- Horizon Oil (HZN) has fired CEO Michael Sheridan and released its interim report
- The oil and gas explorer delivered sales revenue of US$52.7 million, a 17 per cent drop on the prior corresponding period
- Half-year production dropped by a modest 6 per cent, while oil and gas sales volumes dropped by 25 per cent
- A further drop of 29 per cent was outlined in the company's EBITDAX which came in at just over US$31 million
- Positively, operating costs dropped by 12 per cent and administration costs by 7 per cent
- Another win is an almost US$21 million debt reduction since June 2019
- Horizon Oil has populated headlines recently as questions arise around a Petroleum Retention Licence in Papua New Guinea
- As a result of the scandal, Michael Sheridan was suspended and has now resigned as director
- Acting CEO Chris Hodge will continue as Managing Director
- Horizon Oil is up 1.41 per cent today, with shares trading for 7.2 cents each
Horizon Oil (HZN) has fired CEO Michael Sheridan released its half-year report for the period to December 31 2019.
For the half-year, Horizon reported production of 754,862 barrels of oil and gas at an average of 4103 barrels per day. This represents a 6 per cent decrease to the 801,904 barrels produced in the half-year ended December 31 2018.
Production largely came from Horizon's shared operating interest in Block 22/12 within the Beibu Gulf fields in China.
Oil and gas sales volumes were 25 per cent lower this period, coming in at 770,744 barrels of crude oil (bbls) compared to 1,021,218 bbls in the previous corresponding period.
The company anticipated this as being in line with its working interest of production owing to settle its remaining Block 22/12 exploration cost recovery.
Crude oil sales revenue of US$52.7 million was generated as a result of a net oil price of US$68.34 per barrel for the period.
A total of 51 per cent of sales were hedged (securing cashflows despite cost fluctuations), with a gain of US$2.8 million realised on 390,000 barrels of oil hedged at a weighted average price of US$69.46 per barrel compared to 600,000 barrels at US$59.25 per barrel.
A further significant drop of 29 per cent was outlined in the company's earnings before interest, taxes, depreciation, amortisation, and exploration expense (EBITDAX) which came in at US$31.3 million.
Exploration expenditure increased to drill and develop China and Papua New Guinea assets. However, financing costs were US$6.4 million lower than the previous period due to positive refinancing and restructuring changes.
Positively, operating costs dropped by 12 per cent to US$32.5 million due to intentionally lowering costs at the Maari field in New Zealand. Additionally, administrative expenses were 7 per cent lower at US$2.5 million due to focus on costs and reducing staff.
Another win for the oil and gas explorer is having reduced its debt by US$20.6 million since June 30 2019. The company's debt position now sits at US$7.4 million.
Horizon Oil has consistently found its way into the headlines recently regarding the resurfacing issue around the Petroleum Retention Licence 21 (PRL 21) in Papua New Guinea (PNG).
While Horizon's PNG assets have significant potential, the recent roadblocks have postponed the ability to uncover further value.
On February 10, Horizon Oil saw its share price plummet after the AFR resurfaced an investigation from 2011. The initial investigation looked into how Horizon was suspiciously granted the PRL 21 licence following William Dumas, the then Minister for Petroleum and Energy, denying the grant.
The company stated it had no knowledge of any wrongdoing or bribery and proceeded with an independent investigation.
The matter even reached the top order of Papua New Guinea's Prime Minister, James Marape who wanted to find evidence on the issue.
"Recognising the recent challenges faced by the Group in respect of its PNG assets, the Group has impaired these assets down to US$5.7 million [from US$62 million]," CEO Chris Hodge said.
Just after, on February 12, CEO Michael Sheridan faced the fallout and was suspended. Today, the company has terminated his contract. The Horizon Oil Board recognised it was untenable for Michael to remain in the role during the investigation.
"With the continued strong free cash flow generation and reduced debt levels, the Group remains well positioned to pursue value accretive growth opportunities," Chris added.
"The Board thanks Mr Sheridan for his contribution to the company for the past 17 years," Horizon stated in today's announcement.
As a result of his suspension and resignation, the acting CEO Chris Hodge will continue in the role of Managing Director.
Horizon Oil is up 1.41 per cent today, with shares trading for 7.2 cents each at 1:46 pm AEDT.