ACN 51 009 799 455
ANNUAL
REPORT
horizonoil.com.au
FY2024 INVESTMENT
HIGHLIGHTS
Financial Year 2024 was transformative for the Company with the successful
acquisition of Mereenie. This third production asset has diversified our production
base, significantly increased the Group’s reserves, and provides a production base
beyond the expiry of existing licences.
FY24 Total Shareholder Return (TSR) of 54%
adding approximately AUD 120 million of
shareholder value
Successful completion of Block 22/12 drilling
programs, with progress towards Maari life
extension
Completed the acquisition of a 25% non-
operated participating interest in the OL4 and
OL5 development licences, Northern Territory,
Australia, which contain the producing
Mereenie conventional oil and gas field
Recognising the continued strong results for
the financial year, the Company announces
a final unfranked (conduit foreign income)
dividend of AUD 1.5 cents per share.
Together with the interim dividend of AUD
1.5 cents per share paid in April 2024, the
interim and final dividend distributions total
AUD 3.0 cents per share.
STATUTORY PROFIT
BEFORE TAX
US$39.2m
NET CASH
US$26.2m
SALES REVENUE
US$111.5m
FINAL FY24
DIVIDEND
(~US$16M)
AUD 1.51 cps
SALES VOLUME
1,301,155boe
EBITDAX
US$71.5m
1 Final dividend to be paid following the interim dividend of AUD 1.5 cents per share paid in April 2024
HORIZON OIL ANNUAL REPORT 2024
CHINA
Block 22/12
Production 26.95%
AUSTRALIA
OL4/OL5
Production 25%
AREAS OF
OPERATION
CONTENTS
2024 Highlights
01
Reserves and Resources
Statement
05
Shareholder Information
104
Chairman’s Message
02
Activities Review
11
Glossary
107
CEO’s Message
03
Annual Financial Report
15
Corporate Directory
109
1 Net of hedge settlements
2 FY20 and FY21 excludes profit and loss from discontinued operations
NEW ZEALAND
PMP 38160 (Maari/Manaia)
Production 26%
Oil & gas sales
(MMboe)
Maari
Beibu
Cost recovery entitlement
Mereenie
20
21
22
23
24
Revenue1
(US$m)
Maari
Beibu
Cost recovery entitlement
Mereenie
46.8
38.1
74.3
0.1
152.1
84.0
63.6
108.1
116.6
35.5
37.1
25.5
33.8
20
21
22
23
24
EBITDAX2
(US$m)
(Excl. cost recovery)
Cost recovery
20
21
22
23
24
Statutory profit
after tax2
(US$m)
(Excl. cost recovery)
Cost recovery
20
21
22
23
24
16.4
4.9
24.3
43.9
4.9
24.3
43.9
16.3
0.1
0.84
1.20
0.36
0.83
1.43
0.60
0.80
1.27
0.47
1.77
1.30
0.37
0.37
1.40
0.1
36.4
51.4
73.0
51.3
36.4
73.0
103.5
103.5
67.6
71.5
3.9
23.0
25.9
111.5
72.9
34.2
3.9
0.4
0.02
0.05
0.86
2.9
HORIZON OIL ANNUAL REPORT 2024 1
Mike Harding
Chairman
A MESSAGE FROM OUR CHAIRMAN
2024 saw the continuation of the strong cash
generation and dividend declarations that
have become a consistent theme for Horizon.
For the 4th consecutive year, the Company
has been able to return at least AUD 3.0 cents
per share to shareholders, with the final
FY24 dividend announced of AUD 1.5 cents
per share, which followed the earlier interim
dividend paid of AUD 1.5 cents per share.
It is with mixed emotions that I recently announced
my intended retirement from the Horizon Board at
the upcoming AGM. Horizon is a Company I have
grown very fond of, having taken on the role at a time
when the Company was deeply indebted and facing
strategic headwinds which had eroded shareholder
value.
Over my 6 years as Chairman, we significantly reduced
the level of gearing and streamlined the business to
become a lean, highly cash generative oil and gas
company paying substantial distributions which
now amount to over AUD 170 million. Having recently
completed the acquisition of a third producing asset,
and with a wellestablished management team with
Richard at the helm, I feel that now is the right time
for me to retire from the Board. I am delighted that
Bruce Clement, having been a non-executive director
for 4 years, will succeed me as Chairman as he brings
a wealth of knowledge and experience to the role.
In consideration of my impending retirement, the
Company’s transition into a domestic gas producer,
and with a well-established management team, the
Board considers that now is an appropriate time for a
Board refresh.
With my planned retirement from the Board at the
conclusion of the 2024 AGM, Bruce Clement has
agreed to assume the role of Chair from the conclusion
of the AGM. With nearly 4 years of experience on the
Horizon Board, and with over 40 years’ oil and gas
experience including leading ASX listed oil and gas
companies, Beach Energy Limited, AWE Limited and
Roc Oil Limited, Bruce is well qualified to lead Horizon
into the future.
Following a thorough search focused on identifying
a technically strong Board member to replace me as
a nonexecutive director, the Board has identified ex-
Transfield CEO/MD, Dr Peter Goode. Dr Goode brings
over 40 years’ experience in engineering, and oilfield
services, and is currently Chairman and co-founder
of the leading US Onshore completions provider,
GR Energy Services. It is intended that Dr Goode be
appointed to the Board effective 1 September 2024,
and in accordance with ASX listing rules he will stand
for election by shareholders at the 2024 AGM.
As also recently announced, non-executive director
Sandra Birkensleigh plans to retire from the Board in
2025 after over 8 years of service. I would like to thank
Sandra for her time and contribution to the Board,
particularly as audit committee Chair. Whilst Sandra
will seek re-election at the upcoming AGM, she will
assist in finding a replacement for her during her next
term.
Finally, I would like to say thank you for having me as
Chairman and I wish all those associated with Horizon
all the best for the future.
HORIZON OIL ANNUAL REPORT 2024
2
A MESSAGE FROM OUR CEO
Building on the success we’ve had in recent
years, Financial Year 2024 was a pivotal year
for the Company following the successful
completion of the Mereenie acquisition. In
adding a third production asset to the portfolio,
we have diversified the production base,
materially added to the Group’s reserves,
and added an asset which can provide a
production base beyond the expiry of our
existing assets. The subsequent signing of a
long-term strategic gas supply agreement
with the NT government so soon after
completing the acquisition was a tremendous
outcome and underscores the strategic merit
of the acquisition and Mereenie’s importance
to domestic gas supply.
Whilst the Mereenie acquisition was the headline
announcement during the year, our legacy assets
of Block 22/12 and Maari continued to provide the
reliable, high margin financial horsepower to which
we have grown accustomed. Once again, the Block
22/12 joint venture was able to successfully execute
an infill drilling campaign which restored production
back above the field long term average of 10,000 bopd
(gross). The ability of the joint venture to efficiently
convert contingent resources to developed reserves
continues to unlock value for Horizon shareholders,
and planning is underway for a potential CY25 infill
drilling campaign. The infill wells executed at the
WZ12-8E field during the year have increased the
production base from this field providing further
confidence that WZ12-8E production will extend out
further to towards the end of the decade. This led
to a material reserves upgrade at Block 22/12. Maari
also made a material financial contribution during the
year with an 18% increase in production combined
with strong premiums achieved on Maari sales adding
meaningful additional free cashflow. The prospect of
licence extension at Maari out to the end of the decade
and potentially beyond continues to look promising,
with a key milestone achieved during the year with
critical infrastructure recertified for a further 5 years.
In addition, a licence extension application is nearing
completion with regulatory lodgement expected
shortly. If granted, an extension to the licence would
add material value to the Company and provide a
continued pathway for distributions.
Financially, the Company remains in a position of
strength with net cash of over US$26 million, following
both the Mereenie acquisition and the dividend
payments totalling approximately US$37 million.
Cash generation from our assets remains exceptional
allowing the continuation of the Company’s strategy
to prioritise distributions to shareholders. In addition
to the AUD 1.5 cent per share interim dividend paid in
April 2024, we have approved a further AUD 1.5 cent
per share final dividend to be paid in October 2024.
These distributions combined represent over a 15%
dividend yield for the year. With approximately AUD
170 million returned to shareholders over the past
3 to 4 years and with a further AUD 24 million to be
returned over the coming months, we have continued
to sustain a top tier dividend yield which has become
a hallmark of Horizon’s success and stood us apart
from many of our peers. Given our continued robust
cashflow generation, our desire is for distributions to
continue to be a recurring feature in the years ahead.
On the ESG front, safety continued to remain a priority
at all our assets, with the Group Total Reportable
Injury Frequency Rate and Lost Time Injury Frequency
Rate both well below the NOPSEMA industry average.
This is a testament to the quality and diligence of the
operators of our assets – CNOOC, OMV and Central
Petroleum.
HORIZON OIL ANNUAL REPORT 2024
3
Richard Beament
Chief Executive Officer
Specifically on climate change, we were pleased to
see material progress being made during the year at
our Flinders Biochar Project through our investment
in Re-Vi (formerly known as Nobrac).
A key milestone was the production of the first
biochar during the year, with certification of the
Carbon Removal Credits underway. We also see our
investment into domestic gas as an integral part
of supporting the energy transition, with Mereenie
signing a strategic gas sales agreement with rare
earther miner, Arafura Rare Earth’s Limited. Gas from
Mereenie will allow Arafura to process critical rare
earth minerals which are essential for the production
of magnets used for motors in wind turbines and
EVs. The Federal Government support to Arafura
demonstrates the strategic importance of their
Nolans Project which will initially rely on gas being
supplied from the Mereenie field.
Regarding Mike’s recently announced retirement and
the upcoming Board changes, I would like to extend
our gratitude, on behalf of the Board and the entire
Horizon team, for his exceptional contributions and
support over the past six years. Throughout this time,
Mike collaborated with the Board and shareholders
to navigate numerous challenges, ultimately guiding
the company to realign its strategy. Today, thanks
to his leadership, Horizon stands out as a leading
player in the junior energy sector. I also look forward
to welcoming Peter Goode to the Board and want to
extend my gratitude to Sandra Birkensleigh for her 8
years of invaluable service to the Company.
Over the year, our team has put in an enormous effort
to accomplish our strategic goals. I consider myself
very lucky to have the support of such a talented
team of professionals. I thank each of them for their
dedication and hard work, and congratulate them
for the results we’ve been able to achieve.
Looking to the future, we remain steadfast in our
strategy:
• We aim to continue to maximise free cashflow
from our current high quality assets;
• We are focussed on making further distributions to
shareholders; and
• We will continue to invest in organic production
growth initiatives in Block 22/12, Maari and
Mereenie, whilst keeping an eye out for exceptional
new business opportunities – our focus is on
bringing into production our pipeline of contingent
and prospective resources.
Despite the ongoing challenges faced by our
business and sector, our capable team have the
skills and expertise to navigate the obstacles and
continue to create value for shareholders.
HORIZON OIL ANNUAL REPORT 2024
4
2024 HIGHLIGHTS
• Horizon booked net 2P gas Reserves of 32 PJ (5.5 MMboe) following the acquisition of a 25% interest in the
Mereenie producing oil and gas field with an effective date of 1 April 2023. The acquisition is expected to
meaningfully increase net operating cash flow over the next 5+ years and provide a production base beyond
the expiry of our existing assets.
• Horizon net Proved + Probable (2P) Reserves doubled from 4.9 MMboe (all crude) at 30 June 2023 to 9.9
MMboe (44% crude and condensate) at 30 June 2024 as a consequence of the Mereenie acquisition and
transfers from Contingent Resources to Reserves offset in part by production.
• A very strong year of production including a material contribution from the new Mereenie project with
Horizon’s total net economic interest share of production of 1.9 MMboe compared with 1.8 MMboe last year.
China and New Zealand contributed a total of 1.4 MMbbl of oil production while Mereenie contributed 2.7 PJ
sales gas (0.5 MMboe) for the 15 month period from the1 April 2023 effective date.
• Horizon net 2P crude and condensate Reserves declined by 0.5 MMbbl from 4.9 to 4.4 MMbbl with production
of 1.4 MMbbl offset in particular by transfers from Contingent Resources to Reserves in China (+0.6 MMbbl)
and the addition of 0.3 MMbbl associated with the Mereenie acquisition. The China contribution is a
continuation of the Beibu joint venture strategy of actively working to bring new projects into production
including four new wells drill in 2024.
• 2C Contingent Resources increased from 6.9 MMboe to 13.3 MMboe primarily due to 45.6 PJ (7.8 MMboe) of
gas associated with the Stairway and Pacoota reservoirs in the Mereenie asset. China Contingent Resources
also remain strong at 2.6 MMbbl with up to eleven possible future projects, mostly infill wells.
HORIZON OIL LIMITED
2024 RESERVES
AND RESOURCES STATEMENT
AS AT 30 JUNE 2024
RESERVES AND CONTINGENT RESOURCES (HORIZON SHARE AT 30 JUNE 2024)
2024
2023
% Change
1P - Proved Reserves
MMboe
6.0
2.8
113%
2P - Proved and Probable Reserves
MMboe
9.9
4.9
101%
2C - Contingent Resource
MMboe
13.3
6.9
93%
RESERVES AND CONTINGENT RESOURCES BY PRODUCT (HORIZON SHARE AT 30 JUNE 2024)
GAS
PJ
CRUDE AND
CONDENSATE
MMBBL
TOTAL MMBOE
1P - Proved Reserves
20.4
2.5
6.0
2P - Proved and Probable Reserves
32.0
4.4
9.9
2C - Contingent Resource
45.6
5.5
13.3
5
HORIZON OIL ANNUAL REPORT 2024
5
2024 RESERVES AND RESOURCES STATEMENT
PROVED (1P) AND PROVED + PROBABLE (2P) RESERVES
1P - PROVED RESERVES (HORIZON NET)
ALL PRODUCTS MMboe
GAS PJ
CRUDE & CONDENSATE
MMbbl
DEVELOPED
UNDEVELOPED
TOTAL
China
Block 22/12: Beibu
0.0
1.4
1.4
0.0
1.4
New Zealand
PMP 38160: Maari; Manaia
0.0
0.9
0.9
0.0
0.9
Australia
OL4&OL5: Mereenie
20.4
0.2
3.8
0.0
3.8
Closing Balance
30 June 2024 (arith sum)
20.4
2.5
6.0
0.0
6.0
2P - PROVED PLUS PROBABLE RESERVES (HORIZON NET)
ALL PRODUCTS MMboe
GAS PJ
CRUDE & CONDENSATE
MMbbl
DEVELOPED
UNDEVELOPED
TOTAL
China
Block 22/12: Beibu
0.0
2.6
2.6
0.0
2.6
New Zealand
PMP 38160: Maari; Manaia
0.0
1.5
1.5
0.0
1.5
Australia
OL4&OL5: Mereenie
32.0
0.3
5.8
0.0
5.8
Closing Balance
30 June 2024 (arith sum)
32.0
4.4
9.9
0.0
9.9
RESERVES RECONCILIATION
30 JUNE 2023
PRODUCTION1
REVISIONS
TRANSFERS,
EXTENSIONS &
DISCOVERIES
ACQUISITIONS1,
DIVESTMENTS &
RELINQUISHMENTS
30 JUNE 2024
1P - PROVED RESERVES RECONCILIATION (HORIZON NET)
Crude and Condensate
(MMboe)
2.8
-1.4
0.5
0.3
0.3
2.5
Sales Gas (PJ)
0.0
-2.7
0.0
0.0
23.1
20.4
Total 1P MMboe
2.8
-1.9
0.5
0.3
4.3
6.0
2P - PROVED AND PROBABLE RESERVES RECONCILIATION (HORIZON NET)
Crude and Condensate
(MMboe)
4.9
-1.4
-0.1
0.6
0.4
4.4
Sales Gas (PJ)
0.0
-2.7
0.0
0.0
34.7
32.0
Total 1P MMboe
4.9
-1.9
-0.1
0.6
6.3
9.9
1. Acquisition volumes are from Mereenie as at the effective date of 1 April 2023 of the transaction. Production volumes includes 0.6PJ and 0.03 MMbbl
from 1 April 2023 to 30 June 2023 from Mereenie as reported in 11 June 2024 ASX announcement.
* All volumes quoted in text and table are Horizon net. Refer also note 12.
HORIZON OIL ANNUAL REPORT 2024
6
HORIZON OIL ANNUAL REPORT 2024
6
2C - CONTINGENT RESOURCES
2C - CONTINGENT RESOURCES (HORIZON NET)
GAS
PJ
CRUDE &
CONDENSATE
MMbbl
TOTAL
EQUIVALENT
MMboe
China
Block 22/12: Beibu
0.0
2.6
2.6
New Zealand
PMP 38160: Maari; Manaia
0.0
2.8
2.8
Australia
OL4&OL5: Mereenie
45.6
0.1
7.9
Closing Balance 30 June 2024 (arithmetic sum)
45.6
5.5
13.3
2C - CONTINGENT RESOURCES RECONCILIATION
30 JUNE 2023
REVISIONS
TRANSFERS,
EXTENSIONS &
DISCOVERIES
ACQUISITIONS,
DIVESTMENTS &
RELINQUISHMENTS
30 JUNE 2024
2C CONTINGENT RESOURCES (HORIZON NET)
Crude and Condensate (MMboe)
6.9
-1.1
-0.4
0.1
5.5
Sales Gas (PJ)
0.0
0.0
0.0
45.6
45.6
Total MMboe
6.9
-1.1
-0.4
7.9
13.3
* All volumes quoted in text and table are Horizon net. Refer also to note 12.
2U - PROSPECTIVE RESOURCES
2U - PROSPECTIVE RESOURCES (HORIZON NET)
GAS PJ
CRUDE &
CONDENSATE MMbbl
TOTAL
EQUIVALENT
MMboe
China
Block 22/12: Beibu
0.0
2.6
2.6
New Zealand
PMP 38160: Maari; Manaia
0.0
0.0
0.0
Australia
OL4&OL5: Mereenie
0.0
0.0
0.0
Closing Balance 30 June 2024 (arithmetic sum)
0.0
2.6
2.6
2U - PROSPECTIVE RESOURCES RECONCILIATION
30 JUNE 2023
REVISIONS
TRANSFERS,
DISCOVERIES &
EXTENSIONS
ACQUISITIONS /
DIVESTMENTS
30 JUNE 2024
Crude and Condensate (MMboe)
2.6
2.6
Sales Gas (PJ)
0
0
Total MMboe
2.6
2.6
Cautionary statement: Prospective Resources are the estimated quantities of petroleum that may potentially be recovered by the application
of a future development project(s) relate to undiscovered accumulations. The estimates have both an associated risk of discovery and risk of
development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of hydrocarbons. The 2U
Prospective Resources in the above table are unrisked volumes.
* All volumes quoted in text and table are Horizon net. Refer also to note 12.
HORIZON OIL ANNUAL REPORT 2024
7
HORIZON OIL ANNUAL REPORT 2024
7
2024 RESERVES AND RESOURCES STATEMENT
PERMITS, LICENCES AND INTERESTS HELD
PERMIT OR LICENSE
OPERATOR
MATERIAL PROJECTS
NET WORKING INTEREST (%)
30 JUNE 2024
30 JUNE 2023
China
Block 22/12
CNOOC
WZ6-12S,M,N; WZ12-8W,M,E
26.95%
26.95%
New Zealand
PMP 38160
OMV
Maari, Manaia
26.00%
26.00%
Australia
OL4 and OL5
Central Petroleum
Mereenie
25.00%
0.00%
HORIZON OIL ANNUAL REPORT 2024
8
Notes
1
All estimates are prepared in accordance with the
Society of Petroleum Engineers (SPE) Petroleum
Resources Management System (PRMS) revised 2018.
2
Relevant terms used in this statement, capitalised
or otherwise, have the same meaning given to those
terms in the SPE PRMS.
3
Reserves are those quantities of petroleum
anticipated to be commercially recoverable by
application of development projects to known
accumulations from a given date forward under
defined conditions.
4
Contingent Resources are those quantities of
petroleum estimated, as of a given date, to be
potentially recoverable from known accumulations
by application of development projects, but which
are not currently considered to be commercially
recoverable owing to one or more contingencies.
5
Prospective Resources are those quantities
of petroleum estimated, as of a given date, to
be potentially recoverable from undiscovered
accumulations by application of future development
projects. See also above Cautionary Statement.
6
Contingent and Prospective Resource estimates
quoted for China have assumed China National
Offshore Oil Corporation (‘CNOOC’) participation at
51%. CNOOC is entitled to participate at up to a 51%
equity level in any commercial development within
Block 22/12. Prospective Resources also only include
Horizon’s on block share.
7
Liquids are equal to the total of oil, condensate and
natural gas liquids where 1 barrel of condensate or
natural gas liquids equals 1 barrel of oil. Gas reserves
have been converted to oil equivalent using 5.816PJ
equals one million barrels of oil equivalent.
8
Raw Gas is natural gas as it is produced from the
reservoir which may include varying amounts of
heavier hydrocarbons which liquefy at atmospheric
conditions, water vapor and other non-hydrocarbon
gases such as hydrogen sulphide, carbon dioxide,
nitrogen or helium.
9
Sales Gas represents volumes that are likely to
be present a saleable product. Sales Gas are
reported assuming average values for fuel, flare and
shrinkage considering the variable reservoir fluid
properties of each constituent field on an energy
basis the customary unit is PJ. PJ means petajoules
and is equal to 1015 joules.
10 For Reserves and Contingent Resources, depending
on the asset, either deterministic estimates
or probabilistic estimates have been used.
For Prospective Resources, all estimates are
probabilistic estimates.
11
Reported estimates of petroleum Reserves,
Contingent Resources and Prospective Resources
have been aggregated by arithmetic summation
by category. 1P Reserves reported beyond the field,
property or project level aggregated by arithmetic
summation may be a very conservative estimate due
to the portfolio effects of arithmetic summation.
12 Estimates are reported according to Horizon Oil’s
net economic interest, this being Horizon Oil’s net
working interest adjusted for entitlements (Economic
Interest adjustment) under production-sharing
contracts and risked-service contracts; and are
reported net of royalties and lease fuel up to the
reference point. Reference points for Horizon’s
petroleum Reserves and Contingent Resources
and production are defined points where normal
operations cease, and petroleum products are
measured under defined conditions prior to custody
transfer. For China, Horizon’s net economic interest
ranges from 24.32% to 26.95%. For New Zealand and
Australia, Horizon’s net economic interest is equal to
Horizon’s net working interest of 26.00% and 25.00%
respectively.
13 Horizon Oil employs a Reserves Management
System to ensure the veracity of data used in the
estimation process. This process includes review
by senior staff where data is endorsed for inclusion
in the estimating process. Estimates are reviewed
annually, at a minimum, with interim reviews as
required, to respond to any material changes.
Horizon Oil undertakes semi-regular external reviews
to complement its own internal process.
14 The estimates of petroleum Reserves and
Resources contained in this statement are based
on, and fairly represent, information and supporting
documentation prepared by staff and independent
consultants under the supervision of Mr Gavin
Douglas, Chief Operating Officer of Horizon Oil
Limited. Mr Douglas is a full-time employee of
Horizon Oil Limited and is a member of the American
Association of Petroleum Geologists and the Society
of Petroleum Engineers. Mr Douglas’ qualifications
include a Masters of Reservoir Evaluation and
Management from the Heriot Watt University UK,
and more than 25 years of relevant experience.
Mr Douglas consents to the use of the petroleum
Reserves and Resources estimates in the form and
context in which they appear in this statement.
15 Some totals in the tables may not add due to
rounding.
HORIZON OIL ANNUAL REPORT 2024
9
10
10
Horizon Oil Annual Report 2024
HORIZON OIL ANNUAL REPORT 2024
REVIEW
ACTIVITIES
HORIZON OIL LIMITED
HORIZON OIL ANNUAL REPORT 2024
11
HORIZON INTEREST
%
PRODUCTION
26.95
Block 22/12, Beibu Gulf, Offshore China
A successful four well infill well drilling campaign was largely
completed during the fourth quarter of the financial year, ahead
of schedule and under budget, which contributed incremental
production rates of 2,300 bopd gross (620 bopd net). The drilling
program restored production back above the long-term field
average with Block 22/12 production on 30 June 2024 of 10,360
bopd gross (2,792 bopd net). These rated do not include the
contribution from the last 12-8E infill well that came online on 13
July and flowed at approximately 400 bopd gross (Horizon net
108 bopd) following cleanup. The four well program is forecast
to recover an incremental 1.3 mmbbl gross (Horizon net 0.35
mmbbl) to the end of the contract period.
The Joint Venture has also matured a significant water handling
capacity upgrade project which is expected to be online from
early 2026. Recovery from this project was previously carried as
contingent resources but has been reclassified as reserves in
Horizon’s 30 June 2024 reserves report. The project is forecast to
recover an incremental 1.2 mmbbl gross (Horizon net 0.3 mmbbl)
to the end of the contract period. Horizon will pay the Operator
an additional Opex processing tariff for its proportionate share
of additional water handling once the project is online.
The Block 22/12 Joint Venture continues to evaluate and mature
further infill drilling targets with a view to executing a drilling
program during calendar year 2025, subject to rig availability
and joint venture approvals.
1 Cost recovery oil entitlement is a right under the Block 22/12 Petroleum Contract to additional oil production to compensate Horizon for historical exploration
expenditure incurred in the Block. The current entitlement is associated with historical WZ12-8E exploration costs.
During the financial year, the Group’s working interest share
of production from the Beibu Gulf fields was 945,236 barrels
of oil, with production declining as expected back towards
the long term field average following the successful WZ12-
8E development drilling during the prior year. Average gross
production over the financial year was over 9,600 bopd, of
which the Group’s share was 2,590 bopd.
Crude oil sales for the financial year were 911,280 barrels at
an average price of US$84/bbl exclusive of executed hedging.
Oil sales and revenue benefited from an incremental cost
recovery oil entitlement resulting in an additional ~US$3.9
million of revenue recorded for the financial year.
Cash operating costs for the year were US$19.40/bbl
(produced), excluding the costs of well workovers mentioned
below.
A three well workover campaign was completed in the second
half of the financial year comprising activities to restore
production from two currently inactive wells, and preparatory
work on a third inactive well to enable side-tracking during the
subsequent Q4 drilling program.
HORIZON OIL ANNUAL REPORT 2024
12
HORIZON INTEREST
%
PRODUCTION
26
Towards the end of the second quarter, the Maari JV
commenced a workover on the shut-in MR6A well with the
aim of reinstating oil production from the Maari Mangahewa
and to exploit a previously unproduced Matapo Sandstone
behind pipe opportunity. Unexpected workover unit repairs
in December resulted in the temporary suspension of the
workover. With those repairs completed during the financial
year, and following the successful MR8A and MR10 ESP
changeouts (see below), the workover re-commenced
subsequent to year end.
Production was impacted during the fourth quarter by ESP
failures in the MR8A and MR10 production wells, noting that
both pumps materially exceeded their expected operational
lifespans. Following completion of the workover unit repairs,
the pumps were replaced and both wells were successfully
brought back online.
The Operator received the FPSO class extension certificate
from the certifying authority ABS which allows the facility
to continue to operate for a further five years through to
April 2028, subject to meeting ongoing continuous survey
requirements. This, together with the continued favourable
production trends at Maari provides the joint venture with the
confidence to pursue life extension beyond the current 2027
permit expiry, including the preparation of licence extension
documentation which is planned to be lodged with the
regulator later this calendar year.
During the financial year, the Group’s working interest share
of production from the Maari and Manaia fields increased
18% on the prior year to 463,309 barrels of oil owing largely
to the successful restoration of production from the shut-
in Manaia-1 well. Average gross production over the year
was 4,868 bopd, of which the Group’s share was 1,266 bopd.
Crude oil sales were 373,358 barrels, generating revenue of
US$34.5 million at an average realised price of US$92.40/bbl
exclusive of executed hedging. Maari crude oil continued to
attract significant premiums to dated Brent which enhanced
cashflow generation from the asset during the period. Cash
operating costs for the year were US$24.70/bbl (produced).
Crude oil inventory at 30 June 2024 was 116,501 bbls with a
lifting of over 127,000 bbls (net to HZN) deferred to July 2024
which generated revenue in excess of US$10 million.
The Maari Joint Venture completed the conversion of the
MR2a well to a permanent water injector in September 2023.
Following the workover, MR2a is now providing pressure and
displacement support to the producing wells.
HORIZON OIL ANNUAL REPORT 2024
13
HORIZON INTEREST
%
PRODUCTION
25
led to varied gas production, influenced by decreased buyer
nominations. In April 2024, a Gas Supply Agreement (GSA) was
announced with Power and Water Company (PWC) to supply
gas to the NT on an as-available basis throughout 2024,
substantially offsetting the impact of the NGP shutdown.
Subsequent to the end of the year, and in response to an
expression of interest to buyers for gas supply during the
2025-2030 period, the Mereenie JV entered into a long-term
strategic gas sales agreement (GSA) with the Northern Territory
Government (NTG). The new GSA covers the firm supply of
gas for the 6 year period from 1 January 2025 through until
31 December 2030 to underpin the domestic supply of gas to
the Northern Territory. Together with an amended existing
gas supply agreement with Arafura Rare Earths Limited (ARU),
the Mereenie joint venture has now substantially contracted
the forecast Mereenie Proved Developed Producing (PDP) gas
production on a firm take or pay basis until the end of 2030
at current market prices, subject to the ARU GSA becoming
unconditional. These gas sales agreements reduce the
market dependency on the Northern Gas Pipeline (NGP) with
the NTG GSA also including contingent offtake arrangements
for firm gas nominations in 2025 if the NGP is offline. The NTG
GSA also supports the drilling of two proposed infill wells at
Mereenie with contingent offtake arrangements for firm gas
nominations following successful drilling.
The JV continues to focus on additional 2024/25 work program
activities, including helium recovery initiatives and further
infill drilling opportunities with the proposed two well infill
drilling program being endorsed by the JV subsequent to the
end of the financial year. The infill well program is targeting
incremental gas production at Mereenie with drilling activities
expected to commence around the middle of FY25.
