Stanley and Elevala/Ketu discoveries. Sydney-based Horizon owns 50% of PRL 4 and 45% of PRL 21, as well smaller stakes in two adjacent blocks.
However, the price tag for half of Horizon’s equity will have been boosted by the successful Ketu-2 well in PRL 21, recent reserves upgrades, and this year’s final investment decision taken on developing the Stanley field.
“The increased gas volume – around 1.2 trillion cubic feet in PRLs 4 and 21 combined – is approaching the scale required for a mid-scale LNG project and we are advanced in our pre-feasibility studies of this opportunity,” the company said in a statement to the Australian Securities Exchange on Oct 12.
In July, Horizon said any LNG scheme could happen alongside current plans to recover condensate from the gas for early export via the Fly River.
Companies in China, Japan and South Korea that rely on LNG to plug a gap in their energy mix have been actively seeking equity in LNG projects as well as traditional off take deals. – WSJ

http://www.thenational.com.pg/?q=node/41615