On 11 June 2024, the Company advised that its acquisition of a
25% non-operated interest in the producing Mereenie oil and
gas field completed. The effective date of the transaction was
1 April 2023, with revenues earned and costs incurred during
the period from the effective date to completion adjusted
against the initial cash consideration of A$42.5 million
(~US$27.6 million). Horizon’s share of production volumes
during the approximate 14 month period between effective
date and completion were
2.6 PJs of gas and 0.05 mmbbls of oil. Funding for the initial
cash consideration was from a new A$42.5 million senior debt
facility which was executed with Macquarie Bank. Financial
close and drawdown of the facility occurred on 11 June 2024
to enable completion of the acquisition. Subsequent to the
period end, the Company paid the first contingent milestone
payment for the acquisition amounting to A$5 million (~US$3.3
million) following certain commercial milestones being
achieved.
The acquisition was executed together with Echelon Resources
Limited (ASX: ECH) (formerly known as New Zealand Oil & Gas
Limited), an incumbent Mereenie joint venture partner, who
acquired a further 25% participating interest in OL4 and OL5
from Macquarie on identical terms. Central Petroleum remains
as operator of the Mereenie joint venture and manages the
gas sales function on behalf of Horizon, ECH and Cue under a
joint marketing agreement.
Gross production for the 3 weeks since completion of the
transaction was 0.4PJ (Horizon net 25%: 0.1PJ) of gas and
5,740 bbls (Horizon net 25%: 1,435 bbls) of oil. Cash receipts
from Mereenie over recent months have been impacted by
the shutdown of the Northern Gas Pipeline (NGP) which has
HORIZON OIL ANNUAL REPORT 2024
14
Financial
Report
HORIZON OIL LIMITED
For the financial year ended
30 June 2023
This annual financial report
covers the consolidated
financial statements for the
Group, consisting of Horizon Oil
Limited (the ‘Company’) and its
subsidiaries. The annual financial
report is presented in United States
dollars.
Horizon Oil Limited is a public
company limited by shares and is
listed on the ASX. It is incorporated
and domiciled in Australia. Its
registered office and principal
place of business is:
Level 4
360 Kent Street
Sydney NSW 2011
The annual financial report was
authorised for issue by the Board
of Directors on 24 August 2023.
The Board of Directors has the
power to amend and reissue the
annual financial report.
All references to reserves and
contingent resources within the
financial report are drawn from
the Horizon 2024 Reserves and
Resources Statement dated
24 August 2023.
REPORT
FINANCIAL
HORIZON OIL LIMITED
For the financial year ended
30 June 2024
15
HORIZON OIL ANNUAL REPORT 2024
This annual financial report covers the consolidated
financial statements for the Group, consisting of
Horizon Oil Limited (the ‘Company’) and its subsidiaries.
The annual financial report is presented in United
States dollars.
Horizon Oil Limited is a public company limited by
shares and is listed on the ASX. It is incorporated
and domiciled in Australia. Its registered office and
principal place of business is:
Level 4
360 Kent Street
Sydney NSW 2000
The annual financial report was authorised for issue by
the Board of Directors on 28 August 2024. The Board
of Directors has the power to amend and reissue the
annual financial report.
All references to reserves and contingent resources
within the financial report are drawn from the Horizon
2024 Reserves and Resources Statement dated
28 August 2024.
HORIZON OIL ANNUAL REPORT 2024
15
DIRECTORS’ REPORT
Your directors present their report on the consolidated entity (referred to hereafter as the ‘Group’) consisting of Horizon Oil
Limited (the ‘Company’) and the subsidiaries it controlled at the end of, or during the financial year ended, 30 June 2024.
Directors
The following persons were directors of Horizon Oil Limited during the whole, or for part where noted, of the financial year
and up to the date of this report:
M Harding
R Beament
S Birkensleigh
G Bittar
B Clement
N Burgess
Review of operations
Principal activities
During the financial year, the principal activities of the Group continued to be directed towards petroleum production,
development and exploration.
A detailed review of the operations of the Group during the financial year is set out in the Activities Review on pages
11 to 14 of this annual financial report.
Group Financial Performance
Consolidated Statement of Profit or Loss and Other Comprehensive Income
2024 Profit Drivers
The Group reported a statutory profit after tax of US$25.9 million for the financial year (2023: US$43.9 million) with non-cash
items impacting on the financial year result including US$30.1 million (2023: US$38.5 million) in amortisation of production
phase assets and US$1.2 million (2023: US$1.4 million) of non-cash expense related to the value of performance rights and
share appreciation rights granted to Horizon employees.
EBITDAX was US$71.5 million (2023: US$103.5 million) and EBIT was US$40.3 million (2023: US$59.8 million). Cashflows from
operating activities of US$64.2 million (2023: US$72.0 million) enabled the Group to return ~US$37 million to shareholders
whilst also meeting its capital expenditure commitments and repaying a further US$7.9 million in debt during the financial
year.
EBITDAX and EBIT are financial measures which are not prescribed by Australian Accounting Standards and represent the
profit under Australian Accounting Standards adjusted for interest expense, taxation expense, depreciation, amortisation,
HORIZON OIL ANNUAL REPORT 2024
16
and exploration expenditure (including non-cash impairments). The directors consider EBITDAX and EBIT to be useful
measures of performance as they are widely used by the oil and gas industry. EBITDAX and EBIT information has not been
audited. However, they have been extracted from the audited annual financial reports for the financial years ended 30 June
2024 and 30 June 2023.
Basic earnings per share for the financial year was 1.60 US cents based on a weighted average number of fully and partly
paid ordinary shares on issue of 1,617,370,026 shares.
Sales and Production
The Group’s producing assets performed well despite the overall decline in Horizon’s net working interest share of production
to 1,426,687 boe for the financial year (2023: 1,915,886 bbls). Production from Maari was particularly strong, increasing 18%
from the prior period following the restoration of production from the MN1 well and the conversion of MR2a to a permanent
water injector. As anticipated, production from Block 22/12 declined naturally during the period following the successful
WZ12-8E infill drilling during the prior year, with production levels restored back above 10,000 bopd towards the end of the
year following the four well drilling campaign completed in July 2024. The drilling campaign is forecast to recover an
incremental 1.3 million barrels gross (0.35 million barrels, HZN net working interest) to the end of the contract period.
Sales volumes for the financial year declined in line with production to 1,301,155 boe (2023: 1,774,437 bbls) with 119,564 bbls
of crude oil inventory on hand as at 30 June 2024 following the deferral of a Maari lifting from June to July 2024. Sales
revenue for the financial year was US$111.5 million (2023: US$152.1 million), with a net realised oil price of US$85.7/bbl (2023:
US$85.71/bbl), inclusive of hedge settlements. The deferred Maari lifting occurred in July 2024, generating further revenue
of over US$10 million.
Production and sales volumes above exclude Horizon’s economic entitlement to Mereenie pre-completion production of 2.6
PJs (~0.5 mmboe) of gas and 0.05 mmbbls of oil back to the transaction effective date of 1 April 2023. For accounting
purposes, the pre-completion cashflows are set off against the acquisition price in the balance sheet and not booked
through the income statement during the year. On an economic interest basis, Horizon’s total share of production for the
financial year inclusive of Mereenie pre-completion production was approximately 1.9 mmboe, broadly consistent with the
prior year.
Operating costs for the period were US$62.9 million (2023: US$81.2 million). The reduced costs were mainly the result of lower
production levels at Block 22/12 reducing amortisation charges and the deferred Maari lifting which significantly increased
the crude oil inventory held on the balance sheet at the end of the financial year. The lower production volumes also resulted
in reduced special oil levies from Block 22/12.
General and Administrative Expenses
General and administrative expenses reduced by US$1.0 million during the financial year to US$2.8 million (2023: US$3.8
million). The reduction was driven by a reduction in headcount coupled with a reduction in non-cash share-based payment
expenses. General and administrative expenses comprised net employee benefits expense of US$1.7 million (including non-
cash share-based payment expense of US$1.2 million), corporate office expense of US$0.8 million, and depreciation of
US$0.2 million.
Insurance Expense
Insurance expense of US$2.1 million (2023: US$2.0 million) was in line with the prior financial period.
Exploration and Development Expenses
Exploration and development expenses were US$0.8 million (2023: US$4.6 million) and was focused on appraisal and
exploration opportunities in and around Block 22/12 in China and the evaluation of inorganic growth opportunities including
the Mereenie acquisition.
Finance Costs/Income
The Group’s net borrowing costs of US$1.1 million were US$1.7 million lower during the period following the full repayment of
the Group’s Cash Advance Facility in July 2023 coupled with a higher average balance of cash held in interest bearing
accounts/term deposit.
Income and Royalty Tax
The net income and royalty tax expense of US$13.3 million (2023: US$13.1 million) incurred during the financial year included
a current tax expense of US$12.4 million, a deferred income tax benefit of US$2.1 million and a royalty related tax expense of
US$3.0 million. The net income tax expense was driven by cash taxes of US$9.8 million in China and US$2.6 million in New
Zealand. Royalty tax expense of US$2.9 million reflected cash and deferred royalty tax associated with the Maari/Manaia
field.
HORIZON OIL ANNUAL REPORT 2024
17
Consolidated Statement of Financial Position
At 30 June 2024, total assets were US$205.3 million (2023: US$183.5 million) and total liabilities were US$122.0 million (2023:
US$87.7 million), resulting in net assets of US$83.2 million (2023: net assets of US$95.8 million). The initial purchase
consideration for the Mereenie acquisition was fully debt funded, accordingly the acquisition did not have a material impact
on the net asset position of the Group as at 30 June 2024.
At 30 June 2024, the Group reported a net cash position of US$26.2 million. Net cash of US$26.2 million comprised of cash
and cash equivalents held of US$52.6 million (2023: US$43.6 million) offset by borrowings of US$26.4 million (2023: US$7.9
million). At financial year end, borrowings consisted of US$26.4 million principal outstanding on the Group’s debt Facility.
Consolidated Statement of Cash Flows
2024 Cash Drivers
Net cash generated from operating activities for the financial year was US$64.2 million (2023: US$72.0 million) which when
coupled with the disciplined spending and significantly lower capital costs incurred during the period, resulted in the
continued build in cash reserves notwithstanding the significant shareholder distributions and debt repayments made during
the period. The build in cash reserves was further aided by the full debt funding of the initial purchase consideration for the
Mereenie Acquisition.
Corporate
Group liquidity
At 30 June 2024, the Group’s net cash position was US$26.2 million (30 June 2023: US$35.7 million) following ~US$37 million
in dividends paid to shareholders during the financial year and the US$26.4 draw down on a new 5 year debt facility used to
fund the Mereenie Acquisition. Net cash comprises cash and cash equivalent assets held of US$52.6 million (30 June 2023:
US$43.6 million) offset by the nominal value of borrowings drawn down of US$26.4 million (30 June 2023: US$7.9 million) on
the Group’s debt facility. Details of the Group’s debt facilities are set out in Note 19.
Dividends
The Board has declared a final dividend of AUD 1.5 cents per Ordinary share totalling approximately AUD 24.3 million. This
dividend was declared as a Conduit Foreign Income (CFI) unfranked dividend and will be paid on 25 October 2024. During the
financial year, the Board also declared an interim dividend of AUD 1.5 cents per Ordinary share totalling approximately AUD
24.3 million. This dividend was declared as a Conduit Foreign Income (CFI) unfranked dividend and was paid on 26 April 2024.
Oil Price Hedging
The Company maintains leverage to the oil price with a minimal hedge position. At the date of this report, hedges were in
place for 77,500 bbls of oil covering the period to November 2024, with a weighted average fixed price of US$82.64/bbl.
43.6
64.2
17.7
(36.9)
(9.7)
(26.3)
52.6
Opening cash and cash
equivalents at 30 June 2023
Net cash inflows from operating
activities
Debt proceeds, repayments,
and others
Dividends
Investment in oil and gas and
other assets
Mereenie acquisition
Closing cash and cash
equivalents at 30 June 2024
HORIZON OIL ANNUAL REPORT 2024
18
Group business strategies and prospects for future financial years
The Company’s exploration, development and production activities are focused in China and Australasia. The robust cash
flows from the Company’s interests in Block 22/12, offshore China; Maari/Manaia fields, offshore New Zealand and Mereenie,
onshore Australia, will be applied to fund the Company’s future capital and growth program, and to repay debt, with surplus
funds returned to shareholders. The growth program is focussed on enhancing shareholder value by bringing into production
the Company’s substantial inventory of contingent and prospective resources in fields in China, New Zealand and Australia,
whilst keeping an eye on potential other value accretive growth opportunities.
The Company has a targeted and selective exploration and development strategy with specific focus on plays providing
material scale and upside in and around existing permits with ready access to development infrastructure. The reserves
and contingent resources in the company’s inventory provide shareholders with exposure to commodity price upside and
potential production growth opportunities.
The achievement of these strategic objectives may be affected by macro-economic and other risks including, but not limited
to, global growth, volatile commodity prices, exchange rates, climate change, access to financing and political risks. The
speculative nature of petroleum exploration and development will also impact the Company’s ability to achieve these
objectives; key risks of which include production and development risk, exploration and drilling risks, joint operations risk,
and geological risk surrounding resources and reserves.
The Group has various risk management policies and procedures in place to enable the identification, assessment and
mitigation of risks that may arise. Whilst the Group can mitigate some of the risks described above, many are beyond the
control of the Group. For further information in relation to the Company’s risk management framework, refer to the Corporate
Governance Statement.
Outlook
In the near term, continued strong operating cashflow generation is forecast with the Group’s overall production enhanced
and diversified with the addition of the Mereenie asset. Production levels and cashflows from each field are forecast to be
impacted by natural reservoir decline in the near-term before further infill drilling and other production enhancing initiatives
are progressed. These cashflows are expected to enable continued returns to shareholders and funding for further
production growth opportunities.
The Group’s short-term focus is on:
– Continued optimisation of production performance from the Block 22/12, Maari/Manaia and Mereenie fields;
– Maturing further infill drilling opportunities, particularly at Block 22/12 and Mereenie;
– Pursuing life extension at Maari; and
– Continued evaluation of organic and inorganic opportunities.
Matters subsequent to the end of the financial year
Other than the matters noted above and disclosed in the review of operations, there has not been any matter or circumstance
which has arisen since 30 June 2024 that has significantly affected, or may significantly affect:
[1] -
the Group’s operations in future financial years; or
[2] -
the results of those operations in future financial years; or
[3] -
the Group’s state of affairs in future financial years.
Environmental regulation
The Group is subject to significant environmental regulation in respect of exploration, development and production activities
in all countries in which it operates – China, New Zealand and Australia. Horizon Oil Limited is committed to undertaking all
of its exploration, development and production activities in an environmentally responsible manner.
The Directors believe the Group has adequate systems in place for managing its environmental requirements and is not
aware of any breach of those environmental requirements as they apply to the Group.
Reporting currency
The Company’s and the Group’s functional and reporting currency is United States dollars. All references in this annual
financial report to “$” or “dollars” are references to United States dollars, unless otherwise stated.
HORIZON OIL ANNUAL REPORT 2024
19
Business risks
The achievement of Horizon’s business strategy and future financial performance is subject to various risks. Horizon
undertakes steps to identify, assess and manage these risks and operates under a Board-approved Group-wide Risk
Management Framework. Risk management is addressed in the Company’s Sustainability Report, for the year ended
30 June 2024, which may be accessed from the Company’s website at www.horizonoil.com.au.
The material business risks faced by the Group that may have an impact on the operating and financial prospects of the
Group as at 30 June 2024 are:
Risk Description / Potential Impacts
Mitigating factors
1
Adverse impact to
production
A loss of production event causes a reduction in
cashflow.
Group has in place Loss of
Production insurance over the
assets in New Zealand, China and
Australia.
Recent completion of the Mereenie,
Australia transaction on 11 June
2024 diversifies the production
base.
2
Major safety and/or
environmental event
Major safety/environmental incidents leading to
reputational damage, potential facilities
shutdown imposed by regulators and a loss of
business value.
Oversight of operations with regular
site visits and monitoring regulatory
audit reports and timely
implementation of corrective
actions.
3
Market volatility
Market driven forces reduce the value of
Horizon’s assets and/or reduce the revenue
derived from its operations.
The Group has access to
commodity hedge lines and
continually monitors market
conditions and cashflow forecasts
to asses the need for hedging.
Review of corporate and joint
venture budgets and cost-reduction
initiatives.
4
Decommissioning
costs exceed
estimates
Decommissioning costs exceed estimates
adverselt impacting Group liquidity.
Group has in place adequate
liquidity (including working capital)
to cover potential financial security
requirements.
5
Political/Regulatory
risk
Risk that governments enact onerous legislative
changes which has a material impact on the
business
Recent completion of the Mereenie,
Australia transaction on 11 June
2024 diversifies the geographies in
which the Company operates.
HORIZON OIL ANNUAL REPORT 2024
20
Information on Directors & Officers
The following persons held office as Directors or Officers of Horizon Oil Limited at the date of this Directors’ Report:
Chairman, Independent Non-Executive
Director
Mike Harding
Responsibilities:
Mr Harding has been Chairman of Horizon since November 2018. He is Chairman
of Horizon’s Disclosure Committee and Member of Horizon’s Audit and
Remuneration and Nomination Committees.
Experience:
Mr Harding has held management positions around the world with British
Petroleum (BP), including President and General Manager of BP Exploration
Australia.
Directorships:
Mr Harding is a former Director of Cleanaway Waste Management Limited,
former Chairman of Downer, Lynas Limited, Roc Oil Company Limited, Clough
Limited and ARC Energy Limited and a former Director of Santos Limited.
Qualifications:
Mr Harding holds a Master of Science, majoring in Mechanical Engineering.
Managing Director, Chief Executive Officer
Richard Beament
Responsibilities:
Mr Beament has been Managing Director and Chief Executive Officer of Horizon
since July 2022. He was formerly Horizon’s Chief Financial Officer from July 2018
to June 2022 and was Company Secretary from September 2021 to June 2022.
He joined Horizon as Finance and Commercial Manager in May 2010. Since that
time, he has been actively engaged in arranging and managing the Group’s
funding, as well as managing the Group’s investments in Maari and Block 22/12.
He is a Member of Horizon’s Risk Management and Disclosure Committees.
Experience:
Mr Beament is a Chartered Accountant with over 25 years’ experience in
accounting and finance across a range of sectors, including over 13 years in
managerial positions in the oil and gas sector. Prior to joining Horizon in 2010,
he held senior positions with PricewaterhouseCoopers in Sydney and London.
Directorships:
Nil
Qualifications:
Mr Beament holds a Bachelor of Commerce degree and is a member of the
Chartered Accountants Australia and New Zealand (CAANZ).
Independent Non-Executive Director
Sandra Birkensleigh
Responsibilities:
Ms Birkensleigh has been a Director of Horizon since February 2016. She is
Chair of Horizon’s Audit Committee and a Member of Horizon’s Risk
Management, and Remuneration and Nomination Committees.
Experience:
Ms Birkensleigh has 26 years’ experience in financial services, risk
management,
compliance
and
corporate
governance
with
PricewaterhouseCoopers including as Global Lead for Governance Risk &
Compliance, National Lead for Partner Risk and Controls Solutions and a
Service Team Leader for Performance Improvement. Sandra has been a
professional non-executive director at a range of entities for the past 11 years.
Directorships:
Ms Birkensleigh is Chairman of Auswide Bank Limited, Non-Executive Director
of 7-11 Holdings and its subsidiaries, National Disability Insurance Agency and
Adore Beauty Limited, Deputy Chancellor and a Council Member of the
University of the Sunshine Coast and Chair of its Audit and Risk Committee.
She is an Independent Member of the Audit Committee of the Reserve Bank of
Australia and Chair of the Tasmania Finance Corporation.
Ms Birkensleigh is a former director of MLC Limited.
Qualifications:
Ms Birkensleigh is a Chartered Accountant and holds a Bachelor of Commerce.
She is a Graduate Member of the Australian Institute of Company Directors and
Fellow of the Governance, Risk and Compliance Institute.
HORIZON OIL ANNUAL REPORT 2024
21
Non-executive Director
Gregory Bittar
Responsibilities:
Mr Bittar has been a Director of Horizon since March 2017, as nominated by Horizon’s
substantial shareholder IMC Pan Asia Alliance Group. He is Chairman of Horizon’s
Remuneration and Nomination Committee and a Member of Horizon’s Audit
Committee.
Experience:
Mr Bittar has extensive experience in public and private markets mergers and
acquisitions, capital markets and strategic advisory assignments across a range of
sectors including general industrials, metals and mining, mining services and energy.
Mr Bittar has worked for Bankers Trust, Baring Brothers Burrows and Morgan Stanley.
Directorships:
Mr Bittar was a former Chairman of Brightstar Resources Limited, Trek Metals Limited
and Millennium Minerals Limited.
Qualifications:
Mr Bittar holds a Master of Finance from London Business School, a Bachelor of
Economics and a Bachelor of Laws (Hons).
Alternate Director for Gregory Bittar
Bruno Lorenzon
Responsibilities:
Mr Lorenzon has been an Alternate Director for Greg Bittar since March 2017.
Experience:
Mr Lorenzon has worked for the IMC Pan Asia Alliance Group for the past 15 years and
has extensive experience in investments, strategy and corporate finance in the
resources sector both in Australia and overseas. Mr Lorenzon previously worked for
Vale in Brazil and Rio Tinto in Australia in roles encompassing strategic planning,
mergers and acquisitions and business development.
Qualifications:
Mr Lorenzon is a Chartered Financial Analyst and holds a Master of Business
Administration and Bachelor of Civil Engineering.
Independent Non-Executive Director
Bruce Clement
Responsibilities:
Mr Clement was appointed as an independent non-executive director on 1 September
2020. He is Chairman of Horizon’s Risk Management Committee.
Experience:
Mr Clement has over 40 years’ oil and gas experience; beginning his career as a
projects engineer at Esso Australia Limited (now Exxon). He has managed exploration,
development and production operations in Australia and Asia, as well as successfully
delivering key projects in Australia, China, Indonesia, the UK and the USA, including
implementation of major acquisitions and divestments. Mr Clement has led AWE
Limited and Roc Oil Limited as Chief Executive Officer and has held senior managerial
roles at Santos Limited, Ampolex Limited and Esso Australia Limited (Exxon).
Directorships:
Mr Clement is a non-executive director and former interim Chief Executive officer of
Beach Energy Limited (ASX:BPT) and former director of Norwest Energy Limited, Roc
Oil and AWE Limited.
Qualifications
Mr Clement holds a Bachelor of Engineering (Civil) Hons and Bachelor of Science
(Maths & Computer Science) from Sydney University and Masters of Business
Administration from Macquarie University.
Non-Executive Director
Nigel Burgess
Responsibilities:
Mr Burgess was appointed as a non-executive director on 1 July 2021. Mr Burgess is a
nominee director of Samuel Terry Asset Management, which manages the Samuel
Terry Absolute Return Fund, a substantial shareholder in Horizon. Due to his
association with Samuel Terry, he is not considered independent. He is a Member of
Horizon’s Audit Committee.
Experience:
Mr Burgess has 30 years of commercial experience in funds management with Samuel
Terry, Hunter Hall, GIO of Australia and Friends Provident in Australia, and a family
office in Europe. He has experience in a variety of commercial transactions and
corporate restructurings across a range of industries and jurisdictions.
Directorship:
He is a former director of Spicers Limited (ASX: SRS; de-listed 2019) and Yellow
Holdings Limited (New Zealand).
Qualifications:
Mr Burgess holds a Bachelor of Economics degree and Masters of Accounting degree
from the University of New South Wales.
HORIZON OIL ANNUAL REPORT 2024
22
Directors’ Interests in the Company’s Securities
As at the date of this Directors’ Report, the Directors held the following number of fully paid ordinary shares:
DIRECTOR
ORDINARY SHARES
DIRECT
INDIRECT
TOTAL
M Harding
500,000
-
500,000
R Beament
6,016,724
5,936,000
11,952,724
S Birkensleigh
-
-
-
G Bittar
1,000,000
-
1,000,000
B Clement
-
-
-
N Burgess1
-
314,212,423
314,212,423
B Lorenzon (as alternate)
-
-
-
1 Mr Burgess is a Director of Samuel Terry Asset Management Pty Ltd, the Trustee and Investment Manager of Samuel Terry Absolute Return Fund which
holds the 314,212,423 shares.
Chief Financial Officer / Assistant
Company Secretary
Kyle Keen
Responsibilities:
Mr Keen has been Horizon’s Chief Financial Officer since 1 July 2022. Mr Keen has
been Horizon’s Assistant Company Secretary since November 2018.
Experience:
Mr Keen is a Chartered Accountant with expertise in financial risk management and
financial reporting across a range of sectors, in particular, oil and gas. He has 13
years’ experience including working in top tier accounting practices including EY in
the United Kingdom and KPMG in South Africa.
Qualifications
Mr Keen holds a Bachelor of Accounting (Hons) degree and is a member of the South
African Institute of Chartered Accountants.
Group Tax Manager / Company
Secretary
Vasilios (Vas) Margiankakos
Responsibilities:
Mr Margiankakos has been Horizon’s Group Tax Manager since October 2017.
Experience:
Mr Margiankakos has over 20 years’ experience in corporate and international
taxation and mergers and acquisitions across a vast number of industries including
oil and gas, banking and financial services, infrastructure, media, manufacturing
and consumer goods, and technology. Prior to joining Horizon, Vas was Head of Tax
at Bravura Solutions Limited and BBC Worldwide Australia (now BBC Studios), prior
to which he held a number of senior tax positions at top tier accounting practices
such as EY, Deloitte and KPMG.
Qualifications
Mr Margiankakos holds a Bachelor of Economics degree from the University of New
South Wales.
Group Chief Operating Officer
Gavin Douglas
Responsibilities:
Mr Douglas has been Horizon’s Group General Manager – Production & Exploration
until his appointment as Chief Operating Officer on 1 July 2022.
Experience:
Mr Douglas is a geologist with over 25 years’ experience of exploration,
development and production of oil and gas, and has 15 years’ experience in
technical managerial positions, including leading multidiscipline technical teams
in Australia, and throughout Southeast Asia and the Middle East. Prior to joining
Horizon, Gavin was the Well Delivery Manager with Oil Search and Subsurface
Manager with Eaglewood Energy.
Qualifications
Mr Douglas holds an Honours Degree in Geology and a Masters in Reservoir
Evaluation & Management. He is a member of the American Association of
Petroleum Geologists (AAPG) and a member of the Society of Petroleum Engineers
(SPE).
HORIZON OIL ANNUAL REPORT 2024
23
Meetings of Directors
The numbers of meetings of the Company’s Board of Directors (the ‘Board’) and of each Board Committee held during the
financial year, and the numbers of meetings attended by each Director were:
BOARD
AUDIT
COMMITTEE
RISK MANAGEMENT
COMMITTEE
REMUNERATION
& NOMINATION
COMMITTEE
DISCLOSURE
COMMITTEE
Number of meetings held:
7
2
2
2
1
Number of meetings attended by:
M Harding1, 3
63
2
2
1
1
R Beament
7
2
2
2
1
S Birkensleigh
7
2
2
2
G Bittar1
7
2
2
2
B Clement2, 3
7
2
2
1
N Burgess1
7
2
2
B Lorenzon (as alternate for G Bittar)
0
1 Mr Harding, Mr Bittar and Mr Burgess attended the risk management committee meetings in their capacity as Non-Executive Directors of Horizon Oil Limited
and are not members of the risk management committee.
2 Mr Clement attended audit committee meetings in his capacity as a Non-Executive Director of Horizon Oil Limited and is not a member of the audit committee.
Mr Clement attended RNC meeting on behalf of Mr Harding.
3 Mr Clement attended a Board meeting in the capacity as chairman on behalf of Mr Harding.
HORIZON OIL ANNUAL REPORT 2024
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Corporate Governance
The Company and the Board are committed to achieving and demonstrating the highest standards of corporate governance.
The Board continues to review the Company’s governance framework and practices to ensure they meet the interests of
shareholders. The Corporate Governance Statement was approved by the Board on 28 August 2024.
The Company’s Corporate Governance Statement for the year ended 30 June 2024 may be accessed from the Company’s
website at www.horizonoil.com.au. A description of the Company’s main corporate governance practices is set out in the
Corporate Governance Statement. All these practices, unless otherwise stated, were in place for the full financial year and
comply with the ASX Corporate Governance Council’s revised Corporate Governance Principles and Recommendations 4th
edition, released in 2019.
Sustainability Reporting
Sustainability continues to be an important focus for Horizon with progress made during the current financial year on
Horizon’s Environmental Social and Governance (ESG) Action Plan. Summarised below for each of Horizon’s ESG priority areas
is an update on the progress made for the year ended 30 June 2024.
The Company’s Sustainability Report for the year ended 30 June 2024 may be accessed from the Company’s website at
www.horizonoil.com.au.
The Australian Federal Government is proposing amendments to the Corporation Act. The Government’s objective is to
improve transparency and comparability of information available to investors regarding Australian entities exposure to
climate-related financial risks, opportunities, and their plans and strategies in response to these exposures. If the
amendments are enacted, Australian entities will be required to adopt new standards developed by the Australian
Accounting Standards Board (AASB). The standards will be largely based on the International Sustainability Standards
Board’s (ISSB) International Financial Reporting Standards (IFRS) S1 and S2. The disclosure requirements will be gradually
phased in, depending on entity’s consolidated gross assets, revenue and number of employees. We are closely monitoring
the evolving disclosure requirements and will assess the need for changes in ESG reporting expected to be effective for the
financial year commencing 1 July 2026 to ensure ongoing compliance and reporting accuracy.
The ESG metrics discussed below, exclude Mereenie data, given that the completion of Horizon’s asset acquisition was close
to the end of FY24 (11 June 2024). Going forward, Mereenie ESG performance metrics will be included with Horizon’s other
operations, based on Horizon’s percentage equity position. Horizon’s materiality review will be reconducted in FY25, with
the Mereenie asset most like having some bearing on the company’s ESG focus areas.
Health, safety & environment (HSE)
Both Block 22/12 and Maari have continued their strong safety performance, despite significant drilling, workover and
production activities. As at the financial year ended 30 June 2024, Horizon achieved a Total Recordable Injury Frequency
Rate (TRIFR) of 3.30, and a Lost Time Injury Frequency Rate (LTIFR) of zero, both less than the National Offshore Energy
Regulator (NOPSEMA) industry averages in Australia. There were zero fatalities and zero material environmental incidents
for FY24. Our Operators continue to run safety awareness campaigns with the objective of continuous improvement.
The Directors believe the Group has adequate systems in place for managing its environmental requirements and is not
aware of any breach of those environmental requirements as they apply to the Group.
Governance
Governance continues to be a core focus for the Group. The Board continues to have oversight of ESG strategy and
performance, including climate change, with support from the Sustainability Steering Committee. During the period Horizon
conducted its annual assessments on its value and supply chain for risks and incidences of modern slavery. The Modern
Slavery Statement, for FY2023, was published in line with the requirements of the Australian Modern Slavery Act 2018. The
work on 2024 Modern Slavery Statement is currently underway to be submitted in December 2024. This statement may be
accessed from the Company’s website at www.horizonoil.com.au. During the year, Horizon has conducted further checks
around Cyber Security with improvement actions being implemented.
Climate change
Climate change continues to be of importance to the Group, and the recent investment into domestic gas is an important
step in supporting the energy transition. The Mereenie oil and gas field provides gas for both domestic consumption and for
the mining and processing of minerals critical to the energy transition. The Group’s investment in Re-Vi (formerly Nobrac)
continues to progress, with its biochar project achieving first production with certification of carbon removal credits
underway. Horizon continues to support our Operators in emission reduction initiatives. Scope 1 absolute emissions for FY24
HORIZON OIL ANNUAL REPORT 2024
25
is approximately 22% lower than FY23, with most of the reduction attributable to production decline. FY24 has seen the
implementation of some emission reduction initiatives. Refer to the Group’s Sustainability Report for more details.
Horizon continues to acquire and surrender carbon credits in New Zealand Units (NZUs) under the NZ Emissions Trading
Scheme (ETS) to cover 100% of the Group’s share of Maari Scope 1 emissions. Through participation in the NZ ETS, the
Company is supporting New Zealand in achieving its stated commitment to Net Zero GHG emissions by 2050 in alignment
with the Paris Agreement.
People – Employees & Community
The Company continues to focus on its employees and provides workplace flexibility and initiatives to enhance productivity
and staff morale. Horizon continues to work with our Operators and partners to identify and participate in relevant and
meaningful community-based projects.
HORIZON OIL ANNUAL REPORT 2024
26
Remuneration Report
This Remuneration Report (Report) outlines the remuneration arrangements for the Key Management Personnel (KMP) of the
Company for the financial year ended 30 June 2024. The Remuneration Report for 30 June 2023 received a 98% approval at
the 2023 Annual General Meeting held on 22 November 2023. This Report forms part of the Directors’ Report and has been
audited in accordance with section 308(3)(c) of the Corporations Act 2001. The Report is structured as follows:
[1] -
Individuals covered by the Remuneration Report
[2] -
Executive remuneration framework
[3] -
Contractual arrangements for executives
[4] -
Performance and financial year remuneration outcomes
[5] -
Non-executive Director remuneration
[6] -
Statutory and share-based reporting
[1] - Individuals Covered by the Remuneration Report
The Group is required to prepare a Report in respect of KMP, those persons who have the authority and responsibility for
planning, directing, and controlling the activities of the Company and the Group, either directly or indirectly, being:
– Directors; and
– Other Key Management Personnel
The table below outlines the KMP movements during the financial year:
NAME
TITLE
PERIOD AS KMP
DIRECTORS
Mike Harding
Chairman (non-executive)
Full financial year
Richard Beament
Managing Director / Chief Executive Officer
Full financial year
Sandra Birkensleigh
Director (non-executive)
Full financial year
Greg Bittar
Director (non-executive)
Full financial year
Bruce Clement
Director (non-executive)
Full financial year
Nigel Burgess
Director (non-executive)
Full financial year
Bruno Lorenzon
Alternate Director (non-executive)
Full financial year
OTHER KMP (EXECUTIVES)
Gavin Douglas
Chief Operating Officer
Full financial year
Kyle Keen
Chief Financial Officer / Assistant Company Secretary
Full financial year
[2] - Executive Remuneration Framework
[2.1] -
How does Horizon determine remuneration outcomes?
The objective of the Group’s remuneration framework is to provide reward for performance that is competitive and
appropriate for the results delivered. The Board, through its Remuneration and Nomination Committee, continues to review
KMP remuneration arrangements to ensure they align with the Group’s strategic objectives. The remuneration framework
for executives is based on the following principles for guiding the Group’s decisions regarding executive remuneration.
– Good reward governance principles:
– competitiveness and reasonableness;
– performance linkage / alignment of executive compensation;
– transparency; and
– capital management.
HORIZON OIL ANNUAL REPORT 2024
27
– Alignment to shareholders’ interests:
– focuses on sustained growth in shareholder value; and
– attracts and retains high calibre executives capable of managing the Group’s diverse international operations.
– Alignment to program participants’ interests:
– rewards capability and experience;
– reflects competitive reward for contribution to growth in shareholder wealth;
– provides a clear structure for earning rewards; and
– provides recognition for contribution.
[2.2] - Remuneration policy and link to performance
The remuneration framework is designed to recognise performance during the financial year (Short-Term Incentives (STIs))
and maximise shareholder value (Long-Term Incentives (LTIs)). Executive remuneration is comprised of fixed and variable
(“at risk”) remuneration consisting of STIs and LTIs. LTI’s were issued to the below executives during the financial period
following their appointments to drive long term value creation. LTI’s are not planned to be awarded annually. The graph
below sets out the mix of total annual fixed remuneration and the maximum variable remuneration in the form of STI’s.
Annual incentives have been established to drive performance without encouraging undue risk taking. The mix of Total fixed
remuneration and Short-term incentives for the financial year is shown in the table below with percentages rounded to the
nearest whole number.
Chief Executive Officer
Richard Beament
Total Fixed Remuneration (TFR)
57%
Maximum STI
43%
Chief Operating Officer
Gavin Douglas
Total Fixed Remuneration (TFR)
62%
Maximum STI
38%
Chief Financial Officer / Assistant Company Secretary
Kyle Keen
Total Fixed Remuneration (TFR)
67%
Maximum STI
33%
[2.3] - Elements of remuneration
FIXED REMUNERATION (FR)
What is Fixed
Remuneration?
Fixed Remuneration comprises ‘Total Fixed Remuneration’ (TFR), together with non-monetary benefits. TFR
is base salary plus superannuation. Non-monetary benefits include car parking, insurances and other
expenses inclusive of fringe benefits tax. Executive remuneration (which is set and paid in Australian
Dollars (A$)) and other terms of employment are reviewed annually by the Remuneration and Nomination
Committee having regard to relevant comparative information.
Link to strategy and
performance
Competitive TFR is paid to ensure that the Group can attract and retain suitable executives to deliver the
strategic goals. Fixed Remuneration is reviewed annually by the Remuneration and Nomination Committee
considering market data, scope of the Executive’s role, expected skill, experience and qualification and
individual performance.
Performance-based
HORIZON OIL ANNUAL REPORT 2024
28
SHORT-TERM INCENTIVE (STI)
Objective
The STI provides all Executives with an opportunity to earn an annual incentive which is paid in a combination
of cash and deferred equity in the first quarter of the new financial year. The deferred equity element is 50%
of the total STI awarded with the residual paid in cash. The STI award is determined by the Board following
the end of the financial year having regard to Group performance over the financial year.
How is the STI linked to
performance?
The STI is designed to motivate and reward Executives for contributing to the delivery of annual business
performance. Key Performance Indicators (KPIs) are determined each financial year and approved by the
Board. The Company’s performance against these KPIs is reviewed annually.
How is performance
measured for the STI?
Awards are made annually with performance measured over the twelve months to 30 June and are aligned
to the attainment of the Company’s Board approved KPIs for the relevant year. Awards under the plan are
determined and paid in a combination of cash and deferred equity in the first quarter of the new financial
year. The deferred equity element is subject to the specific terms of the executive’s employment
agreement. Actual performance against financial, non-financial and individual measures is assessed at the
end of the financial year. In assessing the achievement of measures, the Remuneration and Nomination
Committee may exercise its discretion to adjust outcomes for significant factors outside the control of
management that contribute positively or negatively to results.
STI opportunity
Up to 75% of the Chief Executive Officer’s TFR, up to 60% of the Chief Operating Officer’s TFR and up to 50%
of the Chief Financial Officer’s TFR. A proportion of each executive’s STI award will be granted in the form of
deferred equity rights with the residual STI paid in cash. The proportions of the STI award paid in cash and
received in deferred equity rights will depend on the executive’s position in the Company and ranges
between 25% - 50% of the total STI awarded. Deferring a proportion of the STI outcome into rights to Shares
creates further alignment between the interests of shareholders and extends the focus beyond the short
term.
How is STI deferred
equity granted?
Any deferred component of STI awarded in relation to a financial year (Performance Year) will be delivered in
the form of rights to acquire fully paid ordinary shares in the Company ('Shares') for nil consideration ('Deferred
STI Rights').
How is the number of
Deferred STI Rights
determined?
The number of Deferred STI Rights granted in relation to any Performance Year will be determined by dividing
the cash amount of the STI to be deferred by the volume weighted average price ('VWAP') of Shares for the final
10 trading days of the Performance Year (usually 10 trading days up to 30 June).
What are the
performance
conditions on the
Deferred STI Rights?
Deferred STI Rights are designed to reward past performance and encourage retention. Once granted,
ordinarily, no further performance conditions will attach to Deferred STI Rights other than the employee
remaining in the Company's employment at the time of vesting.
Distribution and capital
reorganisation
The number of Deferred STI Rights will be adjusted in the event of reorganisation of capital and a participant
will be entitled to receive a distribution equivalent payment in the form of additional shares to the value of
dividends the participant would have received during the deferral period. Deferred STI rights will not attract
dividend and voting rights.
When and how do
Deferred STI Rights
vest?
Deferred STI Rights will vest (subject to Board discretion and satisfaction of any applicable condition) 100%
after 12 months. Vesting periods will generally commence on 1 July of the year in which the Deferred STI Rights
are granted. The Board may satisfy any Deferred STI Rights that vest by procuring that Shares are purchased
on market and transferred or issue new Shares in the Company.
Clawback and Board
discretion in relation to
STI Rights
The Board retains a broad discretion to:
•
allow for accelerated vesting in special circumstances (e.g., death and incapacity);
•
determine that some or all unvested Deferred STI Rights will lapse if any situation arises that, in the
Board’s view should impact the assessment of performance. Such situations may include material
misrepresentations and material misstatements in the Company's accounts;
•
allow for accelerated vesting in certain circumstances e.g. change of control event; and
•
determine that any Deferred STI Rights that vest are settled in cash not Shares (subject to any ASX
Listing Rule or Corporations Act requirements).
HORIZON OIL ANNUAL REPORT 2024
29
LTI PLAN (PERFORMANCE RIGHTS)
How is the LTI linked
to performance?
The LTI Plan for Performance Rights applies to LTI’s issued on and after 1 July 2022. The objective of the
Performance Rights granted pursuant to the LTIP is to create a stronger link between eligible employees’
performance and reward, increasing shareholder value via the proposed LTIP. The LTI Plan forms part of the
Company’s performance-based remuneration system and provides “at risk” incentives based on longer term
Company performance.
Offer to participate in
the Plan and
consideration
The Board may from time to time make offers (each a Plan Offer) to an ‘Eligible Person’ (being, any person
who is an employee (including in full-time or permanent part-time employment) or a director of, or a person
who provides services to, the Company or its related bodies corporate, or any other person so designated by
the Board) to participate in the Plan and receive a right to be allocated a fully paid ordinary share in the
Company (Share), subject to the rules of the Plan (Share Right).
A Plan Offer may be subject to such restrictions and conditions as the Board determines in its absolute
discretion (including, in relation to the applicable expiry date, exercise period and performance criteria).
Unless otherwise stated in the Plan Offer, a participant in the Plan (Participant) is not required to pay for a
grant of Share Rights or the allocation of Shares under a Plan Offer.
Participation in the Plan does not give the Participant a legal or beneficial interest in a Share prior to its
allocation to the Participant, nor any entitlement to a Share, otherwise than in accordance with the Plan Offer
and the rules of the Plan.
Grant of Share Rights
As soon as reasonably practicable following receipt by the Company of an Eligible Person’s acceptance of a
Plan Offer, the Company will, provided that the relevant person continues to be an Eligible Person, issue to
the person the number of Share Rights the subject of the accepted Plan Offer.
Share Rights will not give a Participant any right to dividends or give a Participant a right to vote. However,
Shares issued, transferred or allocated (as applicable) upon a relevant Participant exercising their vested
Share Rights will convey the same rights to dividends and voting as Shares in the same class.
Term of Share rights
Subject to the terms of the Plan (including in relation to circumstances relating to cessation of employment),
the ‘Last Exercise Date‘ (being, the latest date on which a Share Right may be exercised if the Share Right
vests) and ‘Plan Acceptable Date‘ (being, the latest date on which the Company must receive a completed
plan acceptance form from a relevant Participant), are determined by the Board in respect of each grant of
Share Rights. The Share Rights granted have an expiry date no longer than 5 years.
Performance criteria
applicable to Share
Rights
The Board has discretion to prescribe the conditions which must be satisfied or waived before a particular
grant of Share Rights vests and becomes exercisable by the relevant Participant.
A Share Right may only be exercised if it is a vested Share Right and it has not lapsed in accordance with the
terms of the Plan.
Exercise price on
vested Share Rights
The Board may determine whether any exercise price must be paid by the participant on the exercise of vested
Share Rights.
Allocation of Shares
If a relevant Participant opts to exercise vested Share Rights, the Company will allocate to the Participant the
number of Shares to which the Participant is entitled by either (or a combination of) issuing new Shares to the
Participant or procuring the transfer of Shares acquired on market to the Participant.
Cessation of
Employment
In the case of any “Uncontrollable Events” (including death, permanent disablement, retirement,
retrenchment, or such other circumstances which result in the Participant leaving the employment of the
Company or any of its related bodies corporate and which the Board determines is an uncontrollable event)
resulting in a Participant’s cessation of employment, the Board may determine that any unvested Share
Rights either lapse or become vested Share Rights.
If the Participant ceases employment other than because of an Uncontrollable Event, all of the Participant‘s
unvested Share Rights will automatically lapse.
Lapse of Share Rights
Share Rights may lapse in other circumstances, including where the applicable performance criteria are not
wholly satisfied by the time specified in the Plan Offer (unless otherwise specified in the Plan Offer), or where
the Participant commits any act of fraud, defalcation or gross misconduct in relation to the Company’s, or
any of its related bodies corporate’s affairs.
Change of Control
If a Change of Control Event occurs, or the Board determines in its absolute discretion that a Change of Control
Event is likely to occur, subject to the performance criteria applicable to unvested Share Rights, the Board
will determine the appropriate treatment regarding any unvested Share Rights, which may include waiving
the relevant performance criteria, replacing unvested Share Rights with rights to Shares in a new controlling
entity, or causing the unvested Share Rights to lapse.
Re-organisation of
capital, rights issue,
dividend or other
such event
Upon any re-organisation of the issued ordinary capital of the Company, the number of Share Rights, or the
number of Shares allocated on the exercise of the Share Rights, or both will be reconstructed or adjusted to
the extent necessary to comply with, and in accordance with, the ASX Listing Rules applying to a re-
organisation of capital at the time of the reorganisation (as their application in the circumstances is affected
by any waiver granted by ASX).
HORIZON OIL ANNUAL REPORT 2024
30
Key Terms of the
Share Rights issued
onwards from 1 July
2022
The tables below set out the material terms of Share Rights issued under the New LTIP.
Share Price Hurdle
Each tranche of Share Rights vests independently of each other tranche of Share Rights.
The Share Price Hurdles are subject to the following adjustments:
– the relevant Share Price Hurdle will be increased by 10% on each anniversary of the Start Date, commencing
on the third anniversary of the Start Date;
– the relevant Share Price Hurdle will be decreased by an amount determined by the Board (in its absolute
discretion) to account for any dividends or return of capital; and
– the relevant Share Price Hurdle will be increased or decreased (as applicable) by an amount determined by
the Board (in its absolute discretion) to account for any share consolidation or other re-organisation of
capital of the Company.
Performance Criteria
Each tranche of Share Rights will vest on the first and any relevant subsequent date following grant date upon
satisfaction of all of the following conditions:
•
the price per share meets or exceeds the relevant Share Price Hurdle at the close of trade (each, a
Relevant Gateway Date);
•
the volume weighted average price of the shares on the ASX for the preceding 1-month period meets or
exceeds the relevant Share Price Hurdle at close of trading on the date that is one year thereafter each
Relevant Gateway Date (each, a Relevant Anniversary Date);
•
Shares traded in the twelve-month period from the Relevant Gateway Date to the Relevant Anniversary
Date at or above the relevant Share Price Hurdle have a cumulative market value (assessed at the time
each trade was made) of $25,000,000 or more; and
•
the recipient remains an employee of the Company on the vesting date.
Accordingly, the Share Rights granted in respect of each Tranche may be tested in relation to more than one
period (i.e. in respect of successive Relevant Gateway Dates and associated Relevant Anniversary Dates) and,
subject to the terms of the Plan and the Plan Offer, will vest in their entirety on the earliest Relevant
Anniversary Date on which all of the vesting conditions noted above are satisfied.
Share Right Exercise
Price
Nil
Expiry of exercise
period
If a Share Right vests, then the Share Right may be exercised at any time up to the date which is the earlier
of:
•
three years after the Share Right vested; and
•
the date on which a Change of Control Event occurs or the date on which the Board makes a
determination that a Change of Control Event is likely to occur.
HORIZON OIL ANNUAL REPORT 2024
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LTI PLAN (SARS)
LTI PLAN (SARS)
The LTI plan for SARs applied to LTIs awarded prior to 1 July 2022. It will not apply to the award of LTIs after
1 July 2022.
Objective
The LTI plan aimed to align Executive remuneration with the creation of shareholder value.
How is the LTI linked
to performance?
LTI vesting is linked to absolute Horizon share performance, and Horizon share performance relative to the
S&P ASX 200 Energy Index.
Form of LTI grant?
LTIs are awarded as performance rights, known as share appreciation rights (SARs).
SARs vest over a three-to-five-year period on fulfilment of two performance criteria: (1) Horizon’s Total
Shareholder Return (TSR) must exceed 10%; and (2) Horizon’s TSR must equal or exceed the S&P ASX 200
Energy Index (Index), with the level of outperformance determining the proportion of SARs that vest.
The SAR value on vesting is calculated as the difference between the Horizon share price at allocation, and
the Horizon share price at exercise. The Company may settle the SAR value in cash or shares or a
combination, in the Board’s absolute discretion.
What are the
performance
measures applied to
the LTI?
The Board considered that the absolute and relative TSR performance hurdles effectively align the interests
of Executives with Horizon’s shareholders, by motivating Executives to achieve superior outcomes. TSR is a
robust and transparent means of measuring shareholder returns.
SARs vest over a three to five-year period on fulfilment of two performance criteria:
(1) Horizon’s Total Shareholder Return (TSR) must exceed 10%; and
(2) Horizon’s TSR must equal or exceed the S&P ASX 200 Energy Index, whereby the proportion of SARs that
vest is calculated as follows:
–
if Horizon’s TSR is equal to the Index, 50% vest;
–
if the Company’s TSR is 14% or more above the Index, 100% vest; and
–
if Horizon’s TSR is between the Index and 14% above the Index, a percentage vest based on a linear
pro-rata calculation.
Performance 14% above the Index equates to a performance level likely to exceed the 75th percentile of
market returns of companies in the Index (weighted by company size).
Performance period?
SARs will first be tested for vesting at 3 years from award; and thereafter re-tested every 6 months until
5 years from award.
What was the LTI
opportunity?
The former CEO had an LTI opportunity equal to 50% of TFR, and other Executives at that time had an LTI
opportunity equal to 21.4% of TFR. The LTI opportunity is prescribed by the Executives’ employment
contracts.
The number of SARs issued to an Executive in a relevant year is calculated by dividing the monetary value of
the Executive’s LTI opportunity by the fair value of a SAR at allocation. The fair value of a SAR is determined
by an independent expert each year using the Black-Scholes model.
Treatment of
incentives on
cessation of
employment
On cessation of an Executive’s employment, the Board may exercise its discretion to: (1) lapse all or some of
the Executive’s SARs; or (2) determine that some or all of the Executive’s SARs which have not become
exercisable, become exercisable.
When do SARs lapse?
SARs will lapse:
– where the SAR has not vested, 5 years after award or such longer period necessary for the Executive to
freely deal in Horizon securities in accordance with the Securities Trading Policy;
– the Board exercises its discretion to lapse the SARs on cessation of employment;
– the Board exercises its discretion to lapse the SARs for serious misconduct or fraud by an Executive; or
– the Executive provides a notice to Horizon that they wish the SARs to lapse.
Effect of take-over or
change of control of
Company, death or
disablement
In the event of a takeover or change of control event, the Board will either have the discretion or be required
(if a change of control occurs) to determine a special retesting date for vesting of Executives’ SARs.
For example, the Board will have discretion to determine a special retesting date where a takeover bid is
made for the Company. In that case, the special retesting date will be the date determined by the Board.
Where a statement is lodged with the ASX that a person has become entitled to acquire more than 50% of
the Company, the Board will be required to determine a special retesting date, and the special retesting date
will be the day the statement is lodged with the ASX.
The SARs will vest if the performance criteria are fulfilled in relation to that special retesting date.
HORIZON OIL ANNUAL REPORT 2024
32
[2.4] -
Associated policies
The Group has adopted several policies to support remuneration framework and governance, including the Securities Trading
Policy, Continuous Disclosure Policy and the Corporate Code of Conduct. These policies are available on the Group’s website
www.horizonoil.com.au.
[3] - Contractual Arrangements for Executives
Remuneration and other terms of employment for the Executives are formalised in employment contracts.
The key terms of the contractual arrangements for the CEO are summarised below:
COMPONENT
CONTRACT TERM
EXPIRY DATE
NOTICE PERIOD EMPLOYEE
NOTICE PERIOD GROUP
Chief Executive Officer
R Beament
Ongoing basis
No expiration date
6 months
6 months
Termination of employment (without cause)
Payment of termination benefit on termination without cause by the Company,
equal to 6 months remuneration.
Pro rata STI award based on Board’s reasonable assessment of Mr Beament’s
performance and period of employment during that STI year.
Entitlement to any previously granted LTIP or deferred STI award to be dealt with in
accordance with LTIP rules and the terms of offer.
Termination of employment (with cause)
STI is not awarded.
Board has discretion to lapse all SARs, Performance Rights and Deferred STI Rights.
The key terms of the contractual arrangements for the other Executive KMPs are summarised below:
COMPONENT
CONTRACT TERM
EXPIRY DATE
NOTICE PERIOD EMPLOYEE
NOTICE PERIOD GROUP
Other Executives
Ongoing basis
No expiration date
3 months
COO - 6 months
CFO - 3 months
Termination of employment (without cause)
Payment of termination benefit on termination without cause by the Company,
equal to 6 months remuneration.
Pro rata STI award based on Board’s reasonable assessment of the executives
performance and period of employment during that STI year.
Entitlement to any previously granted LTIP or deferred STI award to be dealt with in
accordance with LTIP rules and the terms of offer.
Termination of employment (with cause)
STI is not awarded.
Board has discretion to lapse all SARs, Performance Rights and Deferred STI Rights.
HORIZON OIL ANNUAL REPORT 2024
33
[4] - Group Performance and Financial Year Remuneration Outcomes
[4.1] -
Overview of Horizon performance
The Board aligns remuneration and performance by using ‘at risk’ remuneration, including STI’s and LTI’s. Award of STIs is
dependent on overall company performance and the vesting of LTIs (SARs) occurs on fulfilment of absolute Horizon Total
Shareholder Return (TSR), and Horizon TSR relative to the S&P/ASX200 Energy Index. Vesting of Performance Rights are
based on the performance criteria as outlined in section 2.3.
Horizon share price performance for the current and previous four financial years is displayed in the chart below. During the
2024 Financial Year, the Horizon share price increased 29%, which when combined with the 25% distribution yield (aggregate
of AUD 3.5 cents per share), results in a TSR of 54% for the financial year or approximately A$120 million dollars of value for
shareholders. Horizon’s share price closed at AUD 0.18 per ordinary share on 30 June 2024.
The table below sets out information regarding the Group’s performance over the last five years as required by the
Corporations Act.
FY24
FY23
FY22
FY211
FY201
Profit before tax (US$’000)
39,185
56,989
42,739
5,178
27,300
EBITDAX (US$’000)
71,451
103,525
73,008
36,391
51,392
Net cash/(debt) (US$’000)
26,166
35,652
42,849
31,696
489
Capital Return (A$ cents per share)2
-
-
1.35
3
-
Dividend (A$ cents per share)2
3.0
3.5
1.65
-
-
1 The profit before tax and EBITDAX information for the 2021 and 2022 financial years excludes profit and loss from discontinued operations as reported in the
consolidated statement of profit and loss.
2 Capital Returns and Dividends are declared and approved for the respective financial year shown and may be paid during the subsequent financial year.
HORIZON OIL ANNUAL REPORT 2024
34
[4.2] -
Performance against STI measures for the financial year
The Executive’s STI opportunity is calculated with reference to achievement of KPI targets based on a weighted scorecard
approach. The following table sets out the performance conditions for the STI and their rationale for the financial year.
KEY FOCUS AREAS
OBJECTIVE AND
MEASUREMENT
RATIONALE
STATUS
FINANCIAL
Financial Metrics &
Profitability
Achievement of budgeted
revenue, operating costs and
cashflow across the Block
22/12 and Maari/Manaia fields
Maintain average Group
operating costs and maintain
low corporate general and
administrative expenditure
Maintain and enhance operating
income streams
Maximise profitability and cashflow
Effective cost control
Exceed
Exceed
Exceed
OPERATIONAL
Production
Optimisation
Achieve budgeted production
Maximise profitability and cashflow
Exceed
BUSINESS
DEVELOPMENT
Organic growth and
an opportunistic
approach to inorganic
growth
Focus on organic growth
opportunities resulting in
reserve additions
Ensure sustainability of the business
and cashflow whilst creating value
for shareholders
Exceed
SAFETY
HSSE
Achievement of TRIFR below
NOPSEMA industry average
across Horizon’s assets
Promote safe operations with a safe
workplace for employees
Exceed
PEOPLE, CULTURE &
SUSTAINABILITY
People & Culture
Sustainability
Attracting the right skills and
retaining key staff
Deliver on requirements of
Horizon’s sustainability
roadmap, with enhanced
reporting in accordance with
TCFD guidelines
Ensure Company has the necessary
resources to achieve strategic
objectives
Sustainability awareness; make the
right kind of impact
Exceed
Exceed
Based on the KPI scorecard approved by the Board in respect of the financial year, Executives were eligible for a possible STI
award equal to 100% of their total STI opportunity due to the outstanding company performance during the year.
The table below shows the STIs awarded during the financial year:
EXECUTIVE
TOTAL OPPORTUNITY
US$1
% OF FIXED
REMUNERATION
%
AWARDED
%
FORFEITED
R Beament
281,686
75%
95%
5%
G Douglas
187,989
60%
95%
5%
K Keen
98,035
50%
95%
5%
1 The STI opportunity is calculated by translating the Executives Australian Dollar denominated TFR to United States Dollars at the prevailing spot rate on
30 June 2024. STI’s awarded are settled in a combination of cash and deferred STI rights, refer to section 2.3.
[4.3] - Performance against LTI measures for the financial year
Horizon’s share price performance for the current and previous four financial years is displayed in the chart under section
4.1 of this Report.
LTI awarded in
respect of FY24
During the period, 1,752,233 Performance Rights were issued to K Keen. Refer to section 6.3 for further details.
Awards vesting
in FY24
All Performance Rights and SARs vested and were exercised during the period. Refer to section 6.3 for further
details.
HORIZON OIL ANNUAL REPORT 2024
35
[5] - Non-Executive Director Remuneration
NEDs are paid fees for services on the Board and committees and do not receive any performance-related incentives and no
retirement benefits are provided other than superannuation contributions. The Remuneration and Nomination Committee
reviews fees annually and the Board may also seek advice from external advisers when undertaking the review process.
NED fees are determined within an aggregate Directors’ fee pool limit, which is periodically recommended for approval
by shareholders. Shareholders approved the current fee pool limit of A$600,000 at the 2009 Annual General Meeting.
These fees have not changed in A$ terms for the last ten years. Note that the remuneration table set out on page 37
shows remuneration in US$ in line with the Group’s functional currency.
The table below shows the levels for NEDs (exclusive of superannuation) for FY24.
FEES
DESCRIPTION
PER ANNUM
Board Fees
Chair
A$160,905
Other Non-executive Directors
A$80,453
There were no additional fees paid to NEDs during the financial year for being members of the Board committees. The NEDs
are reimbursed for expenses reasonably incurred in attending to the affairs of the Company. There are no retirement
allowances in place for NEDs.
[6] - Statutory and share based reporting
[6.1] -
Director remuneration for the financial year
The following table sets out the statutory disclosures required under the Corporations Act 2001 (Cth) and in accordance with
Australian Accounting Standards remuneration for Directors for the years ended 30 June 2024 and 30 June 2023.
FINANCIAL YEAR ENDED
30 JUNE 2024 AND 2023
NON-EXECUTIVE DIRECTOR
SHORT-TERM BENEFITS
CASH SALARY / BOARD FEES
US$
POST-EMPLOYMENT BENEFITS
SUPERANNUATION2
US$
TOTAL3
US$
M Harding
2024
104,395
11,484
115,879
2023
108,998
11,445
120,443
S Birkensleigh
2024
52,198
5,742
57,940
2023
54,499
5,722
60,221
G Bittar1
2024
52,198
5,742
57,940
2023
54,499
5,722
60,221
B Clement
2024
52,198
5,742
57,940
2023
54,499
5,722
60,221
N Burgess
2024
57,940
-
57,940
2023
60,221
-
60,221
Total Non-Executive Director
remuneration
2024
318,929
28,710
347,639
2023
332,716
28,611
361,328
Total Non-Executive Director
remuneration (A$)
2024
491,568
44,249
535,817
2023
493,388
42,429
535,817
1 Mr Lorenzon, as alternate Director to Mr Bittar, received no fees during the current and prior financial periods.
2 Superannuation includes both compulsory superannuation payments and salary sacrifice payments made on election by Directors.
3 Remuneration is paid in Australian dollars and converted to US dollars at the foreign exchange rate prevailing on the date of the transaction.
HORIZON OIL ANNUAL REPORT 2024
36
[6.2] - Statutory details of other key management personnel remuneration for the financial year
The table below outlines the remuneration of other key management personnel for the years ended 30 June 2024 and
30 June 2023.
FINANCIAL YEAR ENDED
30 JUNE 2024 AND 2023
SHORT-TERM BENEFITS
POST-
EMPLOYMENT
BENEFITS
TOTAL
CASH OR
IN-KIND
BENEFIT
LONG-TERM
BENEFITS
SHARE
BASED
PAYMENTS
TOTAL
OTHER KEY MANAGEMENT
PERSONNEL
CASH
SALARY &
FEES1
CASH
STIs
ANNUAL
LEAVE
ACCRUAL4
NON-
MONETARY2
SUPER
ANNUATION3
LONG
SERVICE
LEAVE
ACCRUAL4
LONG TERM
INCENTIVES5
R Beament
Chief Executive
Officer
2024
352,954
133,801
11,096
12,743
18,002
528,596
(25,081)
492,782
996,297
2023
336,017
131,150
2,633
11,319
18,481
499,599
(3,744)
898,234
1,394,089
G Douglas
Chief Operating
Officer
2024
291,604
89,295
3,369
4,923
17,936
407,127
9,166
251,423
667,716
2023
278,697
87,516
(8,050)
4,601
16,997
379,762
10,275
287,936
677,972
K Keen
Chief Financial
Officer/Assistant
Co Sec
2024
175,771
69,850
4,761
3,081
17,812
271,275
4,734
329,228
605,237
2023
167,812
54,698
1,922
2,876
16,997
244,305
17,652
54,324
316,281
Total KMP
remuneration
2024
820,329
292,946
19,226
20,747
53,750
1,206,998
(11,181)
1,073,433
2,269,250
2023
782,526
273,363
(3,495)
18,796
52,476
1,123,665
24,183
1,240,495
2,388,342
Total KMP
remuneration
(A$)6
2024
1,253,551
442,249
29,025
31,692
82,119
1,838,636
(17,080)
1,604,118
3,425,674
2023
1,164,415
412,313
(5,272)
27,969
78,085
1,677,510
35,985
1,826,722
3,540,216
1 Cash Salary and Fees for the prior period have been restated to separately disclose the annual leave accrual movement, noting that the total cash or in-
kind benefits did not change.
2 Non-monetary benefits include the value of car parking, insurances, accommodation and other expenses inclusive of Fringe Benefits Tax (“FBT”).
3 Superannuation includes both compulsory superannuation payments and salary sacrifice payments made on election by Directors and KMPs.
4 Reflects the movement in the annual and long service accruals between respective reporting dates.
5 Reflects the current period expense of the grant date value (converted to US dollars at the foreign exchange rate prevailing at that date) of Performance Rights
and SARs.
6 Remuneration is paid in Australian dollars and converted to US dollars at the foreign exchange rate prevailing on the date of the transaction.
HORIZON OIL ANNUAL REPORT 2024
37
[6.3] - Shareholding of key management personnel
Shareholding
The following tables detail the number of shares held by KMP, either directly or indirectly or beneficially during the reporting
period ended 30 June 2024:
KMP
OPENING BALANCE
1 JULY 2023
ACQUIRED
DURING FY24
DISPOSED
DURING FY24
RECEIVED DURING FY24 ON
THE EXERCISE OF RIGHTS
CLOSING BALANCE
30 JUNE 2024
DIRECTORS
M Harding
500,000
-
-
-
500,000
R Beament
764,488
-
-
11,188,236
11,952,724
S Birkensleigh
-
-
-
-
-
G Bittar
1,000,000
-
-
-
1,000,000
B Clement
-
-
-
-
-
N Burgess1
314,212,423
-
-
-
314,212,423
KMP
OPENING BALANCE
1 JULY 2023
ACQUIRED
DURING FY24
DISPOSED
DURING FY24
RECEIVED DURING FY24 ON
THE EXERCISE OF RIGHTS
CLOSING BALANCE
30 JUNE 2024
OTHER KMP
G Douglas
120,000
-
-
5,734,604
5,854,604
K Keen
65,652
-
-
4,736,314
4,801,966
1 Mr Burgess is a Director of Samuel Terry Asset Management Pty Ltd, the Trustee and Investment Manager of Samuel Terry Absolute Return Fund which
holds the 314,212,423 shares.
Long Term Incentives
The following tables detail the number of Share Appreciation Rights, Performance Rights and Deferred STI Rights held by
KMP, either directly or indirectly or beneficially during the reporting period ended 30 June 2024:
KMP
BALANCE AT
START OF
FINANCIAL
YEAR
GRANTED AS
REMUNERATION
DURING
FINANCIAL YEAR
DISTRIBUTION
ADJUSTMENT1
EXERCISED
DURING
FINANCIAL
YEAR3,4
LAPSED
DURING
FINANCIAL
YEAR
BALANCE
AT END OF
FINANCIAL
YEAR
VESTED AND
EXERCISABLE
AT END OF
FINANCIAL
YEAR
UNVESTED
SHARE APPRECIATION RIGHTS
R Beament
5,556,681
-
-
(5,556,681)
-
-
-
-
G Douglas
1,550,400
-
-
(1,550,400)
-
-
-
-
PERFORMANCE RIGHTS
R Beament
19,600,000
-
-
(19,600,000)
-
-
-
-
G Douglas
9,800,000
-
-
(9,800,000)
-
-
-
-
K Keen
7,000,000
1,752,233
-
(8,752,233)
-
-
-
-
DEFERRED STI RIGHTS
R Beament
1,509,881
1,447,056
370,496
(1,509,881)
-
1,817,552
1,817,552
-
G Douglas
1,020,008
965,618
247,231
(1,020,008)
-
1,212,849
1,212,849
-
K Keen
184,210
201,170
51,506
(184,210)
-
252,676
252,676
-
1 In accordance with the plan, the number of 2023 deferred STI rights held by each KMP were adjusted during the financial year for the dividend distributions
paid of AUD 2.0 and AUD 1.5 cents per share.
2 Subsequent to the end of the financial year, 2,090,773 deferred STI rights were issued to KMP in relation to their 2024 STI award.
3 During the period, R Beament exercised all vested SARs, Performance Rights and Deferred STI Rights resulting in the receipt of 11,188,236 HZN shares,
cash of US$596,480 paid/payable and an upward variation to his PAYG amounting to US$931,250. G Douglas exercised all vested SARs, Performance Rights
and Deferred STI Rights resulting in the receipt of 5,734,604 HZN shares, cash of US$210,960 paid/payable and an upward variation to his PAYG amounting
to US$465,265. K Keen exercised all vested Performance Rights and Deferred STI Rights resulting in the receipt of 4,736,314 HZN shares, cash payment of
US$8,753 and an upward variation to his PAYG amounting to US$466,575.
4 100% of SAR’s and Performance Rights on hand were exercised during the financial year. 100% of deferred STI rights on hand at the commencement of
the financial year were exercised during the financial year.
HORIZON OIL ANNUAL REPORT 2024
38
Option holdings
Other than as noted above, no listed or unlisted options in the Company were held during the current or prior financial year
by Directors and other KMP, including their personally related entities.
[6.4] - Securities Trading Policy
The Group’s Securities Trading Policy applies to all Directors, other Executives, employees and their related parties and sets
out the procedures and principles that apply to trading in Horizon Oil Limited securities. A copy of the Securities Trading
Policy is available on the Company website www.horizonoil.com.au.
[6.5] - Other transactions with KMP
Other than as noted above, there are no other transactions between any of the KMP with any of the companies which are
related to or provide services to the Group unless disclosed in this Report.
There were no loans to any of the KMP during the financial year.
[6.6] - Additional statutory information
Terms and conditions of the share-based arrangements
The terms and conditions of each grant of SARs that affected remuneration for Executive KMP in the previous and current
reporting periods are as follows:
GRANT DATE
ESTIMATED EXPIRY
DATE
EXERCISE
PRICE3
STRIKE PRICE1
VALUE PER SAR AT
EFFECTIVE ALLOCATION
DATE2
DATE EXERCISED
01/07/2020
01/07/2025
Nil
A$0.0195
A$0.0264
31/08/2023
01/07/2021
01/07/2026
Nil
A$0.0295
A$0.0535
30/06/2024
1
In accordance with the plan, the strike price of SARs held by each KMP were adjusted during the financial year for the dividend distributions paid of AUD 2.0
and AUD 1.5 cents per share.
2
The value per SAR at grant date under AASB2 which has been determined by an independent expert.
3
No price is payable by a participant in the Long-Term Incentive Plan on the exercise of a SAR.
4
SARs will become exercisable subject to meeting vesting or performance conditions. See summary in section 2.
HORIZON OIL ANNUAL REPORT 2024
39
The terms and conditions of each grant of Performance Rights that affected or will affect remuneration for Executive KMP in
the previous, current or future reporting periods are as follows:
TRANCHE
NUMBER OF RIGHTS
SHARE PRICE HURDLE (A$)1
VALUE PER PERFORMANCE RIGHT
AT GRANT DATE2
DATE EXERCISED
CEO Performance Rights
Tranche A Rights
7,000,000
0.085
A$0.094
25/08/2023
Tranche B Rights
5,600,000
0.115
$0.077
25/08/2023
Tranche C Rights
4,200,000
0.135
A$0.065
25/08/2023
Tranche D Rights
2,800,000
0.155
A$0.046
25/08/2023
COO Performance Rights
Tranche A Rights
3,500,000
0.085
A$0.065
25/08/2023
Tranche B Rights
2,800,000
0.115
A$0.045
25/08/2023
Tranche C Rights
2,100,000
0.135
A$0.038
25/08/2023
Tranche D Rights
1,400,000
0.155
A$0.033
25/08/2023
CFO Performance Rights
Tranche E Rights
3,500,000
0.135
A$0.086
03/05/2024
Tranche F Rights
2,800,000
0.145
A$0.077
03/05/2024
Tranche G Rights
907,406
0.135
A$0.125
03/05/2024
Tranche H Rights
844,827
0.145
A$0.121
03/05/2024
1
In accordance with the plan, the Share Price Hurdles were adjusted to account for distributions to shareholders during the 2024 financial year. Share price
hurdles were only adjusted for distributions made prior to the Performance Rights being exercised.
2
The value per Performance Right at grant date is determined by an independent expert.
3
No price was payable by a participant in the Long-Term Incentive Plan on the exercise of a Performance Right.
The amounts disclosed for the remuneration of Directors and other KMP include the assessed fair values of Performance
Rights granted during the financial year, at the grant date expensed over the relevant vesting period. Fair values have been
assessed by an independent expert using a Monte Carlo simulation. Factors taken into account by this model include the
exercise price, time to maturity, the current share price and expected price volatility of the underlying Horizon shares, the
expected dividend yield and the risk-free interest rate. The value attributable to Performance Rights is allocated to particular
periods in accordance with AASB 2 ‘Share-based Payment’.
The model inputs for each grant of Performance Rights included:
CEO
COO
CFO - 2023
CF0 - 2024
Effective allocation date
1 July 2022
1 July 2022
1 May 2023
1 May 2023
Expiry date
30 June 2027
30 June 2027
30 April 2028
30 April 2028
Grant date
16 November 2022
8 August 2022
1 May 2023
21 February 2024
Exercise price
Nil1
Nil1
Nil1
Nil1
Expected price volatility
60% p.a.
60% p.a.
60% p.a.
55% p.a.
Risk free rate
3.04% p.a.
3.42% p.a.
3.08% p.a.
3.80% p.a.
Expected dividend yield
20.00% p.a.
20.00% p.a.
20.00% p.a.
20.00% p.a.
1
No price is payable by a participant in the Long-Term Incentive Plan on the exercise of a Performance Right. The respective hurdles prices are disclosed
in section 2.3.
HORIZON OIL ANNUAL REPORT 2024
40
Details of remuneration
For each grant of Performance Rights and Deferred STI Rights issued to KMP in the current or prior financial years which
results in an amount being disclosed in the Remuneration Report as a share-based payment to KMP for the financial year,
the percentage of the grant that vested in the financial year and the percentage that was forfeited because the person did
not meet the vesting or performance conditions is set out below.
Performance Rights are expensed over the expected vesting period. The expected vesting date and expected vesting period
are determined at the date of grant and may differ from the date the Performance Rights actually vest and become
exercisable. Based on the performance conditions being met, all Performance Rights on issue vested and were exercised
prior to the expected vesting date. As the vesting was based on market related conditions, the rights continue to be
expensed over the expected vesting period.
No Performance Rights and Deferred STI will vest if the performance conditions are not fulfilled, therefore the minimum value
yet to vest is US$Nil. The maximum value of the SARs, Performance Rights and Deferred STI yet to vest has been determined
as the amount of the fair value at the grant date that is yet to be expensed. The below values have been converted to dollars
at the exchange rate prevailing on the date of the grant.
Dividends
The Board has declared a final dividend of AUD 1.5 cents per Ordinary share totalling approximately AUD 24.3 million. This
dividend was declared as a Conduit Foreign Income (CFI) unfranked dividend and will be paid on 25 October 2024. During the
financial year, the Board also declared an interim dividend of AUD 1.5 cents per Ordinary share totalling approximately AUD
24.3 million. This dividend was declared as a Conduit Foreign Income (CFI) unfranked dividend and was paid on 26 April 2024.
Insurance of Officers
During the financial year, Horizon Oil Limited paid a premium to insure the Directors and secretaries of the Company and
related bodies corporate. The insured liabilities exclude conduct involving a wilful breach of duty or improper use of
information or position to gain a personal advantage. The contract prohibits the disclosure of the premium paid.
The officers of the Company covered by the insurance policy include the Directors and secretaries, and other officers who
are Directors or secretaries of subsidiaries who are not also Directors or secretaries of Horizon Oil Limited.
The liabilities insured include costs and expenses that may be incurred in defending civil or criminal proceedings that may
be brought against the officers in their capacity as officers of the Company or a related body corporate.
PERFORMANCE RIGHTS
NAME
FINANCIAL YEAR
GRANTED
VESTED
%
FORFEITED
%
FINANCIAL YEAR IN WHICH
PERFORMANCE RIGHTS MAY VEST
MAXIMUM TOTAL VALUE OF
GRANT YET TO VEST
US$
R Beament
2023
100%
-
Vested and exercised
7,798
G Douglas
2023
100%
-
Vested and exercised
7,943
K Keen
2023
100%
-
Vested and exercised
99,393
2024
100%
-
Vested and exercised
74,305
DEFERRED STI RIGHTS
NAME
FINANCIAL YEAR
GRANTED
VESTED
%
FORFEITED
%
FINANCIAL YEAR IN WHICH
DEFERRED STIs MAY VEST
MAXIMUM TOTAL VALUE OF
GRANT YET TO VEST
US$
R Beament
2023
100%
-
-
-
2024
-
-
30/06/2025
66,900
G Douglas
2023
100%
-
-
-
2024
-
-
30/06/2025
44,647
K Keen
2023
100%
-
-
-
2024
-
-
30/06/2025
11,642
HORIZON OIL ANNUAL REPORT 2024
41
Non-Audit Services
The Company may decide to employ PricewaterhouseCoopers on assignments additional to its statutory audit duties where
the external auditor’s expertise and experience with the Company and/or the Group are important.
Details of the amounts paid or payable to PricewaterhouseCoopers for audit and non-audit services provided during the
financial year are set out below.
The Board of Directors has considered the position and, in accordance with the written advice received from the Audit
Committee, is satisfied that the provision of non-audit services is compatible with the general standard of independence for
external auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services
by the external auditor, as set out below, did not compromise the external auditor independence requirements of the
Corporations Act 2001 for the following reasons:
– all non-audit services have been reviewed by the Audit Committee to ensure they do not impact the impartiality and
objectivity of the external auditor; and
– none of the services undermine the general principles relating to auditor independence as set out in Australian
Professional Ethical Standards 110 Code of Ethics for Professional Accountants, including reviewing or auditing the
auditor’s own work, acting in a management or a decision-making capacity for the Group, acting as advocate for the Group
or jointly sharing economic risk and rewards.
Remuneration of external auditors
CONSOLIDATED
2024
US$
2023
US$
During the financial year, the following fees were paid or payable for services provided by the external auditor of the parent entity and
its related practices:
PWC AUSTRALIA
Audit and other assurance services
Audit and review of financial reports
231,304
212,371
Other assurance services
13,417
12,649
Total auditors’ remuneration
244,721
225,020
External Auditor’s Independence Declaration
A copy of the external auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is
set out on page 43.
Rounding of Amounts to The Nearest Thousand Dollars
The amounts contained in this report, and in the financial report, have been rounded under the option available to the Group
under ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191. The Group is an entity of the kind to
which the Class Order applies, and accordingly amounts in the Directors’ Report have been rounded off in accordance with
that Class Order to the nearest thousand dollars or, in certain cases, to the nearest dollar.
External Auditor
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of the Directors.
M Harding
R Beament
Chairman
Chief Executive Officer
Sydney
28 August 2024
HORIZON OIL ANNUAL REPORT 2024
42
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Auditor’s Independence Declaration
As lead auditor for the audit of Horizon Oil Limited for the year ended 30 June 2024, I declare that to
the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Horizon Oil Limited and the entities it controlled during the period.
Marc Upcroft
Sydney
Partner
PricewaterhouseCoopers
28 August 2024
HORIZON OIL ANNUAL REPORT 2024
43
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999
Liability limited by a scheme approved under Professional Standards Legislation.
Independent auditor’s report
To the members of Horizon Oil Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Horizon Oil Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 30 June 2024 and of its
financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The financial report comprises:
•
the consolidated statement of financial position as at 30 June 2024
•
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
•
the consolidated statement of changes in equity for the year then ended
•
the consolidated statement of cash flows for the year then ended
•
the notes to the consolidated financial statements, including material accounting policy
information and other explanatory information
•
the consolidated entity disclosure statement as at 30 June 2024
•
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
HORIZON OIL ANNUAL REPORT 2024
44
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Audit scope
Key audit matters
•
Our audit focused on where the Group made
subjective judgements; for example, significant
accounting estimates involving assumptions and
inherently uncertain future events.
•
Amongst other relevant topics, we communicated
the following key audit matters to the Audit and
Risk Committee:
−
Restoration provision
−
Acquisition of Mereenie
•
These are further described in the Key audit
matters section of our report.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Restoration provision
(Refer to note 20)
The estimation of restoration provisions by the Group
involves significant judgement in selecting
methodologies and assumptions, the methodology for
estimating cost and discount rates used to estimate the
present value of these cash flows.
The restoration provision was a key audit matter due to
the significance of the balance and the required
judgement, effort and subjectivity in performing
procedures and evaluating the Group’s methodology,
significant assumptions and estimates.
We performed the following procedures, amongst
others:
• developed an understanding of how the Group
identified the relevant methods, assumptions and
sources of data that are appropriate for developing
the closure plans and associated cost estimates.
• developed an understanding of the relevant control
activities associated with developing the closure
plans and associated cost estimates.
• assessed the appropriateness of the Group’s
significant assumptions used, including the reliability
and relevance of the Group’s key data used in the
closure plans and associated cost estimates.
• tested the mathematical accuracy of the provision
calculations and assessed whether they were in
accordance with the method.
HORIZON OIL ANNUAL REPORT 2024
45
Key audit matter
How our audit addressed the key audit matter
• assessed the reasonableness of the note disclosures
in the financial statements for the year ended 30
June 2024 in light of the requirements of Australian
Accounting Standards.
Acquisition of Mereenie
(Refer to note 26)
During the year, the Group acquired a 25% interest in
Mereenie oil and gas fields (“Mereenie”) for a total
consideration of US$31.96 million.
The acquisition of Mereenie has been accounted for as
a business combination and involved consideration as
to the acquisition date, and the recognition and
measurement of identifiable assets acquired and
liabilities assumed as at that date.
The acquisition was a key audit matter because it had
a significant financial impact on the Group.
We performed the following procedures, amongst
others:
• obtained an understanding of the acquisition by
examining key documents including the
Sale/Purchase Agreement, Completion Statement,
and Debt facility letter.
• evaluated the appropriateness of the accounting
treatment of this acquisition against the requirements
of AASB 3.
• tested the purchase consideration, including
contingent payments and net working capital cash
flows adjustment by agreeing them to supporting
documentation.
• assessed the reasonableness of the note disclosures
in the financial statements for the year ended 30
June 2024 in light of the requirements of Australian
Accounting Standards.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2024, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon through our opinion on the financial report. We
have issued a separate opinion on the remuneration report.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
HORIZON OIL ANNUAL REPORT 2024
46
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report in accordance
with Australian Accounting Standards and the Corporations Act 2001, including giving a true and fair
view and for such internal control as the directors determine is necessary to enable the preparation of
the financial report that is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
HORIZON OIL ANNUAL REPORT 2024
47
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in the directors’ report for the year ended 30 June
2024.
In our opinion, the remuneration report of Horizon Oil Limited for the year ended 30 June 2024
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Marc Upcroft
Sydney
Partner
28 August 2024
HORIZON OIL ANNUAL REPORT 2024
48
DIRECTORS’ DECLARATION
In the directors’ opinion:
(A) the financial statements and notes are in accordance with the Corporations Act 2001 including:
(i)
complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements;
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2024 and of its performance
for the financial year ended on that date;
(B) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable: and
(C) the consolidated entity disclosure statement on page 54 is true and correct.
Note 1 confirms that the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by Section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
M Harding
R Beament
Chairman
Chief Executive Officer
Sydney
28 August 2024
HORIZON OIL ANNUAL REPORT 2024
49
HORIZON OIL LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2024
CONSOLIDATED
NOTE
2024
US$’000
2023
US$’000
REVENUE
4
111,465
152,121
Cost of sales
5
(62,909)
(81,178)
Gross profit
48,556
70,943
Other income
4
1,820
956
General and administrative expenses
5
(2,801)
(3,790)
Insurance expense
5
(2,098)
(2,000)
Exploration and development expenses written off
5
(837)
(4,549)
Impairment of intangible asset
5
-
(412)
Finance costs – interest, transaction costs, other
5
(2,934)
(3,816)
Other expenses - acquisition related transaction costs
5
(1,962)
-
Other expenses
5
(559)
(343)
Profit before income tax
39,185
56,989
NZ royalty tax expense
6a
(2,977)
(2,553)
Income tax expense
6b
(10,308)
(10,584)
Profit for the financial year
25,900
43,852
OTHER COMPREHENSIVE INCOME - ITEMS THAT MAY BE RECLASSIFIED TO PROFIT AND LOSS
Changes in the fair value of cash flow hedges
(92)
10
Currency translation reserve
7
-
Total comprehensive income for the financial year
25,815
43,862
Profit attributable to:
Security holders of Horizon
25,900
43,852
Profit for the financial year
25,900
43,852
Total comprehensive income attributable to:
Security holders of Horizon
25,815
43,862
Total comprehensive income for the financial year
25,815
43,862
Earnings per share for profit attributable to ordinary equity holders of Horizon:
US cents
US cents
Basic earnings per ordinary share
39a
1.60
2.74
Diluted earnings per ordinary share
39b
1.58
2.66
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
HORIZON OIL ANNUAL REPORT 2024
50
HORIZON OIL LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2024
CONSOLIDATED
NOTE
2024
US$’000
2023
US$’000
CURRENT ASSETS
Cash and cash equivalents
7
52,570
43,591
Receivables
8
7,399
18,351
Inventories
9
9,531
2,953
Derivative financial instruments
10
-
24
Other assets
11
538
547
Intangible assets
12
843
1,028
Total current assets
70,881
66,494
NON-CURRENT ASSETS
Investments
13
1,351
1,351
Deferred tax assets
14
13,107
10,591
Plant and equipment
15
190
355
Oil and gas assets
16
119,747
104,707
Total non-current assets
134,395
117,004
Total assets
205,276
183,498
CURRENT LIABILITIES
Payables
17
23,849
13,405
Current tax payable
18
3,952
7,058
Borrowings
19
2,703
7,912
Derivative financial instruments
10
105
-
Total current liabilities
30,609
28,375
NON-CURRENT LIABILITIES
Payables
17
2,560
424
Deferred tax liabilities
21
4,253
5,044
Borrowings
19
23,152
-
Provisions
20
61,459
53,879
Total non-current liabilities
91,424
59,347
Total liabilities
122,033
87,722
Net assets
83,243
95,776
EQUITY
Contributed equity
22
150,095
147,792
Reserves
23a
7,241
11,122
Accumulated losses
23b
(146,859)
(123,595)
Profit reserve
23c
72,766
60,457
TOTAL EQUITY
83,243
95,776
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
HORIZON OIL ANNUAL REPORT 2024
51
HORIZON OIL LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED
30 JUNE 2024
ATTRIBUTABLE TO MEMBERS OF HORIZON
CONTRIBUTED
EQUITY
RESERVES
ACCUMULATED
LOSSES
PROFIT
RESERVE1
TOTAL
EQUITY
NOTE
US$’000
US$’000
US$’000
US$’000
US$000
BALANCE AS AT 1 JULY 2022
159,343
12,093
(96,536)
24,326
99,226
Profit/(loss) for the financial year
-
-
(27,059)
70,911
43,852
Changes in the fair value of cash flow hedges
-
10
-
-
10
Total comprehensive income for the financial year
-
10
(27,059)
70,911
43,862
Transactions with owners in their capacity as equity holders:
Employee share-based payments expense
23a
-
1,369
-
-
1,369
Settlement of exercised options
23a
-
(3,148)
-
-
(3,148)
Ordinary shares issued, net of cost
2,296
-
-
-
2,296
Acquisition of treasury shares
23a
-
(2,387)
-
-
(2,387)
Issue of treasury shares
23a
-
3,174
-
-
3,174
Capital return
(13,847)
3
-
-
(13,844)
Dividends
-
8
-
(34,780)
(34,772)
Balance as at 30 June 2023
147,792
11,122
(123,595)
60,457
95,776
BALANCE AS AT 1 JULY 2023
147,792
11,122
(123,595)
60,457
95,776
Profit/(loss) for the financial year
-
-
(23,264)
49,164
25,900
Changes in the fair value of cash flow hedges
-
(92)
-
-
(92)
Movement in currency translation reserve
-
7
-
-
7
Total comprehensive income for the financial year
-
(85)
(23,264)
49,164
25,815
Transactions with owners in their capacity as equity holders:
Employee share-based payments expense
23a
-
1,203
-
1,203
Settlement of performance rights & SAR’s
23a
-
(4,999)
-
(4,999)
Ordinary shares issued, net of cost
2,303
-
-
2,303
Dividends
-
-
-
(36,855)
(36,855)
Balance as at 30 June 2024
150,095
7,241
(146,859)
72,766
83,243
1 The profit reserve balance reflects the Parent entity’s retained earnings, with the residual Group profit/loss reflected in the accumulated losses reserve.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
HORIZON OIL ANNUAL REPORT 2024
52
HORIZON OIL LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED
30 JUNE 2024
CONSOLIDATED
NOTE
2024
US$’000
2023
US$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
123,821
151,903
Payments to suppliers and employees
(38,242)
(52,099)
85,579
99,804
Interest received
1,782
888
Interest paid
(576)
(1,978)
Income and royalty taxes paid
(20,682)
(26,754)
Acquisition related transaction costs
(1,886)
-
Net cash inflow from operating activities
38
64,217
71,960
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration phase expenditure
-
(4,618)
Payments for oil and gas assets
(9,684)
(26,318)
Payment for acquisition of 25% interest in Mereenie OL4 & OL5 assets
(26,317)
-
Payments for plant and equipment
(12)
-
Payments for financial asset through other comprehensive income
-
(1,351)
Net cash outflow from investing activities
(36,013)
(32,287)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
26,317
20,000
Transaction costs incurred on borrowings
(553)
(235)
Repayment of borrowings
(7,939)
(13,298)
Payments under leasing arrangements
(183)
(214)
Proceeds from new share issue (net of costs)
2,302
2,296
Payments for shares acquired by the Trust
(2,313)
(2,304)
Return of capital to shareholders
-
(13,679)
Dividends paid to shareholders
(36,855)
(32,892)
Net cash outflow from financing activities
(19,224)
(40,326)
NET INCREASE IN CASH AND CASH EQUIVALENTS
8,980
(653)
Cash and cash equivalents at the beginning of the financial year
43,591
44,086
Effects of exchange rate changes on cash and cash equivalents held in foreign currencies
(1)
158
Cash and cash equivalents at the end of the financial year
7
52,570
43,591
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
HORIZON OIL ANNUAL REPORT 2024
53
HORIZON OIL LIMITED
CONSOLIDATED ENTITY DISCLOSURE STATEMENT AS AT 30 JUNE 2024
NAME OF ENTITY
TYPE OF
ENTITY
TRUSTEE,
PARTNER OR JV
PARTICIPANT
% OF
SHARE
CAPITAL
COUNTRY OF
INCORPORATION
AUSTRALIAN
RESIDENT OR
FOREIGN
RESIDENT
FOREIGN
JURISDICTION
Horizon Oil Limited
Body
Corporate
N/A
N/A
Australia
Australian
N/A
Horizon Oil International
Limited
Body
Corporate
JV Participant1
100
New Zealand
Foreign
New Zealand
Horizon Oil International
Holdings Limited
Body
Corporate
N/A
100
BVI
Foreign
BVI
Horizon Oil (Beibu) Limited
Body
Corporate
JV Participant2
100
BVI
Foreign
China
Horizon Oil (China Holdings)
Limited
Body
Corporate
N/A
100
BVI
Foreign
BVI
Horizon Oil Employee
Incentive Trust
Trust
N/A
N/A
N/A
N/A
Horizon Australia
Investments Pty Limited
Body
Corporate
N/A
100
Australia
Australian
N/A
Horizon Australia Energy Pty
Limited
Body
Corporate
JV Participant3
100
Australia
Australian
N/A
1
2
3
JV participant in oil license offshore New Zealand.
JV Participant in oil license offshore China.
JV Participant in oil and gas licenses in Australia.
N/A
HORIZON OIL ANNUAL REPORT 2024
54
Notes to the consolidated Financial Statements
Note 1
Summary of Material Accounting Policies
A summary of the material accounting policies adopted in the preparation of the financial statements are set out below.
These policies have been consistently applied, unless otherwise stated. The financial statements are for the consolidated
entity consisting of Horizon Oil Limited and its subsidiaries (the ‘Group’). For the purposes of preparing the financial
statements, the consolidated entity is a for profit entity.
The nature of the operations and principal activities for the Group are described in the Directors’ Report.
A.
Statement of compliance
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other
authoritative pronouncements of the Australian Accounting Standards Board (‘AASB’), Urgent Issues Group Interpretations
and the Corporations Act 2001.
The consolidated financial statements comply with Australian Accounting Standards as issued by the AASB and International
Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board (‘IASB’).
B.
Basis of preparation
These financial statements are presented in United States dollars and have been prepared under the historical cost
convention, as modified by the revaluation of financial assets and liabilities (including derivative instruments) at fair value
through profit or loss, or other comprehensive income where hedge accounting is adopted.
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and
accordingly amounts in the financial statements are rounded off to the nearest thousand dollars, unless otherwise indicated.
The general purpose financial statements for the year ended 30 June 2024 have been prepared on a going concern basis
which contemplates the realisation of assets and settlement of liabilities in the normal course of business as they become
due. At the date of this report, the directors are of the opinion that no asset is likely to be realised for amounts less than the
amount at which it is recorded in the financial report as at 30 June 2024. Accordingly, no adjustments have been made to
the financial report relating to the recoverability and classification of the asset carrying amounts or the amounts and
classification of liabilities that might be necessary should the Group not continue as a going concern.
New and amended standards adopted by the Group
There were no new and revised Australian Accounting Standards and Interpretations issued by the Australian Accounting
Standards Board (‘AASB’) that were relevant to its operations and effective for the financial year ended 30 June 2024.
There are no other Australian Accounting Standards that are not yet effective and that are expected to have a material
impact on the Group in the current or future financial years.
Critical accounting estimates
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a
higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial
statements are disclosed in Note 2.
Changes in accounting estimates
A review of the Group’s accounting estimates has not affected items recognised in the financial statements for the financial
year ended 30 June 2024, except as disclosed in Note 2.
C.
Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Horizon Oil Limited (the
'Company’ or 'Parent Entity') as at 30 June 2024 and the results of all subsidiaries for the financial year then ended. Horizon
Oil Limited and its subsidiaries together are referred to in these financial statements as ‘the Group’.
Subsidiaries are those entities (including special purpose entities) over which the Group has control. Control exists when the
Company is exposed to, or has the rights to, variable returns from its involvement and has the ability to affect those returns
through its power over that entity. There is a general presumption that a majority of voting rights results in control. The
HORIZON OIL ANNUAL REPORT 2024
55
existence and effect of potential voting rights that are currently exercisable or convertible are also considered when
assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from
the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group (refer to Note 1(M)).
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
Investments in subsidiaries are accounted for at cost in the individual financial statements of the respective parent entity.
These investments may have subsequently been written down to their recoverable amount determined by reference to the
net assets of the subsidiaries as at 30 June each financial year where this is less than cost.
Joint operations
A joint operation is a joint arrangement whereby the participants that have joint control of the arrangement (i.e. joint
operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement.
The Group recognises assets, liabilities, revenues and expenses according to its share in the assets, liabilities, revenues and
expenses of a joint operation or similar as determined and specified in contractual arrangements (Joint Operating
Agreements). Details of major joint operation interests and the sum of the Group’s interests in joint operation assets,
liabilities, revenue and expenses are set out in Note 28.
Where part of a joint operation interest is farmed out in consideration of the farmee undertaking to incur further expenditure
on behalf of both the farmee and the entity in the joint operation area of interest, exploration expenditure incurred and
carried forward prior to farm-out continues to be carried forward without adjustment, unless the terms of the farm-out are
excessive based on the diluted interest retained. An impairment provision is then made to reduce exploration expenditure
to its estimated recoverable amount. Any cash received in consideration for farming out part of a joint operation interest is
recognised in the profit or loss.
D.
Crude oil and gas inventory and materials in inventory
Crude oil and gas inventories, produced but not sold, are valued at the lower of cost and net realisable value. Cost comprises
a relevant proportion of all fixed and variable production, overhead, restoration and amortisation expenses and is determined
on an average cost basis.
Stocks of materials inventory, consumable stores and spare parts are carried at the lower of cost and net realisable value,
with cost primarily determined on a weighted average cost basis.
E.
Operating segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Board of Directors.
F.
Foreign currency translation
[i]
Functional and presentation currency
Items included in the financial statements of each of the Group’s subsidiaries are measured using the currency of the primary
economic environment in which the subsidiary operates (the ‘functional currency’). The consolidated financial statements
are presented in United States dollars, which is Horizon’s presentation currency. Horizon has selected United States dollars
as its presentation currency for the following reasons:
(a) a significant portion of Horizon’s activity is denominated in United States dollars; and
(b) it is widely understood by Australian and international investors and analysts.
[ii] Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at financial year end exchange rates of monetary assets and liabilities denominated in foreign currencies are
HORIZON OIL ANNUAL REPORT 2024
56
generally recognised in the profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges and
qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.
[iii] Group companies
All Group subsidiaries, except for Horizon Australia Energy Pty Ltd have a functional currency of United States dollars.
Horizon Australia Energy Pty Ltd has a functional currency of Australian dollars (AUD). The results and financial position of
this entity has a functional currency different from the presentation currency and is translated into the presentation currency
as follows:
– assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of
that statement of financial position;
– income and expenses for each statement of profit or loss and statement of comprehensive income are translated at
average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
– all resulting exchange differences are recognised in other comprehensive income.
G.
Revenue recognition
Revenue arises from the sale of crude oil and gas. To determine whether to recognise revenue, the Group follows a 5-step
process:
[1] -
Identifying the contract with a customer;
[2] -
Identifying the performance obligations;
[3] -
Determining the transaction price;
[4] -
Allocating the transaction price to the performance obligations; and
[5] -
Recognising revenue when/as performance obligation(s) are satisfied.
The Group enters into sales transactions involving two products. The total transaction price for a contract is allocated
amongst the various performance obligations based on their relative stand-alone selling prices. The transaction price for a
contract excludes any amounts collected on behalf of third parties. Revenue is recognised either at a point in time or over
time, when (or as) the Group satisfies performance obligations by transferring the promised goods to its customers.
Revenue from Block 22/12, China, is derived over a period in time as the crude oil produced continuously flows through a
metered pipeline. The metered monthly production is invoiced at the end of each month, in accordance with a monthly
sales contract, and revenue recognised for the month of production. At the end of each month, once billing occurs and
revenue is recognised, there are no unsatisfied performance obligations or variable revenue requiring estimation.
Revenue from the Maari/Manaia fields, New Zealand, is derived at a point in time as the crude oil produced is stored and sold
in individual liftings which are pursuant to individual sales contracts. Each lifting is invoiced in accordance with the
respective contract and revenue recognised based on the bill of lading date associated with the lifting. Once the lifting is
complete there are no unsatisfied performance obligations or variable revenue requiring estimation.
Revenue from Mereenie, Australia, is derived at a point in time based on volumes sold under contracts with customers.
Performance obligations are met when the product, either gas or oil is delivered to a specified measurement point (gas) or
the point of load-out from third party storage facilities (liquids/oil). Upon completion there are no unsatisfied performance
obligations or variable revenue requiring estimation.
The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and
reports these amounts as other liabilities in the statement of financial position. Similarly, if the Group satisfies a
performance obligation before it receives the consideration, the Group recognises either a contract asset or a receivable in
its statement of financial position, depending on whether something other than the passage of time is required before the
consideration is due.
H.
Taxation
[i]
Income tax
The income tax expense or revenue for the reporting period is the tax payable on the current period’s taxable income based
on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantially enacted at the end of the
reporting period in the countries where the Company’s subsidiaries operate and generate taxable income. It establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
HORIZON OIL ANNUAL REPORT 2024
57
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to
apply when the related deferred income tax asset is realised, or deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases
of investments in subsidiaries where the parent entity is able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly
in equity, respectively.
[ii] Government royalties
Government royalties are treated as taxation arrangements when they are imposed under Government authority and when
the calculation of the amount payable is derived from a measure of profit that falls within the definition of ‘taxable profit’ for
the purposes of AASB 112 Income Taxes. Current and deferred tax is then provided on the same basis as described in (i)
above. Royalty arrangements that do not meet the criteria for treatment as a tax are recognised on an accruals basis.
I.
Leases
The Group leases an office in Sydney and various equipment, with rental contracts typically taken out for fixed periods of
12 months to 3 years. These contracts do not have a reasonably certain extension option and may contain both lease and
non-lease components. The Group allocates the consideration in the contract to the lease and non-lease components
based on their relative stand-alone prices. Lease terms are negotiated on an individual basis, and do not impose any
covenants other than the security interests in the leased assets that are held by the lessor.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments:
– fixed payments (including in-substance fixed payments), less any lease incentives receivable; and
– variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined,
the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar
terms, security and conditions. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities is
4.5%.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost and are depreciated over the shorter of the asset's useful life and the lease term
on a straight-line basis.
J.
Impairment of assets
Assets are reviewed for impairment at each reporting date to determine whether there is any indication of impairment. If an
impairment indicator exists a formal estimate of the recoverable amount is calculated. Intangible assets with an indefinite
useful life are assessed for impairment regardless of whether there are any indicators of impairment. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount
is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the
cash inflows from other assets or groups of assets (‘cash-generating units’).
In assessing the recoverable amount, an asset’s estimated future pre-tax cash flows are discounted to their present value
using an pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific
to the asset.
Exploration phase expenditure is assessed for impairment in accordance with Note1(N).
HORIZON OIL ANNUAL REPORT 2024
58
K.
Cash and cash equivalents
For presentation purposes in the statement of cash flows, cash and cash equivalents includes cash at banks and on hand
(including share of joint operation cash balances), deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the consolidated statement of financial position.
L.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for
doubtful debts. Trade receivables are generally due for settlement within 30 days from the date of recognition. They are
included in current assets, except for those with maturities greater than one year after the end of the reporting period which
are classified as non-current assets.
The group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables. The expected loss rates are based on the payment profiles of sales over a period of
36 months before 30 June 2024 and the corresponding historical credit losses experienced within this period. The historical
rates are adjusted to reflect current and forward-looking information on key factors affecting the ability of the customers to
settle the receivables. Management assesses the collectability of these amounts based on the customer relationships and
historical payment behaviour.
M.
Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity
instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the
fair values of the assets transferred, the liabilities assumed, equity interests issued by the Group, fair value of any asset or
liability resulting from a contingent consideration arrangement, and fair value of any pre-existing equity interest in the
subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with
limited exceptions, measured initially at their fair values at the acquisition date. Acquisition related costs are expensed as
incurred.
For purchase combinations which do not constitute the acquisition of a business, the Group identifies and recognises the
individual identifiable assets acquired and liabilities assumed. The consideration paid is allocated to the individual
identifiable assets and liabilities on the basis of their relative fair values at the date of purchase. Acquisition related costs
are capitalised.
N.
Exploration phase expenditure
Exploration phase expenditure in respect of each area of interest is accounted for using the successful efforts method of
accounting. The successful efforts method requires all exploration phase expenditure to be expensed in the period it is
incurred, except the costs of successful wells, the costs of acquiring interests in new exploration assets and pre-
development costs where there is a high degree of probability that the development will go ahead, which are capitalised.
Costs directly associated with the drilling of exploration wells and any associated geophysical and geological costs are
initially capitalised pending determination of whether potentially economic reserves of hydrocarbons have been discovered.
Business development costs such as the review of farm in opportunities and bid rounds are expensed in the period in which
they are incurred. Areas of interest are recognised at the cash-generating unit level, being the smallest grouping of assets
generating independent cash flows which usually is represented by an individual oil or gas field.
When an oil or gas field has been approved for development, the capitalised exploration phase expenditure is reclassified as
oil and gas assets in the statement of financial position. Prior to reclassification, capitalised exploration phase expenditure
is assessed for impairment.
Where an ownership interest in an exploration and evaluation asset is purchased, any cash consideration paid net of
transaction costs is treated as an asset acquisition. Alternatively, where an ownership interest is sold, any cash
consideration received net of transaction costs is treated as a recoupment of costs previously capitalised, with any excess
accounted for as a gain on disposal of non-current assets.
Impairment of capitalised exploration phase expenditure
Exploration phase expenditure is reviewed for impairment semi-annually in accordance with the requirements of AASB 6
Exploration for and Evaluation of Mineral Resources. The carrying value of capitalised exploration phase expenditure is
assessed for impairment at the asset or cash-generating unit level (which usually is represented by an exploration permit or
licence) whenever facts and circumstances (as defined in AASB 6) suggest that the carrying amount of the asset may exceed
its recoverable amount. If any indication of impairment exists, an estimate of the asset’s recoverable amount is calculated.
HORIZON OIL ANNUAL REPORT 2024
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An impairment loss exists when the carrying amount of an asset or cash-generating unit exceeds its estimated recoverable
amount. The asset or cash-generating unit is then written-down to its recoverable amount. Impairment losses are
recognised as an expense in profit or loss.
Capitalised exploration phase expenditure that suffered impairment is tested for possible reversal of the impairment loss
whenever facts or changes in circumstances indicate that the impairment may have reversed.
O.
Oil and gas assets
[i]
Development expenditure
Development expenditure is stated at cost less any accumulated impairment losses. Development expenditure incurred by
or on behalf of the Group is accumulated separately for fields in which proven and probable hydrocarbon reserves have been
identified to the satisfaction of directors. Such expenditure comprises direct costs and overhead expenditure incurred which
can be directly attributable to the development phase or is acquired through the acquisition of a permit.
Once a development decision has been taken on an oil or gas field, the carrying amount of the relevant exploration and
evaluation expenditure in respect of the relevant area of interest is aggregated with the relevant development expenditure.
Development expenditure is reclassified as ‘production assets’ at the end of the commissioning phase, when the oil or gas
field is capable of operating in the manner intended by management (that is, when commercial levels of production are
capable of being achieved).
Development expenditure is tested for impairment in accordance with the accounting policy set out in Note 1(J).
[ii] Production assets
When further development costs are incurred in respect of a production asset after the commencement of production, such
expenditure is carried forward as part of the production asset when it is probable that additional future economic benefits
associated with the expenditure will flow to the Group. Otherwise such expenditure is classified as production expense in
income statements when incurred.
Production assets are stated at cost less accumulated amortisation and any accumulated impairment losses.
Once commercial levels of production commence, amortisation is charged using the unit-of-production method. The unit-
of-production method results in an amortisation expense proportional to the depletion of proven and probable hydrocarbon
reserves for the field. Production assets are amortised by area of interest in the proportion of actual production for the
financial period to the proven and probable hydrocarbon reserves of the field.
The cost element of the unit-of-production calculation is the capitalised costs incurred to date for the field together with
the estimated / anticipated future development costs (stated at current financial period-end using unescalated prices) of
obtaining access to all the proven and probable hydrocarbon reserves included in the unit-of-production calculation.
Production assets are tested for impairment in accordance with the accounting policy set out in Note 1(J).
[iii] Restoration provision
The estimated costs of decommissioning and removing an asset and restoring the site are included in the cost of the asset
as at the date the obligation first arises and to the extent that it is first recognised as a provision. This asset is subsequently
amortised on a unit-of-production basis.
The corresponding provision is reviewed at the end of each reporting period. The provision is measured at the best estimate
of the present value amount required to settle the present obligation at the end of the reporting period, based on current
legal and other requirements and technology, discounted where material using market yields at the balance sheet date on
Treasury bonds with terms to maturity and currencies that match, as closely as possible, to the estimated future cash
outflows.
Where there is a change in the expected restoration, rehabilitation or decommissioning costs, an adjustment is recorded
against the carrying value of the provision and any related restoration asset, and the effects are recognised in profit or loss
on a prospective basis over the remaining life of the operation.
The unwinding of the effect of discounting on the restoration provision is included within finance costs in profit or loss.
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[iv] Reserves
The estimated reserves include those determined on an annual basis by Mr Gavin Douglas, Chief Operating Officer of Horizon.
Mr Douglas is a full-time employee of Horizon and is a member of the American Association of Petroleum Geologists.
Mr Douglas’ qualifications include a Master of Reservoir Evaluation and Management from the Heriot Watt University, UK and
more than 25 years of relevant experience. The reserve estimates are determined by Mr Douglas based on assumptions,
interpretations, and assessments. These include assumptions regarding commodity prices, foreign exchange rates,
operating costs and capital expenditures, and interpretations of geological and geophysical models to make assessments
of the quantity of hydrocarbons and anticipated recoveries.
P.
Investments and other financial assets
Subsidiaries are accounted for in the consolidated financial statements as set out in Note 1(C).
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling
the receivable. They are included in current assets, except for those with maturities greater than 12 months after the end of
the reporting period which are classified as non-current assets. Loans and receivables are included in receivables in the
statement of financial position.
The Group classifies other financial assets in the following measurement categories:
– - those to be measured subsequently at fair value (either through OCI or profit or loss), and
– - those to be measured at amortised cost
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI.
Equity instruments
At initial recognition, Group’s management has elected to measure its equity instruments at fair value through other
comprehensive income (FVOCI). The group subsequently measures all equity investments as fair value. Where the group’s
management has elected to present fair value gains and losses on equity instruments in OCI, there is no subsequent
reclassification of fair value gains and losses to profit or loss following the derecognition of the investment.
Q.
Plant and equipment
The cost of improvements to, or on, leasehold property is depreciated over the unexpired period of the lease or the estimated
useful life of the improvement to the Group, whichever is shorter.
Depreciation on other assets is calculated using the straight-line method to allocate their cost or revalued amounts, net of
their residual values, over their estimated useful lives, as follows:
– Computer equipment
3 – 4 years
– Furniture, fittings and equipment
3 – 10 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of the reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or
loss.
R.
Intangible assets
[i]
New Zealand carbon credits
New Zealand carbon credits, also referred to as New Zealand Units (NZUs) are acquired through the Environmental Protection
Authority and surrendered to the New Zealand Government for the Group’s proportionate share of the Maari/Manaia fields
direct greenhouse gas emissions for the calendar year. The NZUs are valued at cost and do not expire.
NZUs are not amortised but are tested for impairment in accordance with the accounting policy set out in Note 1(J).
S.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are
unpaid. Due to their short-term nature they are not discounted. The amounts are unsecured and are usually paid within
HORIZON OIL ANNUAL REPORT 2024
61
30 days of recognition. They are included in current liabilities, except for those with maturities greater than one year after
the end of the reporting period which are classified as non-current liabilities.
T.
Derivatives
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The accounting for subsequent changes in fair value depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group
designates certain derivatives as either; (1) hedges of the fair value of recognised assets or liabilities or a firm commitment
(fair value hedge); or (2) hedges of the cash flows of recognised assets and liabilities and highly probable forecast
transactions (cash flow hedges). The Group currently does not have any derivatives designated as fair value hedges.
The Group documents at the inception of the hedging transaction the relationship between hedging instruments and hedged
items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also
documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in
hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of
hedged items.
The fair values of derivative financial instruments used for hedging purposes are disclosed in Note 10. Movements in the
hedging reserve in equity are shown in Note 23(A).
[i]
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in
profit or loss within other income or other expenses.
Amounts accumulated in equity are recycled to profit or loss in the periods when the hedged item will affect profit or loss
(for instance when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest
rate swaps hedging variable rate borrowings is recognised in profit or loss within “finance costs”. The gain or loss relating
to the effective portion of forward foreign exchange contracts and commodity price contracts hedging export sales is
recognised in profit or loss within ‘sales’. However, when the forecast transaction that is hedged results in the recognition
of a non-financial asset (for example, inventory) or a non-financial liability, the gains and losses previously deferred in equity
are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset or liability.
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in profit or loss.
When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is
immediately transferred to the profit or loss.
[ii] Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument
that does not qualify for hedge accounting are recognised immediately in profit or loss and are included in other income or
other expenses.
U.
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured
at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised
in profit or loss over the period of the borrowings using the effective interest rate method. Fees paid on the establishment
of loan facilities which are not an incremental cost relating to the actual drawdown of the facility, are recognised as
prepayments (netted against the loan balance) and amortised on a straight-line basis over the term of the facility.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability
for at least 12 months after the end of the reporting period.
V.
Borrowing costs
Borrowing costs which includes the costs of arranging and obtaining financing, incurred for the acquisition or construction
of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its
intended use or sale. Other borrowing costs are expensed when incurred.
No borrowing costs (2023: US$Nil) were capitalised during the current financial year and the amount of borrowing costs
amortised to the income statement were US$709,199 (2023: US$1,001,234).
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W.
Employee benefits
[i]
Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and related on-costs expected to be settled
within 12 months of the end of the reporting period are recognised in other payables in respect of employees' services up to
the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The
liabilities are recognised in other payables.
[ii] Long service leave
The liability for long service leave is recognised as a provision for employee benefits and measured as the present value of
expected future payments to be made in respect of services provided by employees up to the end of the reporting period
using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of
employee departures and periods of service. Expected future payments are discounted using market yields at the end of
the reporting period on national government bonds with terms to maturity and currency that match, as closely as possible,
the estimated future cash outflows.
[iii] Share-based payments
Share-based payment compensation benefits are provided to employees and consultants via the Horizon Long-Term
Incentive Plan, the Horizon Employee Option Scheme, and the General Option Plan. Information relating to these schemes
is set out in Note 32.
The fair value of performance rights and share appreciation rights (‘SARs’) granted under the Horizon Long-Term Incentive
Plan and Horizon Employee Option Scheme are recognised as an employee share-based payments expense with a
corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the
performance rights and SARs granted, which includes any market performance conditions but excludes the impact of any
service and non-market performance vesting conditions and the impact of any non-vesting conditions. Non-market
performance vesting conditions are included in assumptions about the number of performance rights and SARs that are
expected to vest.
The fair value is measured at grant date. The total expense is recognised over the vesting period, which is the period over
which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the Group revises its
estimates of the number of performance rights and SARs that are expected to vest based on the non-market performance
vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding
adjustment to equity.
The fair value at grant date is independently determined using either a Black-Scholes or Monte Carlo simulation option
pricing model that takes into account the exercise price, the term of the option or SAR, the impact of dilution, the share price
at effective allocation date and expected price volatility of the underlying share, the expected dividend yield and the risk-
free interest rate for the term of the performance right or SAR.
The Company has elected to retain any amounts originally recognised in the share-based payments reserve, regardless of
whether the associated performance rights are cancelled or lapse unexercised.
The Horizon Oil Employee Incentive Trust administers the Long-Term Incentive Plan and Horizon Oil Employee Option
Scheme. The Horizon Oil Employee Incentive Trust is consolidated in accordance with the principles in Note 1(C).
Where the Horizon Oil Employee Incentive Trust purchases the company’s equity instruments, the consideration paid,
including any directly attributable incremental costs (net of income taxes) is deducted from equity reserves. When an
employee exercises performance rights pursuant to the Long-Term Incentive Plan or Employee Option Scheme, and the
Board resolves to settle in shares, the Horizon Oil Employee Oil Incentive Trust transfers the appropriate amount of shares to
the employee.
X.
Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new ordinary shares or options over unissued ordinary shares are
shown in share capital as a deduction, net of related income tax, from the proceeds. Incremental costs directly attributable
to the issue of new shares or options for the acquisition of a business are not included in the cost of the acquisition as part
of the purchase consideration but are expensed.
Where the Group purchases the company’s equity instruments, for example as the result of a share buy-back, the
consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity
HORIZON OIL ANNUAL REPORT 2024
63
attributable to the owners of Horizon as treasury shares until the shares are cancelled or reissued. Where such ordinary
shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs
and the related income tax effects, is included in equity attributable to the owners of Horizon.
Y.
Earnings per share
[i]
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during
the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
[ii] Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the
after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares. Potential ordinary shares are considered dilutive only when their conversion to ordinary shares would
decrease earnings per share, or increase loss per share, from continuing operations.
Z.
Goods and Services Tax (‘GST’)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.
AA. Parent entity financial information
The financial information for the parent entity, Horizon Oil Limited, disclosed in Note 40, has been prepared on the same
basis as the consolidated financial statements, except as set out below.
[i]
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of
Horizon Oil Limited. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being
deducted from the carrying amount of these investments.
[ii] Financial guarantees
Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries for no
compensation, the fair values of these guarantees are accounted for as contributions and recognised as part of the cost of
the investment.
Note 2
Critical accounting estimates and judgements
This section considers estimates and judgements which are continually evaluated and are based on historical experience
and other factors, including expectations of future events that may have a financial impact on the Group and that are
believed to be reasonable under the circumstances.
A.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The most significant estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amount of assets and liabilities relate to:
[i]
Exploration and evaluation assets
The Group’s policy for exploration and evaluation expenditure is discussed in Note 1(N). The application of this policy requires
management to make certain estimates and assumptions as to future events and circumstances. These estimates and
HORIZON OIL ANNUAL REPORT 2024
64
assumptions include whether commercially viable reserves have been found and whether the capitalised exploration and
evaluation expenditure will be recovered through future exploitation or sale.
[ii] Reserve estimates
The estimated quantities of proven and probable hydrocarbons reported by the Group are integral to the calculation of
amortisation expense (depletion), assessments of impairment of assets, provision for restoration and the recognition of
deferred tax assets due to changes in expected future cash flows. Reserve estimates require interpretation of complex and
judgemental geological and geophysical models in order to make an assessment of the size, shape, depth and quality of
reservoir, and their anticipated recoveries. The economic, geological and technical factors used to estimate reserves may
change from period to period. Reserve estimates are prepared in accordance with guidelines prepared by the Society of
Petroleum Engineers.
[iii] Provisions for restoration
The Group estimates the future removal and restoration costs of petroleum production facilities, wells, pipelines and related
assets at the time of installation of the assets and reviews these assessments periodically. In most instances the removal
of these assets will occur well into the future. The estimate of future removal costs therefore requires management to make
judgements around the timing of the required restoration, rehabilitation and decommissioning activities, as well as the
discount rate. The carrying amount of the provision for restoration is disclosed in Note 20.
New Zealand, Maari Restoration
During the financial year the Group revised the discount, inflation and foreign exchange rates used in quantifying the New
Zealand restoration provision. The resultant effect is decrease in the restoration provision and rehabilitation asset of US$1.3
million.
Australia, Mereenie Restoration
During the financial year, following the acquisition of 25% interest in the Mereenie oil and gas fields, the Group recognised
US$7.0 million future costs of restoring the operating sites at Mereenie.
[iv] Impairment of oil and gas assets
The Group assesses whether its oil and gas assets are impaired on a semi-annual basis when an indicator of impairment is
present. This includes an estimation of the recoverable amount of the cash generating unit to which each asset belongs.
The recoverable amount of an asset is the higher of its fair value less cost to sell and value in use. The fair value less cost
to sell is assessed on the basis of the estimated net cash flows that will be received from the asset’s continued employment
and subsequent disposal. The estimated future cash flows are based on estimates of hydrocarbon reserves, future
production profiles, commodity prices, operating costs and future development costs necessary to access the reserves.
Current climate change legislation is also factored into the estimated future cashflows and future uncertainty created by
climate change risks continue to be monitored. In most cases, the present value of future cashflows is most sensitive to
estimates of future oil price, reserves, and production rates.
[v] Share-based payments
Share-based payment transactions with directors and employees are measured by reference to the fair value of the share
performance rights and employee options at the date they were granted. The fair value is ascertained using an appropriate
pricing model, being either the Black-Scholes or Monte Carlo simulation, depending on the terms and conditions upon which
the share performance rights and employee options were granted. The Group also applies assumptions around the likelihood
of the share performance rights or options vesting which will have an impact on the expense and equity recorded in the
financial year. The number of share performance rights and employee options outstanding are disclosed in Note 32.
[vi] Recoverability of deferred tax assets
The recoverability of deferred tax assets is based on the probability that future taxable amounts will be available to utilise
those temporary differences and losses. The Group has not recognised deferred tax assets in respect of some tax losses
and temporary tax differences at this point in time. Whilst the recently acquired Mereenie gas field is expected to generate
future Australian taxable income for the Australian tax consolidated group, the recognition of these tax losses as deferred
tax assets will be reassessed once longer-term income and expenditure information from the acquisition is available to the
Company.
Assessing the future utilisation of tax losses and temporary tax differences requires the Group to make significant estimates
related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from
operations and the application of existing tax laws. To the extent that future utilisation of these tax losses and temporary
HORIZON OIL ANNUAL REPORT 2024
65
tax differences becomes probable, this could result in significant changes to deferred tax assets recognised, which would
in turn impact future financial results.
B.
Critical judgements in applying the Group’s accounting policies
No critical judgements considered to have a significant risk of causing a material adjustment to the carrying amounts of the
assets and liabilities within the next financial year were made during the preparation of this report.
Note 3
Segment information
A.
Description of segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision
maker. The chief operating decision maker has been identified as the Board of Directors.
The operating segments identified are broadly based on the Group’s working interest in each individual oil and gas permit,
arranged by developmental phase. Discrete pre-tax financial information (including pre-tax operating profit and capital
expenditure on exploration and evaluation assets and oil and gas assets) for each oil and gas permit is prepared and provided
to the chief operating decision maker on a regular basis. In certain circumstances, individual oil and gas permits are
aggregated into a single operating segment where the economic characteristics and long-term planning and operational
considerations of the individual oil and gas permits are such that they are considered interdependent. The Group has
identified three operating segments:
– China development – the Group is currently involved in developing and producing crude oil from the Block 22/12 – WZ6-12,
WZ12-8W and WZ12-8E oil field developments and in the exploration and evaluation of hydrocarbons within Block 22/12;
– New Zealand development – the Group is currently involved in developing and producing crude oil from the Maari/Manaia
oil field development; and
– Australia development – the Group is currently involved in developing and producing oil and gas from the Mereenie OL4
and OL5 oil and gas fields.
B.
Segment information provided to the chief operating decision maker
2024
CHINA
DEVELOPMENT
US$’000
NEW ZEALAND
DEVELOPMENT
US$’000
AUSTRALIA
DEVELOPMENT
US$’000
UNALLOCATED
US$’000
TOTAL
US$’000
SEGMENT INFORMATION:
Revenue from external customers
76,832
34,243
390
-
111,465
Profit/(loss) before tax
32,434
8,041
(2,226)1
936
39,185
Depreciation and amortisation
(16,120)
(13,899)
(120)
(177)
(30,316)
Total segment assets as at 30 June 2024
49,682
71,958
43,584
40,052
205,276
Additions to non-current assets other than financial assets and deferred tax during the financial year ended:
Production phase expenditure
(including purchase price of Mereenie)
5,815
2,538
31,109
-
39,462
Plant and equipment
-
-
-
12
12
Total segment liabilities as at 30 June 2024
18,764
61,242
40,013
2,014
122,033
1 Inclusive of acquisition related expenses of US$1.9 million.
HORIZON OIL ANNUAL REPORT 2024
66
2023
CHINA
EXPLORATION &
DEVELOPMENT
US$’000
NEW ZEALAND
EXPLORATION &
DEVELOPMENT
US$’000
UNALLOCATED
US$’000
TOTAL
US$’000
SEGMENT INFORMATION:
Revenue from external customers
116,657
35,464
-
152,121
Profit/(loss) before tax
52,820
5,434
(1,265)
56,989
Depreciation and amortisation
(28,428)
(10,072)
(215)
(38,715)
Total segment assets as at 30 June 2023
69,048
84,754
29,696
183,498
Additions to non-current assets other than financial assets and deferred tax during the financial year ended:
Exploration, development and production phase
expenditure
17,724
3,744
-
21,468
Plant and equipment
-
-
522
522
Total segment liabilities as at 30 June 2023
26,177
60,092
1,453
87,722
C.
Other segment information
[i]
Segment revenue
The Group’s revenue is derived from the sale of crude oil produced in China, New Zealand and Australia and the sale of gas
produced in Australia. The Group sells to external customers through sales agreements with the respective joint venture
operators in China and New Zealand (CNOOC and OMV) who market and on-sell crude oil to external customers, for which the
Group is charged a marketing fee stipulated by the sales agreements. In Australia, the Group sells to external domestic
customers through individual sales contracts.
Reportable segment revenues are equal to consolidated revenue.
[ii] Segment profit before tax
The chief operating decision maker assesses the performance of operating segments based on a measure of profit before
tax.
Segment profit before tax is equal to consolidated profit before tax.
[iii] Segment assets
The amounts provided to the chief operating decision maker with respect to total assets are measured in a manner
consistent with that of the financial statements.
Reportable segment assets are equal to consolidated total assets.
[iv] Segment liabilities
The amounts provided to the chief operating decision maker with respect to total liabilities are measured in a manner
consistent with that of the financial statements.
Reportable segment liabilities are equal to consolidated total liabilities.
HORIZON OIL ANNUAL REPORT 2024
67
Note 4
Revenue
CONSOLIDATED
2024
US$’000
2023
US$’000
FROM CONTINUING OPERATIONS
Crude oil sales
111,214
150,565
Gas sales
390
-
Net realised gain/(loss) on oil hedging derivatives
(139)
1,556
111,465
152,121
OTHER INCOME
Interest received from unrelated entities
1,820
956
1,820
956
Revenue for the financial year ended 30 June 2024 relates to contracts executed for the sale of crude oil and gas, and all
performance obligations have been met within the period. There is no variable consideration requiring estimation for the
year ended 30 June 2024.
The Group did not have contracts that were executed in a prior period, whereby the performance obligations were partially
met at the beginning of the period. There are no existing contracts that are unsatisfied or partially unsatisfied as at
30 June 2024.
The Group’s revenue disaggregated by primary geographical markets is reported in Note 3 – Segment information.
The Group’s revenue disaggregated by pattern of revenue recognition is as follows:
CONSOLIDATED
2024
US$’000
2023
US$’000
CRUDE OIL SALES
Goods transferred at a point in time
77,222
35,464
Goods transferred over a period of time
34,243
116,657
111,465
152,121
HORIZON OIL ANNUAL REPORT 2024
68
Note 5
Expenses
CONSOLIDATED
2024
US$’000
2023
US$’000
COST OF SALES
Direct production costs
31,113
32,656
Inventory adjustments1
(4,842)
888
Amortisation expense
30,139
38,500
Royalties and other levies
6,499
9,134
62,909
81,178
1 Adjustment for the cost of inventory produced which is on hand as at the end of the financial period.
GENERAL AND ADMINISTRATIVE EXPENSES
Employee benefits expense
533
1,346
Employee share options expense
1,203
1,369
Corporate office expense
883
847
Depreciation expense
177
215
Rental expense relating to operating leases
5
13
2,801
3,790
INSURANCE EXPENSE
Insurance expense (including Loss of Production Income insurance)
2,098
2,000
2,098
2,000
EXPLORATION AND DEVELOPMENT EXPENSES
Exploration and development expenditure written off
837
4,549
837
4,549
IMPAIRMENT EXPENSE
Impairment of carbon credits2
-
412
-
412
2 During the previous period, the Company assessed the recoverability of the New Zealand carbon units and recorded an impairment expense.
FINANCING COSTS
Interest and finance charges
719
2,034
Discount unwinding on provision for restoration
2,182
1,542
Amortisation of prepaid financing costs
33
240
2,934
3,816
OTHER EXPENSES
Net foreign exchange loss
556
338
Other expenses
3
5
Non-recurring acquisition related expenses
1,962
-
2,521
343
HORIZON OIL ANNUAL REPORT 2024
69
Note 6
Income tax expense
CONSOLIDATED
2024
US$’000
2023
US$’000
(a)
Royalty tax expense (benefit)
Royalty paid / payable in New Zealand – current tax expense
4,165
3,984
Tax benefit related to movements in deferred tax balances
(1,188)
(1,431)
Total royalty tax expense
2,977
2,553
(b)
Income tax expense
Current tax expense
12,664
20,264
Tax benefit related to movements in deferred tax balances
(2,090)
(10,536)
Adjustments for current tax of prior periods
(266)
856
Total income tax expense
10,308
10,584
Deferred income tax benefit included in income tax expense comprises:
(Increase) in deferred tax assets
(878)
(4,608)
(Decrease) in deferred tax liabilities
(1,212)
(5,928)
Total deferred income tax (benefit)
(2,090)
(10,536)
CONSOLIDATED
2024
US$’000
2023
US$’000
(c)
Numerical reconciliation between profit before tax and tax expense / (benefit)
Profit from continuing operations before income tax
39,185
56,989
Less: Royalty paid / payable
(4,165)
(3,984)
35,020
53,005
Tax at the Australian tax rate of 30% (2023: 30%)
10,506
15,902
Tax effect of amounts which are not deductible / (taxable) in calculating taxable income:
Expenditure not allowed for income tax purposes
108
1,816
Other deductible items
-
(5,531)
Other assessable items
1,247
-
11,861
12,187
Effect of overseas tax rates
(1,708)
(2,539)
Deferred tax asset not brought to account
430
77
Tax paid on non-resident insurance premiums
-
3
Adjustments for current tax of prior periods
(275)
856
Income tax expense
10,308
10,584
Royalty tax expense
2,977
2,553
Total tax expense recognised in statement of profit or loss
13,285
13,137
HORIZON OIL ANNUAL REPORT 2024
70
(d)
Amounts recognised in other comprehensive income
Aggregate deferred tax arising in the reporting period and not recognised in net profit or loss but directly debited to other
comprehensive income.
Deferred tax: Changes in fair value of cash flow hedges
(36)
11
Total tax expense / (benefit) recognised in other comprehensive income
(36)
11
(e)
Tax losses
Unused tax losses (and applicable tax rate) for which no deferred tax asset has been recognised:
Horizon Oil Limited – 30% (2023: 30%)
4,767
2,742
Potential tax benefit at applicable tax rates
4,767
2,742
The Company also did not recognise further deferred income tax assets of US$432,996 (2023: US$291,107) in respect of other
timing differences amounting to US$1,443,320 (2023: US$1,059,688).
The Company had formed an Australian Tax Consolidated Group with its Australian subsidiaries, Horizon Australia
Investments Pty Limited and Horizon Australia Energy Pty Limited and is subject to the Australian tax consolidation regime.
Note 7
Cash and cash equivalents
CONSOLIDATED
2024
US$’000
2023
US$’000
Cash at bank and on hand
18,384
4,311
Restricted cash1
-
12,552
Deposits2
34,186
26,728
52,570
43,591
1 Under the terms of Horizon’s previous Cash Advance Facility, certain cash balances were available to the Group after certain conditions of the relevant
facility agreement were satisfied. As this previous facility has been repaid on 31 July 2023, the conditions no longer apply.
2 Includes on-call and short-term cash deposits with maturities less than 3-months.
Note 8
Receivables
CONSOLIDATED
2024
US$’000
2023
US$’000
Trade and other receivables1
7,399
18,351
7,399
18,351
1 Of this balance US$Nil (2023: US$Nil) related to amounts receivable from related parties. Refer to Note 31 for further details.
Information about the Company’s exposure to credit and market risks, and collectability of overdue amounts, is included in
Note 24(B).
HORIZON OIL ANNUAL REPORT 2024
71
Note 9
Inventories
CONSOLIDATED
2024
US$’000
2023
US$’000
Crude oil, at cost
7,577
2,131
Drilling and workover spares inventory
1,954
822
9,531
2,953
Note 10
Derivative financial instruments
CONSOLIDATED
2024
US$’000
2023
US$’000
CURRENT:
Derivative asset – Foreign exchange contracts – cash flow hedges
-
24
Derivative liability – Oil price swaps – cash flow hedges
(105)
-
(105)
24
The Group is party to derivative financial instruments in the normal course of business in order to hedge exposure to oil price,
interest rate and foreign exchange fluctuations in accordance with the Group’s financial risk management policies (refer to
Note 24a.
Oil price swap contracts (cash flow hedges)
During the financial year, oil price hedging was undertaken as a risk mitigation measure to mitigate the concentration of oil
price exposure on Maari liftings whereby oil is produced over an approximate three month period, but sold subject to the
average oil price in the month which it is lifted. At 30 June 2024, the Group had 50,000 bbls of crude oil hedged through Brent
oil price swaps at a weighted average price of US$83.91/bbl.
The gain or loss arising from re-measurement of the hedge-accounted instruments at fair value is deferred in equity in the
hedging reserve, to the extent that the hedge is effective, and re-classified into profit or loss when the hedged transaction
is recognised. The ineffective portion is recognised in profit or loss immediately. During the financial year, a net loss of
US$139,000 (2023: net gain of US$1,556,180) was transferred to profit or loss.
Note 11
Other assets
CONSOLIDATED
2024
US$’000
2023
US$’000
Other assets - prepayments
538
547
538
547
HORIZON OIL ANNUAL REPORT 2024
72
Note 12
Intangible assets
CONSOLIDATED
CURRENT ASSETS
NEW ZEALAND
CARBON CREDITS1
US$’000
TOTAL
US$’000
FINANCIAL YEAR ENDED 30 JUNE 2023
Cost – 1 July 2022
1,202
1,202
Additions
676
676
Disposals – settlements2
(438)
(438)
Impairment of carbon units
(412)
(412)
Closing value
1,028
1,028
FINANCIAL YEAR ENDED 30 JUNE 2024
Cost – 1 July 2023
1,028
1,028
Additions
319
319
Disposals – settlements2
(504)
(504)
Closing value
843
843
1 The Group acquires New Zealand Units ((NZUs) also referred to as carbon credits) to surrender to the New Zealand Government through the Environmental
Protection Authority, for its proportionate share of the Maari/Manaia fields direct greenhouse gas emissions for the calendar year. NZUs are tradable
instruments with transactions taking place on the New Zealand Emissions Trading Register, which is operated by the Environmental Protection Authority.
The NZUs are recorded at cost and are not amortised and are tested for impairment at each balance sheet date.
2 The Company’s obligation for the 2023 calendar year was settled in May 2024 whereby a portion of the NZU’s on hand were surrendered to the
Environmental Protection Authority.
Note 13
Investments
CONSOLIDATED
NON-CURRENT ASSETS
2024
US$’000
2023
US$’000
Fair value of investment in unlisted shares
1,351
1,351
1,351
1,351
During the previous financial year Horizon made a seed capital investment to acquire an approximate 3.5% interest in Re-Vi
(formerly known as Nobrac Limited), a subsidiary of ASX listed company, Kiland Limited (KIL). This investment is accounted
for as an equity instrument at fair value through other comprehensive income (FVOCI).
As at 30 June 2024, the fair value of the equity instrument reflect the consideration paid to acquire these shares. Refer to
Note 24(d) for details of the valuation techniques used.
HORIZON OIL ANNUAL REPORT 2024
73
Note 14
Deferred tax assets
CONSOLIDATED
2024
US$’000
2023
US$’000
Recognised deferred tax assets are attributable to:
Tax losses
-
-
Development and production expenditure
14,853
11,553
Cash flow hedges
29
-
Provisions and other
328
608
Total deferred tax assets
15,210
12,161
Set off of deferred tax liabilities pursuant to set off provisions
(2,103)
(1,570)
Net deferred tax assets
13,107
10,591
2024
MOVEMENTS
TAX LOSSES
US$’000
DEVELOPMENT &
PRODUCTION
EXPENDITURE
$US’000
CASH FLOW HEDGES
US$’000
PROVISIONS &
OTHER
US$’000
TOTAL
$US’000
AT 1 JULY 2023
-
11,553
-
608
12,161
(Charged)/credited
– to profit or loss
-
3,300
-
(280)
3,020
– to other comprehensive income
-
-
29
-
29
At 30 June 2024
-
14,853
29
328
15,210
2023
MOVEMENTS
TAX LOSSES
US$’000
DEVELOPMENT &
PRODUCTION
EXPENDITURE
$US’000
CASH FLOW HEDGES
US$’000
PROVISIONS AND
OTHER
US$’000
TOTAL
$US’000
AT 1 JULY 2022
-
6,472
45
1,164
7,681
(Charged)/credited
– to profit or loss
-
5,081
-
(556)
4,525
– to other comprehensive income
-
-
(45)
-
(45)
At 30 June 2023
-
11,553
-
608
12,161
HORIZON OIL ANNUAL REPORT 2024
74
Note 15
Property, plant and equipment
BUILDING(2)
US$’000
OTHER PLANT &
EQUIPMENT(2)
US$’000
LEASEHOLD
IMPROVEMENTS
US$’000
TOTAL
US$’000
As at 1 July 2022
Cost
547
1,720
1,106
3,373
Accumulated depreciation
(502)
(1,717)
(1,092)
(3,311)
Net book amount
45
3
14
62
FINANCIAL YEAR ENDED 30 JUNE 2023
Opening net book amount
45
3
14
62
Additions
486
36
-
522
Disposals
-
-
(14)
(14)
Depreciation expense[1]
(198)
(17)
-
(215)
Closing net book amount
333
22
-
355
As at 30 June 2023
Cost
1,033
1,756
-
2,789
Accumulated depreciation
(700)
(1,734)
-
(2,434)
Net book amount
333
22
-
355
FINANCIAL YEAR ENDED 30 JUNE 2024
Opening net book amount
333
22
-
355
Additions
-
12
-
12
Depreciation expense[1]
(166)
(11)
-
(177)
Closing net book amount
167
23
-
190
As at 30 June 2024
Cost
1,033
1,768
-
2,801
Accumulated depreciation
(866)
(1,745)
-
(2,611)
Net book amount
167
23
-
190
[1] Depreciation expense in relation to the right of use assets is US$170,200.
[2] Included in the net book amount of buildings, and other plant and equipment are right-of-use assets as follows:
30 JUN 2024
US$’000
30 JUN 2023
US$’000
Office premises
167
333
Photocopier and IT equipment
5
8
Total
172
341
HORIZON OIL ANNUAL REPORT 2024
75
Note 16
Oil and gas assets
CONSOLIDATED
2024
US$’000
2023
US$’000
DEVELOPMENT AND PRODUCTION PHASE EXPENDITURE
Producing oil and gas property acquisition, deferred geological, seismic and drilling,
production and distribution facilities and other development expenditure
594,534
571,322
Acquisition of oil & gas asset – Mereenie
38,143
-
Expenditures written off during the period
(1)
(4,161)
Reassessment of rehabilitation obligation - Maari
(1,316)
19,020
Carried forward accumulated impairment losses
(116,598)
(116,598)
Less accumulated amortisation
(395,015)
(364,876)
119,747
104,707
The reconciliation of development and production phase expenditure carried forward above is as follows:
CONSOLIDATED
DEVELOPMENT PHASE
EXPENDITURE
US$’000
PRODUCTION PHASE
EXPENDITURE
US$’000
TOTAL
US$’000
BALANCE AT 1 JULY 2022
-
106,879
106,879
Amortisation incurred
-
(38,500)
(38,500)
Increase in restoration obligation
-
19,020
19,020
Development and production costs incurred during financial year
10,049
11,420
21,469
Expenditures written off during the period
-
(4,161)
(4,161)
Transfer to production phase/(from development phase)
(10,049)
10,049
-
BALANCE AT 30 JUNE 2023
-
104,707
104,707
Amortisation incurred
-
(30,139)
(30,139)
Change in restoration obligation
-
(1,316)
(1,316)
Acquisition of oil and gas asset
-
38,143
38,143
Development and production costs incurred during financial year
-
8,353
8,353
Expenditures written off during the period
-
(1)
(1)
Balance at 30 June 2024
-
119,747
119,747
HORIZON OIL ANNUAL REPORT 2024
76
Note 17
Payables
CONSOLIDATED
2024
US$’000
2023
US$’000
CURRENT LIABILITIES
Trade creditors
1,033
337
Share of joint operation creditors and accruals
15,712
10,320
ETS obligation1
267
255
Lease liabilities4
157
131
Mereenie acquisition – deferred payment2
3,312
-
Other creditors
3,368
2,362
23,849
13,405
NON-CURRENT LIABILITIES
Mereenie acquisition – contingent payment3
2,352
-
Lease liabilities4
16
191
Other creditors
192
233
2,560
424
1 The ETS liability represents Horizon Oil International Limited’s obligation to the New Zealand Government for the company’s proportionate share of the
Maari/Manaia fields greenhouse gas emissions. Refer to Note 12 for the disclosure of the carbon credits acquired (NZUs) which will be surrendered to the
New Zealand Government for settlement of this obligation. The ETS obligation is recorded at the cost of the units acquired to settle the obligation. When
the number of units required to settle the obligation exceeds the units on hand, the excess will be accounted for at the cost of obtaining the incremental
units required to settle the obligation.
2 A deferred payment of A$5 million was payable to Macquarie as purchase consideration for the acquisition of Mereenie oil and gas fields (refer Note 26).
Full payment was made in July 2024.
3 A future payment of A$4 million is payable to Macquarie as purchase consideration for the acquisition of Mereenie oil and gas fields subject to certain
conditions being met.
4 The Group has lease for an office in Sydney and various equipment. The lease liabilities are secured by the related underlying assets. Future minimum
lease payments at 30 June 2024 were as follows:
MINIMUM LEASE PAYMENTS DUE
Within one year
US$’000
One to five years
US$’000
After five years
US$’000
Total
US$’000
30 June 2024
Lease payments
162
16
-
178
Finance charges
(5)
-
-
(5)
Net present values
157
16
-
173
Note 18
Current tax payable
CONSOLIDATED
2024
US$’000
2023
US$’000
Current tax payable – China
2,137
3,606
Current tax payable – New Zealand
1,588
1,540
Current royalty tax payable – New Zealand
227
1,912
3,952
7,058
HORIZON OIL ANNUAL REPORT 2024
77
Note 19
Borrowings
CONSOLIDATED
2024
US$’000
2023
US$’000
CURRENT:
Bank loans1 (B)
2,703
7,912
NON-CURRENT:
Bank loans1 (B)
23,152
-
Total Borrowings
25,855
7,912
1 Bank loans are shown net of associated transaction costs.
A.
Net debt reconciliation
This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.
2024
US$’000
2023
US$’000
Cash and cash equivalents
52,570
43,591
Borrowings2 – repayable within one year (including overdraft)
(2,814)
(7,939)
Borrowings2 – repayable after one year and in five years (including overdraft)
(23,590)
-
Lease liabilities
(173)
(322)
Net cash
25,993
35,330
Cash and liquid investments
52,570
43,591
Gross debt2 – variable interest rates
(26,404)
(7,939)
Lease liabilities
(173)
(322)
Net cash
25,993
35,330
2 Borrowings and gross debt represent the nominal value of the Debt Facility drawn down.
CASHFLOWS
NON-CASH CHANGES
OPENING
1 JULY
2023
DRAWDOWN3
REPAYMENTS
FOREIGN
EXCHANGE
MOVEMENT
AMORTISATION OF
TRANSACTION
COSTS
CLOSING
30 JUNE
2024
Cash Advance Facility
7,912
-
(7,939)
-
27
-
Debt Facility
-
25,764
-
85
6
25,855
Total liabilities from financing
activities
7,912
25,764
(7,939)
85
33
25,855
3
Funds drawn down are shown net of associated transaction costs incurred during the period.
B.
Bank loans – Debt Facility
On 31 July 2023, the Cash Advance Facility with ANZ, Westpac and ICBC was repaid in full.
On 4 June 2024, Horizon advised that it has executed a new AUD 42.5 million senior debt facility agreement with Macquarie
Bank to fund the acquisition of the 25% non-operating interest in the OL4 and OL5 development licenses which contain the
producing Mereenie conventional oil and gas field, Northern Territory, Australia.
HORIZON OIL ANNUAL REPORT 2024
78
The new senior debt facility, is structured as a reserves base lending facility, has a term of 5 years with semi-annual
repayments and attracts an interest rate of BBSW + 5%. Lender security is limited to first ranking general security over the
interest in Mereenie, with a parent company guarantee which is customary for a reserves base lending facility. On 11 June
2024, the Group reached financial close and draw down took place to fund the Mereenie acquisition.
Under the facility, the facility limit is determined by applying a minimum facility life coverage ratio to the net present value
of estimated future cash flows from the Mereenie oil and gas field. Estimated future cash flows are dependent on, amongst
other things, oil and gas prices, reserve estimates, operating and capital cost estimates. The facility is secured by a floating
charge over the shares and assets of the borrower (Horizon Australia Energy Limited which is a wholly owned subsidiary of
Horizon Oil Limited). Horizon Oil Limited has guaranteed the performance of Horizon Australia Energy Limited in relation to
the loan facility from Macquarie Bank. The Group is subject to covenants which are common for a facility of this nature.
At 30 June 2024, total debt drawn under the facility was US$26.4 million (A$39.9 million).
Note 20 Provisions
CONSOLIDATED
2024
US$’000
2023
US$’000
Restoration (current)
-
-
Restoration (non-current)
61,459
53,879
61,459
53,879
The reconciliation of the movement in the total of the restoration provisions is as follows:
Balance at beginning of financial year
53,879
33,317
Additional provision during financial year
7,034
27,750
Unwinding of discount
2,205
1,542
Payment of restoration cost
(344)
-
Effect of change in inflation, discount and FX rates
(1,315)
(8,730)
Balance at end of financial year
61,459
53,879
During the financial year, following the acquisition of 25% interest in Mereenie oil and gas fields, the Group recognised US$7.0
million future costs of restoring the operating sites at Mereenie.
Note 21
Non-current liabilities – Deferred tax liabilities
CONSOLIDATED
2024
US$’000
2023
US$’000
RECOGNISED DEFERRED TAX LIABILITIES ARE ATTRIBUTABLE TO:
Development and production expenditure
4,584
6,115
Accounting profits royalty
391
58
Other
1,381
441
Total deferred tax liabilities
6,356
6,614
Set off of deferred tax assets pursuant to set off provisions
(2,103)
(1,570)
Net deferred tax liabilities
4,253
5,044
HORIZON OIL ANNUAL REPORT 2024
79
2024
DEVELOPMENT
AND
PRODUCTION
EXPENDITURE
US$’000
ACCOUNTING
PROFITS ROYALTY
US$’000
CASH FLOW
HEDGES
US$’000
OTHER
US$’000
TOTAL
US$’000
AT 1 JULY 2023
6,115
58
441
6,614
(Charged] / credited
-
To profit or loss
(1,531)
333
940
(258)
-
To other comprehensive income
At 30 June 2024
4,584
391
1,381
6,356
2023
DEVELOPMENT
AND
PRODUCTION
EXPENDITURE
US$’000
ACCOUNTING
PROFITS ROYALTY
US$’000
CASH FLOW
HEDGES
US$’000
OTHER
US$’000
TOTAL
US$’000
AT 1 JULY 2022
12,641
1,221
44
195
14,101
(Charged] / credited
-
To profit or loss
(6,526)
(1,163)
-
246
(7,443)
-
To other comprehensive income
-
-
(44)
-
(44)
At 30 June 2023
6,115
58
-
441
6,614
Note 22 Contributed equity
CONSOLIDATED
NUMBER OF SHARES
CONSOLIDATED
2024
‘000
2023
‘000
2024
US$‘000
2023
US$‘000
A.
Issued share capital
Ordinary shares
Fully paid
1,623,015
1,601,443
149,636
147,333
Partly paid to A$0.01
1,500
1,500
459
459
1,624,515
1,602,943
150,095
147,792
B.
Movements in ordinary share capital
[i]
Ordinary shares (fully paid)
Date
Details
Number of shares
US$'000
30/06/2023
Balance as at 30 June 2023
1,601,442,962
147,333
28/08/2023
Issuance of new shares
- settlement of SAR’s
16,933,000
1,786
17/06/2024
Issuance of new shares
- settlement of Performance Rights
4,638,683
517
30/06/2024
Balance as at 30 June 2024
1,623,014,645
149,636
-
-
-
-
-
-
-
-
HORIZON OIL ANNUAL REPORT 2024
80
[ii]
Ordinary shares (partly paid to A$0.01):
Date
Details
Number of shares
US$'000
30/06/2024
Balance as at 30 June 2024
1,500,000
459
30/06/2023
Balance as at 30 June 2023
1,500,000
459
C.
Ordinary shares
Fully paid
Fully paid ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of shares held. Voting rights are governed by the Company’s Constitution. In summary, on a show
of hands every holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote and upon a poll
each fully paid ordinary share is entitled to one vote.
Partly paid
Partly paid ordinary shares are issued on exercise of employee options. The partly paid shares currently on issue are held
by the Company following forfeiture by their original holder. The outstanding obligation in relation to the partly paid ordinary
shares is payable either when called or by the date not exceeding 5 years from the grant date of the option which gave rise
to the partly paid ordinary share. Partly paid ordinary shares entitle the holder to participate in dividends and the proceeds
on winding up of the Company in proportion to the number of shares held. Voting rights are governed by the Company’s
Constitution. In summary, on a show of hands every holder of partly paid ordinary shares present at a meeting in person or
by proxy is entitled to one vote and upon a poll, is entitled to one vote to the proportion of the total issue price then paid up.
D.
Unlisted options over unissued ordinary shares
Information related to the Employee Option Scheme, including details of options issued, exercised and lapsed during the
financial year and options outstanding at the end of the financial year is set out in Note 32.
HORIZON OIL ANNUAL REPORT 2024
81
Note 23 Reserves and retained profits
CONSOLIDATED
2024
US$’000
2023
US$’000
A.
Reserves
SHARE-BASED PAYMENTS RESERVE
Movements:
Balance at beginning of financial year
11,137
12,916
Employee share-based payments expense
1,203
1,369
Settlement of SAR’s and Performance Rights
(5,030)
(3,148)
Balance at end of financial year
7,310
11,137
HEDGE RESERVE
Movements:
Balance at beginning of financial year
16
6
Movement in net market value of hedge contracts
(121)
17
Deferred tax
29
(7)
Balance at end of financial year
(76)
16
TREASURY SHARES
Movements:
Balance at beginning of financial year
(31)
(829)
Acquisition of shares by the Employee Share Trust
-
(2,387)
Settlement of SAR’s
31
3,174
Capital return & dividends
-
11
Balance at end of financial year
-
(31)
CURRENCY TRANSLATION RESERVE
Movements:
Balance at beginning of financial year
-
-
Movement in currency translation
7
-
Balance at end of financial year
7
-
Total reserves
7,241
11,122
B.
Accumulated losses
CONSOLIDATED
2024
US$’000
2023
US$’000
Accumulated losses at beginning of financial year
(123,595)
(96,536)
Net loss for financial year
(23,264)
(27,059)
Accumulated losses at end of financial year
(146,859)
(123,595)
C.
Profit reserve
CONSOLIDATED
2024
US$’000
2023
US$’000
Profit reserve at the beginning of the financial year
60,457
24,326
Parent company profit for financial year
49,164
70,911
Dividends paid
(36,855)
(34,780)
Profit reserve at the end of the financial year
72,766
60,457
HORIZON OIL ANNUAL REPORT 2024
82
D.
Nature and purpose of reserves
Share-based payment reserve:
The fair value of performance rights and share appreciation rights granted to employees results in an increase in equity upon
recognition of the corresponding employee benefits expense, as described in the accounting policy set out in Note 1(W)([iii]).
The fair value of general options granted also results in an increase in equity unless accounting standards require the options
to be treated otherwise.
The Company has elected to retain any amounts originally recognised in the share-based payments reserve, regardless of
whether the associated options or share appreciation rights are cancelled or lapse unexercised.
Hedge reserve:
Changes in the market value of the effective portion of derivatives is reflected directly in equity until such time as the hedge
is ineffective or expires, as described in the accounting policy set out in Note 1(T).
Treasury shares:
Treasury shares are shares in Horizon that are held by the Horizon Employee Share Trust for the purpose of issuing shares
under the Horizon Employee Option Scheme and the Horizon Long Term Incentive (LTI) Plan. Refer to Note 32 for further
information. Shares issued to employees are recognised on a weighted average basis.
Movement in treasury shares
Date
Details
Number of shares
US$'000
30/06/2023
Balance as at 30 June 2023
356,294
31
28/08/2023
Settlement of SARs
(356,294)
(31)
30/06/2024
Balance as at 30 June 2024
-
-
Currency translation reserve:
Exchange differences arising on translation of Horizon Australia Energy Pty Ltd, from its functional currency of Australian
dollars into the Group’s presentation currency of United States dollars, are recognised in other comprehensive income as
described in the accounting policy set out in Note 1(F) and accumulated in a separate reserve within equity.
Note 24 Financial risk management
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and
commodity price risk); credit risk; liquidity risk; capital risk; and climate related and other emerging risks. The Group's overall
risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse
effects on the financial performance of the Group. The Group uses derivative financial instruments such as oil price swaps,
interest rate swaps and foreign exchange forward contracts, to hedge certain risk exposures. Derivatives are exclusively
used for hedging purposes, i.e. not as trading or other speculative instruments. The Group uses different methods to
measure the different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest
rate, foreign exchange and commodity price risks, and aging analysis for credit risk.
Risk management is carried out by the finance function under policies approved by the Board of Directors. The finance
function identifies, evaluates and if necessary hedges financial risks in close co-operation with Group management. The
board provides written principles for overall risk management, as well as written policies covering specific areas, such as
mitigating foreign exchange, interest rate and credit risks and the use of derivative financial instruments.
The Group has no off-balance sheet financial assets or liabilities as at the end of the reporting period.
HORIZON OIL ANNUAL REPORT 2024
83
The Group held the following financial instruments at 30 June 2024 and 30 June 2023:
CONSOLIDATED
30 JUNE 2024
US$’000
30 JUNE 2023
US$’000
FINANCIAL ASSETS
Cash and cash equivalents
52,570
43,591
Receivables
7,399
18,351
Derivative financial instruments
-
24
59,969
61,966
FINANCIAL LIABILITIES
Payables (current)
23,849
13,405
Current tax payable
3,952
7,058
Payables (non-current)
2,367
424
Borrowings (net of borrowing costs capitalised)
25,855
7,912
56,023
28,799
A.
Market risk
[i]
Foreign exchange risk
Foreign exchange risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates.
Foreign exchange risk arises when future commercial transactions and recognised financial assets and financial liabilities
are denominated in a currency that is not the Group’s functional currency.
The Group operates internationally and is exposed to foreign exchange risk arising predominately from Australian and New
Zealand dollars and Chinese Renminbi.
The Group manages foreign exchange risk by monitoring forecast cash flows in currencies other than US dollars and ensuring
that adequate Australian dollar and New Zealand dollar cash balances are maintained.
The objective of the Group’s foreign exchange risk management policy is to ensure its financial viability despite potential
periods of unfavourable exchange rates. Regular sensitivity analysis is conducted to evaluate the potential impact of
unfavourable exchange rates on the Group’s future financial position. The results of this evaluation are used to determine
the most appropriate risk mitigation tool to be used. The Group will hedge when it is deemed the most appropriate risk
mitigation tool to be used.
As at 30 June 2024, the Group had no outstanding exchange rate hedges (30 June 2023: derivative asset of US$24,000).
Effects of hedge accounting
The effects of the foreign currency related hedging instruments on the Group’s financial position and performance are as
follows:
CONSOLIDATED
30 JUNE 2024
US$’000
30 JUNE 2023
US$’000
FOREIGN CURRENCY FORWARDS (USD/AUD)
Carrying amount – asset / (liability)
-
24
Notional amount
-
2,808
Maturity date
-
10 July 2023 - 11 December 2023
Hedge ratio1
-
1:1
Change in discounted spot value of outstanding instruments
-
24
Weighted average hedged rate for the year
-
US$1: AUD0.6431
1 The foreign currency swaps and foreign currency forward contracts are denominated in the same currencies as the highly probable future operating and
corporate overhead expenditures (AUD corporate expenditures) therefore the hedge ratio is 1:1.
HORIZON OIL ANNUAL REPORT 2024
84
Exposure to foreign exchange risk
The Group’s exposure to foreign exchange risk at the end of each reporting period was as follows:
GROUP
30 JUNE 2024
30 JUNE 2023
AUD
US$’000
NZD
US$’000
RMB
US$’000
AUD
US$’000
NZD
US$’000
RMB
US$’000
Cash and cash equivalents
7,673
1,370
-
10,079
1,392
-
Receivables
1,182
180
-
89
232
-
Current tax payable
-
3,089
2,137
-
3,518
3,606
Current payables
5,775
-
1,108
1,211
-
838
Non-current payables
2,544
-
-
232
-
-
For the financial year ended and as at 30 June 2024, if the currencies set out in the table below had strengthened or
weakened against the US dollar by the percentage shown, with all other variables held constant, the net result for the
financial year would increase / (decrease) and net assets would increase / (decrease) by:
GROUP
NET RESULT
NET ASSETS
NET RESULT
NET ASSETS
2024
US$’000
2023
US$’000
2024
US$’000
2023
US$’000
2024
US$’000
2023
US$’000
2024
US$’000
2023
US$’000
Change in currency1
+10%
+10%
+10%
+10%
-10%
-10%
-10%
-10%
Australian dollar impact
576
567
38
611
(576)
(567)
(38)
(611)
New Zealand dollar impact
507
881
(111)
(136)
(507)
(881)
111
136
Chinese Renminbi impact
-
-
(243)
(333)
-
-
243
333
1 This has been based on the change in the exchange rate against the US dollar in the financial years ended 30 June 2024 and 30 June 2023. The sensitivity
analysis has been based on the sensitivity rates when reporting foreign exchange risk internally to key management personnel and represents
management’s assessment of the possible change in foreign exchange rates based on historic volatility. In management’s opinion, the sensitivity
analysis is not fully representative of the inherent foreign exchange risk as the end of the reporting period exposure does not necessarily reflect the
exposure during the course of the financial year.
[ii] Commodity price risk
Commodity price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
change in market commodity prices for crude oil.
The objective of the Group’s commodity price risk management policy is to ensure its financial viability despite potential
periods of unfavourable prices. Regular sensitivity analysis is conducted to evaluate the potential impact of unfavourable
prices on the Group’s future financial position. The results of this evaluation are used to determine the most appropriate risk
mitigation tool to be used. The Group will hedge when it is deemed the most appropriate risk mitigation tool to be used or
where required by its financing arrangements. During the current financial year, oil price hedging was undertaken as a risk
mitigation measure to ensure the Group’s financial position remains sound and that the Group is able to meet its financial
obligations in the event of low oil prices.
At 30 June 2024, the Group had 50,000 bbls of crude oil hedged through Brent oil price swaps at a weighted average price of
US$83.91/bbl.
Effects of hedge accounting
The effects of the oil price swaps on the group’s financial position and performance are as follows:
CONSOLIDATED
30 JUNE 2024
US$’000
30 JUNE 2023
US$’000
OIL PRICE SWAPS
Carrying amount – liability
105
-
Notional amount
4,196
-
Maturity date
31 July 2024
-
Hedge ratio1
1:1
-
Change in fair value of outstanding hedging instruments since 30 June 2023
(105)
-
Weighted average hedged rate for the year
US$83.91/bbl
-
1 The oil price swaps were executed in the same oil price benchmark as the highly probable future oil sales, therefore the hedge ratio is 1:1.
HORIZON OIL ANNUAL REPORT 2024
85
For the financial year ended and as at 30 June 2024, if the crude oil price rose or fell by the percentage shown, with all other
variables held constant, the result for the financial year would increase / (decrease) and net assets would increase /
(decrease) by:
GROUP
NET RESULT
NET ASSETS
NET RESULT
NET ASSETS
2024
US$’000
2023
US$’000
2024
US$’000
2023
US$’000
2024
US$’000
2023
US$’000
2024
US$’000
2023
US$’000
Change in crude oil price
+10%
+10%
+10%
+10%
-10%
-10%
-10%
-10%
Impact
4,850
7,509
4,850
7,509
(5,814)
(8,846)
(5,814)
(8,846)
[iii] Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market interest rates.
The Group has no interest-bearing assets considered to materially expose the Group’s core income and/or operating cash
flows to changes in market interest rates.
As at 30 June 2024 and 30 June 2023, the Group’s interest rate risk arises from borrowings, issued at variable rates, exposing
the Group to cash flow interest rate risk. Group policy is to manage material interest rate exposure. Regular sensitivity
analysis is conducted to evaluate the potential impact of unfavourable interest rate movements on the Group’s future
financial position. The results of this evaluation are used to determine the most appropriate risk mitigation tool to be used.
During the current and prior financial year, the Group did not enter into any interest rate swap contracts.
The Group manages its cash flow interest rate risk by using floating to fixed interest rate swaps. Such interest rate swaps
have the economic effect of converting borrowings from floating to fixed rates. Under the interest rate swaps, the Group
agrees with other parties to exchange, at specific intervals, the difference between fixed contract rates and floating-rate
interest amounts calculated by reference to the agreed notional principal amounts.
The Group’s exposure to interest rate risk for financial instruments is set out below:
FLOATING
INTEREST
RATE
FIXED INTEREST RATE MATURING IN:
NON-
INTEREST
BEARING
CARRYING
AMOUNT
US$’000
1 YEAR OR
LESS
US$’000
OVER 1 TO 2
YEARS
US$’000
OVER 2 TO 5
YEARS
US$’000
US$’000
US$’000
AS AT 30 JUNE 2024
FINANCIAL ASSETS
Cash and cash equivalents
18,057
33,688
-
-
825
52,570
Receivables
-
-
-
-
7,399
7,399
18,057
33,688
-
-
8,224
59,969
Weighted average interest rate p.a.
4.35%
FINANCIAL LIABILITIES
Trade and other payables
-
-
-
-
23,849
23,849
Current tax payable
-
-
-
-
3,952
3,952
Non-current payables
-
-
-
-
2,367
2,367
Derivative financial instruments
-
-
-
-
105
105
Borrowings (nominal)
26,404
-
-
-
-
26,404
26,404
-
-
-
30,273
56,677
Weighted average interest rate p.a.
9.56%
Net financial assets/(liabilities)
(8,347)
33,688
-
-
(22,049)
3,292
HORIZON OIL ANNUAL REPORT 2024
86
FLOATING
INTEREST
RATE
FIXED INTEREST RATE MATURING IN:
NON-
INTEREST
BEARING
CARRYING
AMOUNT
US$’000
1 YEAR OR
LESS
US$’000
OVER 1 TO 2
YEARS
US$’000
OVER 2 TO 5
YEARS
US$’000
US$’000
US$’000
AS AT 30 JUNE 2023
FINANCIAL ASSETS
Cash and cash equivalents
27,884
-
-
-
15,707
43,591
Receivables
-
-
-
-
18,351
18,351
Derivative financial instruments
-
-
-
-
24
24
27,884
-
-
-
34,082
61,966
Weighted average interest rate p.a.
3.58%
FINANCIAL LIABILITIES
Trade and other payables
-
-
-
-
13,405
13,405
Current tax payable
-
-
-
-
7,124
7,124
Non-current payables
-
-
-
-
424
424
Borrowings
7,939
-
-
-
-
7,939
7,939
-
-
-
20,953
28,892
Weighted average interest rate p.a.
6.62%
Net financial assets
19,945
-
-
-
13,129
33,074
As at 30 June 2024 and 30 June 2023, the Group had the following variable rate borrowings outstanding:
30 JUNE 2024
30 JUNE 2023
WEIGHTED AVERAGE
INTEREST RATE
% P.A.
BALANCE
US$’000
WEIGHTED AVERAGE
INTEREST RATE
% P.A.
BALANCE
US$’000
External loans
9.56%
26,404
6.62%
7,939
Net exposure to cash flow interest rate risk
26,404
7,939
At 30 June 2024 and 30 June 2023, if the interest rates had been 1.0% p.a. higher or lower and all other variables held
constant, the net result for the financial year would increase/(decrease) and net assets as at 30 June 2024 and 30 June 2023
would increase/(decrease) by:
GROUP
NET RESULT
NET ASSETS
NET RESULT
NET ASSETS
2024
US$’000
2023
US$’000
2024
US$’000
2023
US$’000
2024
US$’000
2023
US$’000
2024
US$’000
2023
US$’000
CHANGE IN INTEREST
RATE P.A.
+1%
+1%
+1%
+1%
-1%
-1%
-1%
-1%
Impact of Assets
293
98
293
98
(1,274)
(349)
(1,274)
(349)
Impact of Liabilities
14
112
14
112
(136)
(112)
(136)
(112)
Impact of Net Assets
279
(14)
279
(14)
(1,138)
(237)
(1,138)
(237)
B.
Credit risk
Credit risk is managed on a Group basis. Credit risk refers to the risk that a counterparty will default on its contractual
obligations resulting in financial loss to the Group. Credit risk arises from cash and cash equivalents, derivative financial
instruments, as well as credit exposures to customers, including outstanding receivables.
It is acknowledged that the Group’s sales of crude oil are primarily concentrated with two counterparties. However, the
Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit
history, and that the Group has the ability to sell crude to other parties if desired.
Derivative counterparties and cash transactions are limited to high credit quality financial institutions. Where commercially
practical the Group seeks to limit the amount of credit exposure to any one financial institution.
The maximum exposure to credit risk at the end of each reporting period is the carrying amount of the financial assets as
summarised in this note.
HORIZON OIL ANNUAL REPORT 2024
87
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit
ratings (if available) or to historical information about counterparty default rates.
CONSOLIDATED
2024
US$’000
2023
US$’000
CASH AND CASH EQUIVALENTS
Counterparties with external credit rating (Standard & Poors)
AA-
45,122
42,057
A+
6,624
-
Counterparties without external credit rating
Share of joint operations cash balances
824
1,534
Total cash and cash equivalents
52,570
43,591
RECEIVABLES
Counterparties with external credit rating (Standard & Poors / Fitch)
AAA
283
295
AA-
816
67
A+
5,536
7,143
A-
10
10,757
BBB+
279
-
BBB-
319
-
Counterparties without external credit rating
Share of joint operation receivables balances
156
89
Total receivables
7,399
18,351
The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance for all trade receivables. The expected loss rates are based on the payment profiles of sales over a period of
36 months before 30 June 2024 and the corresponding historical credit losses experienced within this period. The historical
rates are adjusted to reflect current and forward-looking information on key factors affecting the ability of the customers to
settle the receivables. Management has assessed the collectability of these amounts based on the customer relationships
and historical payment behaviour and believe that the amounts are still collectable in full.
On that basis, the loss allowance as at 30 June 2024 was determined as follows for trade receivables:
AS AT 30 JUNE 2024
CURRENT
MORE THAN 30 DAYS
DUE PAST
MORE THAN 60 DAYS
DUE PAST
TOTAL
Expected loss rate
0%
0%
0%
Gross carrying amount
7,399
-
-
7,399
Loss Allowance
-
-
-
-
As at 30 June 2024, there were no financial assets that are past due (30 June 2023: US$Nil). At the date of this report, the
full balance of the receivables has been received in cash.
C.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities.
The Group has policies in place to manage liquidity risk by maintaining adequate reserves and by continuously monitoring
forecast and actual cash flows and matching profiles of financial assets and liabilities.
Financing arrangements
As at 30 June 2024 and 30 June 2023, the Group had no undrawn borrowing facilities.
HORIZON OIL ANNUAL REPORT 2024
88
Maturities of financial liabilities
An analysis of the Group’s financial liability maturities for the current and prior financial year is set out below:
AS AT 30 JUNE 2024
NON-INTEREST BEARING
US$’000
VARIABLE RATE1
US$’000
FIXED RATE
US$’000
Less than 6 months
27,906
1,273
-
6 – 12 months
-
3,950
-
Between 1 and 2 years
-
14,445
-
Between 2-5 years
2,367
13,295
Total contractual cash flows
30,273
32,963
-
1 Includes principal repayments and future interest payments.
AS AT 30 JUNE 2023
NON-INTEREST BEARING
US$’000
VARIABLE RATE1
US$’000
FIXED RATE
US$’000
Less than 6 months
20,720
7,939
-
6 – 12 months
-
-
-
Between 1 and 2 years
232
-
-
Total contractual cash flows
20,952
7,939
-
1 Includes principal repayments and future interest payments.
D.
Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for
disclosure purposes.
AASB 7 ‘Financial Instruments: Disclosures’ requires disclosure of fair value measurements by level of the following fair value
measurement hierarchy:
(a)
quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
(b)
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices) (level 2); and
(c)
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
[i]
Fair value measurements
The following table presents the Group’s assets and liabilities measured and recognised at fair value as at 30 June 2024 and
30 June 2023:
AS AT 30 JUNE 2024
LEVEL 1
US$’000
LEVEL 2
US$’000
LEVEL 3
US$’000
TOTAL
US$’000
ASSETS
Financial assets at fair value through OCI:
Equity investment in unlisted shares
-
-
1,351
1,351
Total assets
-
-
1,351
1,351
LIABILITIES
Derivatives used for hedging
-
105
-
105
Total liabilities
-
105
-
105
HORIZON OIL ANNUAL REPORT 2024
89
AS AT 30 JUNE 2023
LEVEL 1
US$’000
LEVEL 2
US$’000
LEVEL 3
US$’000
TOTAL
US$’000
ASSETS
Derivatives used for hedging
-
24
-
24
Financial assets at fair value through OCI:
Equity investment in unlisted shares
-
-
1,351
1,351
Total assets
-
24
1,351
1,375
There were no transfers between levels 1, 2 or 3 for recurring fair value measurements during the year.
The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting
period.
The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at
30 June 2024.
[ii] Valuation techniques used to derive fair values
The fair value of financial instruments traded in active markets (such as publicly traded derivatives) was based on quoted
market prices at the end of each reporting period. The quoted market price used for hedging derivatives held by the Group
was the current bid price. These instruments are included in level 1.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is
determined using valuation techniques. These valuation techniques maximise the use of observable market data where it
is available and rely as little as possible on entity specific estimate. If all significant inputs required to fair value an
instrument are observable, the instrument is included in level 2.
The fair value of equity investment as at 30 June 2024 is equivalent to the consideration paid to acquire the 3.5% interest in
the unlisted shares. As one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3.
Specific valuation techniques used to value financial instruments include:
– Discounted cash flow projections based on reliable estimates of future cash flows.
All resulting fair value estimates for unlisted equities are included in level 3.
[iii] Other fair value measurements
The carrying value of receivables and payables are assumed to approximate their fair values due to their short-term nature.
The fair value of other financial liabilities (being financial guarantees), after factoring in the likelihood that the parent entity
would be required to perform under the guarantees, was not considered material.
The fair value of borrowings for disclosure purposes is not materially different to their carrying value given the likely
anticipated repayment profile. Refer to Note 19 for further details.
The fair value of other classes of financial instruments not yet covered above was determined to approximate their carrying
value.
E.
Capital risk
The consolidated entity manages its capital to ensure that entities in the consolidated group will be able to continue as a
going concern while maximising the return to stakeholders through the optimisation of the debt and equity balances.
F.
Climate-related and other emerging risks
Climate-related and other emerging risks encompass the impact of climate change, any associated climate change
regulations, funding restrictions and any other emerging factors (e.g. technological disruption to the oil and gas industry)
that could have a material impact on the Group. The Group will continue to monitor the impact of these risks.
HORIZON OIL ANNUAL REPORT 2024
90
At the date of this report, the Group is impacted by emissions trading regulations in New Zealand. Currently there are no
equivalent emissions trading regulations in the other jurisdictions in which the Group operates.
The Group manages the impact of the emissions trading regulations in New Zealand by acquiring New Zealand carbon credits
(NZUs) throughout the financial period to offset its annual obligation, such that it is not wholly exposed to the NZU price at
the date of settlement.
At 30 June 2024, if the New Zealand carbon credit price had been 10% p.a. higher or lower and all other variables held
constant, the net result for the financial year would increase/(decrease) and net assets as at 30 June 2024 would
increase/(decrease) by:
GROUP
NET RESULT
NET ASSETS
NET RESULT
NET ASSETS
2024
US$’000
2023
US$’000
2024
US$’000
2023
US$’000
2024
US$’000
2023
US$’000
2024
US$’000
2023
US$’000
Change in NZU price
+10 %
+10%
+ %
+10%
-%
-10%
%
-10%
Impact
37
34
58
77
(37)
(34)
(58)
(77)
Note 25 New Zealand Imputation Credits
CONSOLIDATED
2024
US$’000
2023
US$’000
Imputation credits available for subsequent financial years1
2,929
2,927
1 The franking credits available for subsequent financial years are only available to New Zealand resident shareholders under the Trans-Tasman imputation
legislation.
Note 26 Acquisition of a 25% interest in Mereenie oil and gas fields
Summary of acquisition
On 14 February 2024, Horizon Australia Energy Pty Ltd, a wholly owned subsidiary of Horizon Oil Limited, executed a sale and
purchase agreement with Macquarie Mereenie (Seller) to acquire a 25% non-operating participating interest in the OL4 and
OL5 development licenses, Northern Territory, Australia which contain the producing Mereenie conventional oil and gas field.
The effective date of acquisition was 1 April 2023, with the transaction completing on 11 June 2024.
The acquisition has been accounted for as a business combination. In accordance with the accounting policy described in
note 1(n), the Group identified and recognised the fair value of the individual identifiable assets acquired and liabilities
assumed on provisional basis at the effective acquisition date with the exception of the restoration asset and liability of
US$7.0 million which was estimated by the Group on acquisition following an external consultant review.
Details of the purchase consideration and the net assets acquired at the completion date are as follows:
2024
US$’000
Purchase consideration:
Cash Paid via debt funding
28,059
Net working capital cash flows
(1,742)
Deferred payment
3,301
Contingent payment
2,338
Total purchase consideration
31,956
HORIZON OIL ANNUAL REPORT 2024
91
The assets and liabilities recognised as a result of the acquisition at the completion date are as follows:
FAIR VALUE
US$’000
Cash
224
Receivable
565
Inventory – consumable spare parts
561
Inventory – gas and crude oil
102
Oil and gas assets
38,143
Prepaid expenses
29
Payables
(634)
Restoration provision
(7,034)
Net identifiable assets acquired
31,956
In addition to the aforementioned identifiable assets and liabilities, the Group assumed oil and gas expenditure
commitments associated with the acquired license. Refer to Note 37 for further detail in relation to the Group’s capital
commitments.
Note 27
Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy set out in Note 1(C):
NAME OF SUBSIDIARY
COUNTRY OF
INCORPORATION
PERCENTAGE OF EQUITY HOLDING AND
VOTING INTEREST (ALL SHARES ISSUED
ARE ORDINARY SHARES)
BUSINESS
ACTIVITIES
CARRIED ON IN
2024
%
2023
%
Horizon Oil International Limited
New Zealand
100
100
New Zealand
Horizon Oil International Holdings Limited
BVI
100
100
BVI
Horizon Oil (Beibu) Limited
BVI
100
100
China
Horizon Oil (China Holdings) Limited
BVI
100
100
BVI
Horizon Oil Employee Incentive Trust
Australia
100
100
Australia
Horizon Australia Investments Pty Limited
Australia
100
100
Australia
Horizon Australia Energy Pty Limited
Australia
1001
-
Australia
1 During the financial year, the Group established Horizon Australia Energy Pty Limited, a stand-alone company that holds the 25% non-operating interest
in the Mereenie oil and gas fields. This entity is consolidated in accordance with the principles in Note 1(C).
HORIZON OIL ANNUAL REPORT 2024
92
Note 28 Interest in joint operations
Companies in the Group were participants in a number of joint operations. The Group has an interest in the assets and
liabilities of these joint operations. The Group’s share of current assets and liabilities of the joint operations is included in
the consolidated statement of financial position in accordance with the accounting policy described in Note 1(C), and the
carrying values of Group’s share of exploration, development and production phase expenditure is recorded in accordance
with the accounting policies set out in Note 1(P) and (N), under the following classifications:
CONSOLIDATED
2024
US$’000
2023
US$’000
CURRENT ASSETS
Cash and cash equivalents
825
1,534
Receivables
156
89
Inventories
9,531
2,953
Total current assets
10,512
4,576
NON-CURRENT ASSETS
Oil and gas assets
119,747
104,707
Total non-current assets
119,747
104,707
Total assets
130,259
109,283
CURRENT LIABILITIES
Payables
15,712
10,320
Total current liabilities
15,712
10,320
NON-CURRENT LIABILITIES
Restoration provision
61,459
53,879
Total non-current liabilities
61,459
53,879
Total liabilities
77,171
64,199
Share of net assets employed in joint operations
53,088
45,084
Contingent liabilities in respect of joint operations are detailed in Note 35.
Exploration and development expenditure commitments in respect of joint operations are detailed in Note 37.
The Group had an interest in the following joint operations:
PERMIT OR LICENCE
PRINCIPAL ACTIVITIES
INTEREST (%)
30 JUNE 2024
INTEREST (%)
30 JUNE 2023
NEW ZEALAND
PMP 38160 (Maari/Manaia)
Oil and gas production, exploration and development
26.00%
26.00%
CHINA
Block 22/12
Oil and gas production, exploration and development
26.95%
26.95%
AUSTRALIA
Mereenie OL4 & OL5
Oil and gas production, exploration and development
25.00%1
-
1 During the current financial year, the group acquired a 25% non-operating interest in the Mereenie oil and gas fields.
HORIZON OIL ANNUAL REPORT 2024
93
Note 29 Remuneration of external auditors
CONSOLIDATED
2024
US$
2023
US$
During the financial year, the following fees were paid or payable for services provided by the external auditor of the parent entity
and its related practices:
PwC Australia
Audit and other assurance services
Audit and review of financial reports
231,304
212,371
Other assurance services
13,417
12,649
Total auditors’ remuneration
244,721
225,020
It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to its statutory external audit duties
where PricewaterhouseCoopers’ expertise and experience with the Group are important. It is the Group’s policy to seek
competitive tenders for all major consulting projects.
Note 30 Remuneration of key management personnel
See the Remuneration Report within the Directors’ Report for details of directors and other key management and their
detailed remuneration.
KEY MANAGEMENT PERSONNEL COMPENSATION
2024
US$
2023
US$
Short-term employee benefits
1,153,248
1,071,190
Post-employment benefits
53,750
52,476
Long-term benefits
(11,181)
24,183
Share-based payments (non-cash)
1,073,433
1,225,588
Total key management personnel remuneration
2,269,250
2,373,437
Detailed remuneration disclosures are provided in sections 1 - 6 of the audited Remuneration Report.
Loans to key management personnel
There were no loans to directors or other key management personnel during the current or prior financial year.
Other transactions with key management personnel
There were no other transactions with key management personnel during the current or prior financial year, other than as
disclosed in sections 1 - 6 of the remuneration report.
Note 31
Related parties
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties, unless otherwise stated.
Directors and other key management personnel
There were no related party transactions with directors and other key management personnel during the current or prior year
other than as disclosed in sections 1 - 6 of the Remuneration report and Note 32.
Subsidiaries
Interests in subsidiaries are set out in Note 27. Details in respect of guarantees provided to subsidiaries are set out in
Note 40([ii]).
Transactions with related parties
Transactions between Horizon Oil Limited and related parties in the wholly-owned Group during the financial years ended
30 June 2024 and 30 June 2023 consisted of:
HORIZON OIL ANNUAL REPORT 2024
94
(a)
Contributions to share capital by Horizon Oil Limited;
(b)
Loans advanced by Horizon Oil Limited;
(c)
Loans repaid to Horizon Oil Limited;
(d)
Payments to Horizon Oil Limited under financial guarantee contract arrangements;
(e)
Interest payments to Horizon Oil Limited on loans advanced to subsidiaries;
(f)
Dividends paid to Horizon Oil Limited; and
(g)
Reimbursement of expenses to Horizon Oil Limited.
The reimbursement of expenses to Horizon Oil Limited by subsidiaries is based on costs recharged on a relevant time
allocation of consultants and employees and associated office charges.
Terms and conditions
Transactions relating to dividends, calls on partly paid shares and subscriptions for new ordinary shares were on the same
terms and conditions that applied to other shareholders.
All other transactions were made on normal commercial terms and conditions and at market rates, except that there are no
fixed terms for the repayment of loans between the parties. Certain loans to/from subsidiaries are subject to interest. The
average interest rate on loans attracting interest during the financial year was LIBOR plus 4.53% (2023: LIBOR plus 4.53%).
Outstanding balances are unsecured and repayable in cash.
Note 32 Share-based payments
Set out below is a summary of performance rights, deferred STI rights and share appreciation rights on issue:
GRANT DATE
ESTIMATED
EXPIRY
DATE
EXERCISE
PRICE
BALANCE
START OF
FINANCIAL
YEAR
NUMBER
GRANTED
DURING
FINANCIAL
YEAR
NUMBER
EXERCISED
DURING
FINANCIAL
YEAR
NUMBER
LAPSED/
CANCELLED
DURING
FINANCIAL
YEAR
NUMBER
BALANCE
END OF
FINANCIAL
YEAR
NUMBER
VESTED AND
EXERCISABLE
AT END OF
FINANCIAL
YEAR
NUMBER
CONSOLIDATED ENTITY 2024
SHARE APPRECIATION RIGHTS ISSUED
01/07/2020
01/07/2025
A$0.021
3,720,681
-
(3,720,681)
-
-
-
01/07/2021
01/07/2026
A$0.031
3,386,400
-
(3,386,400)
-
-
-
TOTAL
7,107,081
-
(7,107,081)
-
-
-
PERFORMANCE RIGHTS ISSUED
16/11/2022
30/06/2027
-
19,600,000
-
(19,600,000)
-
-
-
08/08/2022
30/06/2027
-
9,800,000
-
(9,800,000)
-
-
-
01/05/2023
30/04/2028
-
7,000,000
-
(7,000,000)
-
-
-
21/02/2024
30/04/2028
-
-
1,752,233
(1,752,233)
-
-
-
TOTAL
36,400,000
1,752,233
(38,152,233)
-
-
-
DEFERRED STI RIGHTS ISSUED
30/06/2022
N/A
-
3,221,275
-
(3,221,275)
-
-
-
30/06/20232
N/A
-
-
4,315,706
-
-
4,315,706
4,315,706
TOTAL
3,221,275
4,315,706
(3,221,275)
-
4,315,706
4,315,706
1 No price is payable by a participant in the Long-Term Incentive Plan on the exercise of a SAR, Performance Rights and Deferred STI Rights. The ‘strike
price’ for SARs is the 10-day volume weighted average price for Horizon shares at effective allocation date. Following shareholder approval of a A$ 1.35
cent capital return, at an extraordinary general meeting on 7 October 2022, the strike prices of SARs on issue have been reduced by A$ 1.35 cents.
2 In accordance with the plan, the number of 2023 deferred STI rights held by each KMP were adjusted during the financial year for the aggregate A$ 3.5
cent dividend distributions per share.
HORIZON OIL ANNUAL REPORT 2024
95
GRANT DATE
ESTIMATED
EXPIRY
DATE
EXERCISE
PRICE
BALANCE
START OF
FINANCIAL
YEAR
NUMBER
GRANTED
DURING
FINANCIAL
YEAR
NUMBER
EXERCISED
DURING
FINANCIAL
YEAR
NUMBER
LAPSED/
CANCELLED
DURING
FINANCIAL
YEAR
NUMBER
BALANCE
END OF
FINANCIAL
YEAR
NUMBER
VESTED AND
EXERCISABLE
AT END OF
FINANCIAL
YEAR
NUMBER
CONSOLIDATED ENTITY 2023
SHARE APPRECIATION RIGHTS ISSUED
01/07/2017
01/07/2022
A$0.021
39,191,714
-
(39,191,714)
-
-
-
01/07/2018
01/07/2023
A$0.111
6,453,777
-
(6,453,777)
-
-
-
01/07/2019
01/07/2024
A$0.081
8,179,878
-
(8,179,878)
-
-
-
01/07/2020
01/07/2025
A$0.021
3,720,681
-
-
-
3,720,681
-
01/07/2021
01/07/2026
A$0.061
9,194,811
-
-
(5,808,411)
3,386,400
-
TOTAL
66,740,861
-
(53,825,369)
(5,808,411)
7,107,081
-
PERFORMANCE RIGHTS ISSUED
16/11/2022
30/06/2027
-
-
19,600,000
-
-
19,600,000
-
08/08/2022
30/06/2027
-
-
9,800,000
-
-
9,800,000
-
01/05/2023
30/04/2028
-
-
7,000,000
-
-
7,000,000
-
TOTAL
36,400,000
-
-
36,400,000
-
DEFERRED STI RIGHTS ISSUED
30/06/20222
N/A
-
-
3,221,275
-
-
3,221,275
3,221,275
TOTAL
-
3,221,275
-
-
3,221,275
3,221,275
1 No price is payable by a participant in the Long-Term Incentive Plan on the exercise of a SAR, Performance Rights and Deferred STI Rights. The ‘strike
price’ for SARs is the 10-day volume weighted average price for Horizon shares at effective allocation date. Following shareholder approval of a A$ 1.35
cent capital return, at an extraordinary general meeting on 7 October 2022, the strike prices of SARs on issue have been reduced by A$ 1.35 cents.
2 In accordance with the plan, the number of 2022 deferred STI rights held by each KMP were adjusted during the financial year for the A$ 1.35 cents capital
return per share and aggregate A$ 3.15 cent dividend distributions per share.
Long Term Incentive Plan (SARs)
The LTI arrangements approved at the 2010 annual general meeting apply to senior executives and involve the grant of share
appreciation rights which may vest subject (amongst other things) to the level of total shareholder return (‘TSR’) achieved in
the vesting period, relative to an appropriate index. This plan applied for the financial years up to and including 2022. As
noted in the remuneration report, following a review of the current long term incentive plan award of Share Appreciation
Rights), the Board approved a revised LTI Plan which involves the award of performance rights in place of share appreciation
rights. The rationale for the new LTI plan is to create a stronger link between performance and reward and to align the
interests of Senior Executives more strongly with those of the shareholders of Horizon.
A SAR is a right to receive either or both a cash payment or shares in the Company, as determined by the board, subject to
the Company satisfying certain conditions, including performance conditions.
The LTI Plan provides that the amount of the cash payment or the number of shares in the Company that the participant
receives on exercise of the SAR is based on the value of the SAR at the time it is exercised (’SAR Value’). The SAR Value is
the excess, if any, of the volume weighted average price (’VWAP’) of shares in the Company for the ten-business day period
up to the date before the date the SAR is exercised over the VWAP of shares in the Company for the ten-business day period
up to the day before the “Effective Allocation Date” for the SARs. The Effective Allocation Date for the SARs is the grant date
of the SARs or any other day determined by the board, at the time of the grant. The Effective Allocation Date would generally
be the date the executive’s entitlement was determined.
If the board determines that the SARs are to be satisfied in cash, the amount of cash that the participant receives on the
exercise of the SARs is the SAR Value multiplied by the number of SARs exercised (less any deduction for taxes that the
Company is required to make from the payment). If the board determines that the SARs are to be satisfied in shares, the
number of shares that the participant receives on the exercise of the SARs is the SAR Value divided by the volume weighted
average price of shares in the Company for the ten-business day period up to the day before the day the SARs are exercised.
Where the number of shares calculated is not a whole number, it will be rounded down to the nearest whole number.
Long Term Incentive Plan (Performance Rights)
The LTI arrangements approved at the 2022 annual general meeting apply to senior executives and involve the grant of
performance rights which may vest subject (amongst other things) the achievement of certain share price hurdles, A$25
million of cumulative share trades at or above the share price hurdles and the one-month VWAP, at the one year anniversary
HORIZON OIL ANNUAL REPORT 2024
96
of achieving the share price hurdle, must meet or exceed the share price hurdle. This plan applied for from and including
the 2023 financial year.
Under the LTI Plan, the board has the discretion, subject to the ASX Listing Rule requirements, to grant performance rights
to executives as long-term incentives. A performance right is a right to receive shares in the Company, subject to the
Company satisfying certain conditions, including performance conditions. Each performance right entitles the holder to one
Horizon Ordinary share should the performance right vest.
No price is payable by a participant in the Long-Term Incentive Plan on the exercise of a SAR or Performance Right.
During the financial year, the Horizon Long-Term Incentive Plan and Horizon Employee Option Scheme are also administered
by the Horizon Employee Share Trust. This trust is consolidated in accordance with Note 1(C ).
Shares issued by the trust to the employees are acquired through the issuance of new Ordinary shares by the Company.
Shares held by the trust and not yet issued to employees at the end of the reporting period are shown as treasury shares in
the financial statements. Refer to Note 23(D) for details.
Performance Rights issued
The independently assessed fair value’s at grant date of these performance rights are disclosed below. The terms and
conditions of each grant of Performance Rights presently on issue are as follows:
TRANCHE
NUMBER OF
RIGHTS
SHARE PRICE HURDLE
(A$)1
EXPIRY DATE
FAIR VALUE PER
PERFORMANCE RIGHT AT
GRANT DATE2
DATE EXERCISED
CEO Performance Rights issued with a Grant Date of 16 November 2022
Tranche A Rights
7,000,000
0.085
30 June 2027
A$0.094
25/08/2023
Tranche B Rights
5,600,000
0.115
30 June 2027
$0.077
25/08/2023
Tranche C Rights
4,200,000
0.135
30 June 2027
A$0.065
25/08/2023
Tranche D Rights
2,800,000
0.155
30 June 2027
A$0.046
25/08/2023
COO Performance Rights issued with a Grant Date of 8 August 2022
Tranche A Rights
3,500,000
0.085
30 June 2027
A$0.065
25/08/2023
Tranche B Rights
2,800,000
0.115
30 June 2027
A$0.045
25/08/2023
Tranche C Rights
2,100,000
0.135
30 June 2027
A$0.038
25/08/2023
Tranche D Rights
1,400,000
0.155
30 June 2027
A$0.033
25/08/2023
CFO Performance Rights issued with a Grant Date of 1 May 2023 (Trance E, F) and 21 February 2024 (Tranche G, H)
Tranche E Rights
3,500,000
0.135
30 April 2028
A$0.086
03/05/2024
Tranche F Rights
2,800,000
0.145
30 April 2028
A$0.077
03/05/2024
Tranche G Rights
907,406
0.135
30 April 2028
A$0.125
03/05/2024
Tranche H Rights
844,827
0.145
30 April 2028
A$0.121
03/05/2024
1
In accordance with the plan, the Share Price Hurdles were adjusted to account for distributions to shareholders during the 2024 financial year. Share price
hurdles were only adjusted for distributions made prior to the Performance Rights being exercised
2
The value per Performance Right at grant date is determined by an independent expert.
3
No price is payable by a participant in the Long-Term Incentive Plan on the exercise of a Performance Right.
The Group engages external, independent and qualified valuers to determine the fair value at grant date. The fair value of
the performance rights is using a Monte Carlo simulation technique.
The Monte Carlo simulation technique used to calculate the theoretical value of the performance rights uses current stock
prices, expected dividend yield, expected interest rates, time to expiration and expected volatility. A calculated share price
volatility of 55% - 60.0% was applied in the valuations. All other parameters were based on the specific terms of the share
appreciation rights issued or observable market data.
HORIZON OIL ANNUAL REPORT 2024
97
The simulation inputs for the grant of Performance Rights during the financial year ended 30 June 2024 included:
CEO
COO
CFO - 2023
CFO - 2024
Effective allocation date
1 July 2022
1 July 2022
1 May 2023
1 May 2023
Expiry date
30 June 2027
30 June 2027
30 April 2028
30 April 2028
Grant date
16 November
2022
8 August
2022
1 May 2023
21 February
2024
Exercise price
Nil1
Nil1
Nil1
Nil1
Expected price volatility
60% p.a.
60% p.a.
60% p.a.
55% p.a.
Risk free rate
3.04% p.a.
3.42% p.a.
3.08% p.a.
3.8% p.a.
Expected dividend yield
20.00% p.a.
20.00% p.a.
20.00% p.a.
20.00% p.a.
Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the financial year as part of employee
benefits expense in profit or loss were as follows:
CONSOLIDATED
2024
US$’000
2023
US$’000
SHARE APPRECIATION RIGHTS ISSUED UNDER:
Long Term Incentive Plan
1,203
1,369
Total employee share-based payments expense
1,203
1,369
Performance Rights/SARs in respect of which expiry dates were modified during the financial year
No Performance Rights/SARs expiry dates were modified during the financial year.
Performance Rights/SARs exercised during the financial year
During the financial year 7,107,081 SARs and 38,152,233 Performance Rights were exercised and settled with the issuance of
20,220,683 Ordinary shares which were transferred from the Horizon Employee Incentive Trust, cash paid/payable of
A$1,057,719 and an upward variation of PAYG amounting to A$2,841,093.
Performance Rights/SARs lapsing or cancelled during the financial year
No Performance Rights/SARs lapsed or were cancelled during the financial year.
Performance Rights/SARs lapsed subsequent to 30 June 2024
No performance rights or SARs have lapsed subsequent to financial year end.
Deferred STI Rights exercised during the financial year
During the financial year 3,221,275 Deferred STI Rights were exercised and settled with the issuance of 1,707,274 Ordinary
shares which were transferred from the Horizon Employee Incentive Trust and cash paid/payable of A$234,670.
Deferred STI Rights issued subsequent to 30 June 2024
Subsequent to period end, 3,691,728 deferred STI rights were issued in relation to the FY24 STI’s awarded. 1,135,434 of these
rights remain subject to shareholder approval at the 2024 Annual General Meeting.
HORIZON OIL ANNUAL REPORT 2024
98
Note 33 Employee entitlements
CONSOLIDATED
2024
US$’000
2023
US$’000
EMPLOYEE ENTITLEMENT LIABILITIES ARE INCLUDED WITHIN:
Current – other creditors
175
136
Non-current - other creditors (Note 17)
192
233
NUMBER
2024
NUMBER
2023
EMPLOYEE NUMBERS
Average number of employees during financial year
10
11
Note 34 Contingent asset
The Group had no contingent assets as at 30 June 2024.
Note 35 Contingent liabilities
The Group had contingent liabilities as at 30 June 2024 and 30 June 2023 that may become payable in respect of:
In accordance with normal oil and gas industry practice, the Group has entered into joint operations and farm-out
agreements with other parties for the purpose of exploring and developing its petroleum interests. If a participant to a joint
operation defaults and fails to contribute its share of joint operation obligations, then the remaining joint operation
participants are jointly and severally liable to meet the obligations of the defaulting participant. In this event, the interest in
the permit or licence held by the defaulting participant may be redistributed to the remaining participants. In the event of a
default, a contingent liability exists in respect of expenditure commitments due to be met by the Group in respect of
defaulting joint operation participants.
The Group occasionally receives claims arising from its operations in the normal course of business. In the opinion of the
directors, all such matters are either covered by insurance or, if not covered, are without merit or are of such a nature the
amounts involved would not have a material impact on the results.
No material losses are anticipated in respect of any of the above contingent liabilities.
Note 36 Events after balance sheet date
Other than the matters disclosed in this report, there has not been any matter or circumstance which has arisen since
30 June 2024 that has significantly affected, or may significantly affect:
– the Group’s operations in future financial years; or
– the results of those operations in future financial years; or
– the Group’s state of affairs in future financial years.
The financial statements were authorised for issue by the Board of Directors on 28 August 2024. The Board of Directors has
the power to amend and reissue the financial statements.
Note 37
Exploration and development commitments
The Group has entered into joint operations for the purpose of exploring, developing and producing from certain petroleum
interests. To maintain existing interests or rights to earn interests in those joint operations the Group will be expected to
make contributions to ongoing exploration and development programs. Since such programs are subject to continual review
by operating committees, upon which the Group is represented, the extent of future contributions in accordance with these
arrangements is subject to continual renegotiation.
Subject to the above-mentioned limitations, the directors have prepared the following disclosure of exploration and
development expenditure commitments not recognised in the consolidated financial statements. These are payable as
follows, based on current status and knowledge of estimated quantum and timing of such commitments by segment.
HORIZON OIL ANNUAL REPORT 2024
99
2024
NEW ZEALAND
DEVELOPMENT
CHINA
EXPLORATION &
DEVELOPMENT
AUSTRALIA
DEVELOPMENT1
TOTAL
Within one financial year
1,083
3,629
-
4,712
Later than one financial year but not later than 5 financial
years
-
-
-
-
Total
1,083
3,629
-
4,712
1 Subsequent to period end the Group approved development commitments of US$5.9 million (net to HZN) which will be incurred within one financial year.
2023
NEW ZEALAND
DEVELOPMENT
CHINA EXPLORATION
& DEVELOPMENT
TOTAL
Within one financial year
1,808
2,745
4,553
Later than one financial year but not later than 5 financial years
-
697
697
Total
1,808
3,442
5,250
The above commitments may be deferred or modified with the agreement of the host government, by variations to the terms
of individual petroleum interests, or extensions to the terms thereof. Another factor likely to delay timing of these
commitments is the potential lack of availability of suitable drilling rigs in the area of interest.
The commitments may also be reduced by the Group entering into farm-out agreements or working interest trades, both of
which are typical of the normal operating activities of the Group.
In addition to the above commitments, the Group has invested funds in other petroleum exploration interests, but is not
exposed to a contingent liability in respect of these, as it may choose to exit such interests at any time at no cost penalty
other than the loss of the interests.
HORIZON OIL ANNUAL REPORT 2024
100
Note 38 Reconciliation of profit after income tax to net cash flows from operating activities
CONSOLIDATED
2024
US$’000
2023
US$’000
PROFIT FOR FINANCIAL YEAR
25,900
43,852
Exploration and development expenditure written off/expensed
837
4,549
Depreciation expense
177
215
Movement in employee entitlement liabilities
39
51
Non-cash employee share-based payments expense
1,203
1,369
Amortisation expense
30,139
38,500
Amortisation of prepaid financing costs
33
240
Discount unwinding on provision for restoration
2,182
1,542
CHANGE IN OPERATING ASSETS AND LIABILITIES:
Decrease/(Increase) in trade debtors
11,007
(264)
Decrease/(Increase) in other debtors and prepayments
140
(127)
(Increase)/Decrease in inventory
(6,577)
1,230
(Decrease) in net deferred tax liabilities
-
(4,536)
(Increase) in net deferred tax assets
(1,416)
-
(Decrease) in tax payable
(3,107)
(2,029)
Increase/(Decrease) in trade creditors
696
(12,945)
Increase in other creditors
2,964
313
NET CASH INFLOW FROM OPERATING ACTIVITIES
64,217
71,960
HORIZON OIL ANNUAL REPORT 2024
101
Note 39 Earnings per share
CONSOLIDATED
2024
US CENTS
2023
US CENTS
(a) Basic earnings per share attributable to the ordinary equity holders of the Company
1.60
2.74
(b) Diluted earnings per share attributable to the ordinary equity holders of the Company
1.58
2.66
2024
NUMBER
2023
NUMBER
WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR
Weighted average number of ordinary shares used as the denominator in calculating basic
earnings per share
1,617,370,026
1,598,627,894
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted earnings per share
1,637,486,880
1,650,327,032
2024
US$’000
2023
US$’000
RECONCILIATION OF EARNINGS USED IN CALCULATING EARNINGS PER SHARE
Profit attributable to the ordinary equity holders of the company used in calculating basic and
diluted earnings per share
25,900
43,852
Information concerning the classification of securities
A.
Partly paid ordinary shares
Partly paid ordinary shares carry the rights of fully paid ordinary shares and to that extent they have been recognised as
ordinary share equivalents in the determination of basic earnings per share. All partly paid shares on issue are held by the
Company.
Details regarding the partly paid ordinary shares are set out in Note 22a.
B.
Performance rights and share appreciation rights granted as compensation
Performance rights and share appreciation rights (SARs) granted to employees under the Long-Term Incentive Plan or
Employee Option Scheme issued are included in the calculation of diluted earnings per share to the extent to which they are
dilutive. The SARs are considered to be contingently issuable shares and are treated as outstanding and included in the
calculation of diluted earnings per share if the relevant performance hurdles have been met. Performance Rights and SARs
have not been included in the determination of basic earnings per share.
Details regarding the options and share appreciation rights are set out in Note 32.
HORIZON OIL ANNUAL REPORT 2024
102
Note 40 Parent Entity financial information
[i]
Summary financial information
The individual financial statements for the Parent Entity show the following aggregate amounts:
PARENT ENTITY
2024
US$’000
2023
US$’000
STATEMENT OF FINANCIAL POSITION
Current assets
38,511
29,560
Non-current assets
118,707
116,298
Total assets
157,218
145,858
Current liabilities
1,821
1,215
Non-current liabilities
193
239
Total liabilities
2,014
1,454
Net assets
155,204
144,404
Contributed equity
150,095
147,792
Share-based payments reserve
7,310
11,122
Accumulated losses
(74,967)
(74,967)
Profit reserve
72,766
60,457
Total equity
155,204
144,404
Profit for the financial year
49,164
70,911
Total comprehensive profit for the financial year
49,164
70,911
[ii] Guarantees entered into by the parent entity
The parent entity has provided guarantees in respect of bank loan of its subsidiaries amounting to US$26,403,729 (2023:
US$7,939,200) and has also provided customary joint venture guarantees.
No liability has been recognised for guarantees provided. After factoring in the likelihood that the parent entity would be
required to perform under the guarantees the fair value of the liability was not considered material.
[iii] Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2024 or 30 June 2023. For information about guarantees
given by the parent entity, see above.
[iv] Contractual commitment for the acquisition of property, plant or equipment
As at 30 June 2024, the parent entity had no contractual commitments for the acquisition of property, plant or equipment
(30 June 2023 – US$Nil).
HORIZON OIL ANNUAL REPORT 2024
103
INFORMATION
SHARE-
HOLDER
HORIZON OIL LIMITED
SHARE-
HORIZON OIL ANNUAL REPORT 2024
104
Horizon Oil Limited and Controlled Entities
Securities Exchange Information as at 15 August 2024
DISTRIBUTION OF EQUITY SECURITIES
The distribution of equity security holders ranked according to size at 15 August 2024 was as follows:
ORDINARY SHARES
SIZE OF HOLDING
SHARES
UNLISTED OPTIONS
SHARE
APPRECIATION
RIGHTS
PERFORMANCE
RIGHTS
DEFERRED STI
RIGHTS
1 to 1,000
295
-
-
-
-
1,001 to 5,000
469
-
-
-
-
5,001 to 10,000
855
-
-
-
-
10,001 to 100,000
2,348
-
-
-
-
100,001 and over
902
-
-
-
5
TOTAL
4,869
-
-
-
5
A total of 372 holders held less than a marketable parcel of 2,632 ordinary shares.
TWENTY LARGEST SHAREHOLDERS
The names of the twenty largest shareholders of the Company’s ordinary shares are listed below:
NAME
NUMBER OF ORDINARY SHARES % OF ISSUED ORDS
1
IMC Investments Limited
400,574,175
24.68
2
J P Morgan Nominees Australia Limited
363,785,205
22.41
3
Citicorp Nominees Pty Limited
184.868,815
11.39
4
HSBC Custody Nominees (Australia) Limited
52,986,764
3.26
5
BNP Paribas Nominees Pty Ltd
38,536,076
2.37
6
Mr Michael Francis Sheridan
27,433,289
1.69
7
Carrington Land Pty Limited
20,000,000
1.23
8
Mr Richard Cameron Beament and Mrs Sophie Nicole Beament
11,952,724
0.74
9
VLH Pty Limited
9,264,367
0.57
10
Kaluki Pty Limited
7,890,417
0.49
11
Neweconomy Com Au Nominees Pty Limited
7,049,613
0.43
12
Amidor Investments Pty Limited
6,250,000
0.39
13
Botanic Farm Pty Limited
6,158,920
0/38
14
Spinel Investments Pty Limited
5,854,604
0.36
15
Brides Pty Limited
5,550,000
0.34
16
Mr Kyle Christopher Keen and Ms Janine Jacqueline Gossman
4,801,966
0.30
17
Mr Anthony James Emmett
4,526,712
0.28
18
Mr John Bernard Porteous
4,313,593
0.27
19
Berne No 132 Nominees Pty Limited
4,000,000
0.27
20
Merryl Lynch (Australia) Nominees Pty Limited
3,837,123
Total
1,169,584,363
1,169,584,363
72.06
3,837,123
0.25
HORIZON OIL ANNUAL REPORT 2024
105
Horizon Oil Annual Report 2024
106
ISSUED SECURITIES
Issued securities as at 15 August 2024:
SECURITY
NUMBER ON ISSUE
NUMBER OF HOLDERS
Ordinary fully paid shares1
1,622,962,814
4,869
Ordinary partly paid shares
1,500,000
1
Unlisted deferred STI rights
4,315,706
5
1
The Company’s ordinary fully shares are listed on the Australian Securities Exchange.
SUBSTANTIAL HOLDERS
Substantial holders in the Company are set out below:
ORDINARY SECURITY
NUMBER OF ORDINARY SHARES
% OF ISSUED ORDS
IMC Investments Ltd (an associate of Austral-Asia Energy Pty Ltd)
400,574,175
24.68
Samuel Terry Asset Management Pty Limited
314,232,423
19.36
Spheria Asset Management Pty Limited
106,379,080
6.55
Total
821,185,678
50.59
VOTING RIGHTS
Ordinary shares – fully paid
Voting of members is governed by the Company’s Constitution. In summary, every member present in person or by
proxy attorney or representative shall have one vote on a show of hands and one vote for each share on a poll.
Ordinary shares – partly paid
Voting of members is governed by the Company’s Constitution. In summary, every member present in person or by
proxy attorney or representative shall have one vote on a show of hands and upon a poll, is entitled to one vote to
the proportion of the total issue price then paid up.
Deferred STI rights - unlisted
No voting rights.
A-IFRS
Australian equivalents to International Financial Reporting Standards
ASIC
Australian Securities and Investments Commission
ASX
Australian Securities Exchange
bbl(s)
Blue barrel(s), oil barrel volume is 0.159 cubic metres
bcf
Billion cubic feet of natural gas
boe
Barrel of oil equivalent. The factor used to convert gas to oil equivalent is based
upon an approximate energy value of 6,000 cubic feet per barrel and not price
equivalence at the time
boepd
Barrel of oil equivalent per day
bopd
Barrel of oil per day inclusive of NGLs
CNOOC
China National Offshore Oil Corporation
EBITDAX
Earnings before interest, tax, depreciation, depletion and amortisation, and
exploration expenses
ESP
Electrical submersible pump
FID
Final investment decision
FPSO
Floating production, storage and offloading vessel
GST
Goods and services tax
JOA
Joint operating agreement
km
Kilometres
LIBOR
London inter-bank offered rate
LNG
Liquified natural gas
mmbbl/mmbo
Million barrels of oil
mmboe
Million barrels of oil equivalent
mmcfb
Millions cubic feet barrels
NDRC
National Development and Reform Commission
NGL(s)
Natural gas liquid(s)
OTCQB
OTC Markets Group Venture Market
ODP
Overall Development Plan
PEP
Petroleum exploration permit
PMP
Petroleum mining permit
Reserves
Reserves as included in this report refers to both Proven and Probable reserves
(2P). Proven and Probable reserves are reserves that analysis of geological and
engineering data suggests are more likely than not to be recoverable – there is
at least a 50% probability that reserves recovered will exceed Proven and
Probable reserves.
GLOSSARY
HORIZON OIL ANNUAL REPORT 2024
107
Contingent Resources
The Company’s technically recoverable resources (2C) for its discovered oil and
gas fields are classified as contingent resources. These resources would be
expected to be booked in reserves (Proven and Probable reserves) once
commercialisation arrangements have been finalised.
PSA
Production Sharing Agreement
SDA
Supplemental Development Agreement
SPE-PRMS
Society of Petroleum Engineers – Petroleum Resources Management System
Sq km
Square kilometres
tcf
Trillion cubic feet of natural gas
USD / US$
United States dollars
WHP
Wellhead platform
WOU
Workover unit
2D Seismic
Seismic recorded in 2 dimensions
3D Seismic
Seismic recorded in 3 dimensions
HORIZON OIL ANNUAL REPORT 2024
108
HORIZON OIL LIMITED
ABN 51 009 799 455
Board of Directors
Michael Harding (Chairman)
Richard Beament (Chief Executive Officer)
Sandra Birkensleigh
Gregory Bittar (Alternate: Bruno Lorenzon)
Bruce Clement
Nigel Burgess
Company Secretary
Vasilios (Vas) Margiankakos
Assistant Company Secretary
Kyle Keen
Australian Registered Office
(Principal place of business]
Level 4, 360 Kent Street,
SYDNEY NSW 2000
Telephone:
+]612] 9332 5000
Facsimile:
+[612] 9332 5050
Email:
info@horizonoil.com.au
Website:
www.horizonoil.com.au
Domicile and country of incorporation
Australia
Share Registrar
Computershare Investor Services Pty Limited
6 Hope Street
Ermington NSW 2115
Telephone:
+[613) 9415 4000
Solicitors
King & Wood Mallesons
Level 30 Waterfront Place
1 Eagle Street
BRISBANE QLD 4000
Auditor
PwC
One International Towers Sydney
Watermans Quay, Barrangaroo
SYDNEY NSW 2000
Stock Exchange
Horizon Oil Limited shares are listed on the ASX (ASX
code: HZN) and the US OTC Markets Group (OTCQB:
HZNFF)
Notice of annual general meeting
The Annual General Meeting of Horizon will be held at:
Cliftons
Level 13, 60 Margaret St
Sydney NSW 2000
Time:
10.00am
Date:
20 November 2024
HORIZON OIL ANNUAL REPORT 2024
109
horizonoil.com.au
Disclaimer: Statements contained in this report may be forward looking statements. Such statements relate to future events and expectations and as such
involve known and unknown risks and uncertainties. Actual results, actions and developments may differ materially from those expressed or implied by these
forward looking statements depending on a variety of factors. While every effort is made to provide accurate and complete information, Horizon accepts no
responsibility for any loss, damage, cost or expense incurred by you as a result of any error, omission or misrepresentation in information in this report.