Horizon Oil (ASX:HZN) reported what management described as a “strong” FY26 half-year result for the six months ended Dec. 31, 2025, citing disciplined cost control and the successful integration of its newly acquired Thailand gas assets despite a materially weaker realized oil price environment.
Chief Executive Officer Richard Beament said completion of the Thailand acquisition on Aug. 1, alongside a 10-year extension of the Maari permit in New Zealand to December 2037, represented a “genuine step change” for the company by increasing production, improving cash flow resilience, extending portfolio life, and further diversifying the business.
Operating and financial performance
- Production and sales volumes: Up 26% and 25%, respectively, versus the prior corresponding half year, exceeding 1 million barrels of oil equivalent.
- Underlying revenue: $54.2 million, including $9.6 million from Thailand.
- EBITDAX: $28.6 million, “broadly in line” with the prior half year despite a 15% lower realized oil price.
- Operating cash flow: Cash flow from operating activities increased 37% to $25.1 million.
- Liquidity and leverage: Cash was $35.6 million at Dec. 31, with a net debt position of $9.8 million following payment of the FY25 final dividend and the predominantly debt-funded Thailand acquisition.
Keen said the group continued to maintain a low cash operating cost base of around $20 per barrel of oil equivalent, supporting free cash flow generation even as lower realized oil prices weighed on profits.
Dividend and capital allocation
Management highlighted continued shareholder distributions as a central element of Horizon’s strategy. The board declared an FY26 interim dividend of AUD 0.015 per share, payable in April 2026.
Beament said the interim distribution extends Horizon’s track record to a sixth consecutive year of distributions, with more than AUD 0.17 per share paid or declared since 2021, totaling over AUD 274 million.
On cash deployment in the half, Keen said $25.1 million of operating cash flow (including Thailand’s contribution) funded the FY25 final dividend of $15.9 million, $3.0 million of debt repayments, and $4.6 million of investments across the producing asset base.
He also noted that a key driver of the decline in cash during the period was a loan to a joint venture partner to support completion of the Thailand transaction. The loan accrues interest at SOFR + 9% per annum, amortizes fully by Dec. 31, 2027, and had already seen more than $1 million repaid at the time of the call.
Thailand integration and growth projects
The Thailand acquisition—interests in the Sinphuhorm and Nam Phong gas fields—completed Aug. 1, 2025 and was described as immediately accretive. Keen noted that while the acquisition had an effective date of Jan. 1, 2025, only five months of contribution was reflected in the half-year financials, with cash flows generated between the effective and completion dates deducted from the purchase price.
Beament said Thailand contributed roughly 28% of group production during the five-month period, generating $9.6 million in revenue and operating at an average cost of around $7 per barrel of oil equivalent. He added that both fields exceeded nominations, and early optimization at Nam Phong delivered an estimated 7% production uplift with no additional capital.
A key near-term catalyst is the Nam Phong booster compressor. Beament said a final investment decision was reached in early January, and the project is expected to increase Nam Phong production by at least 40% from mid-2026.
At Sinphuhorm, he said regulatory approvals were in place and work had commenced to tie in the PH14 well, along with perforation of a shallow section of the PH-1 sidetrack on the same pad, targeted for completion later in 2026.
Portfolio operations: China, New Zealand, and Australia
Block 22/12 (Beibu Gulf, China): Beament said performance was “solid” and broadly in line with expectations. Natural reservoir decline was partly offset via workovers, slickline activities, and optimization. The joint venture’s liquid handling capacity upgrade is scheduled to come online progressively over coming months and is expected to help sustain and potentially increase oil production rates later in 2026. He also said feasibility studies have progressed on a potential multi-well development at WZ12-8 East.
Maari (New Zealand): Maari delivered what management called an “outstanding” half, reaching the highest daily rates in more than five years during August following successful workovers. Average production was approximately 12% higher than the prior corresponding period, supported by stable reservoir performance and effective water injection. Beament highlighted the 10-year permit extension to December 2037 as a major milestone, providing long-term certainty for production, optimization, and decommissioning planning.
Mereenie (Northern Territory, Australia): Mereenie continued to perform strongly, with two infill wells drilled in early 2025 still contributing almost 25% of total field gas production, according to Beament. He said realized gas pricing improved materially after legacy contracts expired, and a binding letter of intent with Power and Water Corporation provides a pathway to firm supply of uncontracted gas through to 2034. The agreement underpins plans to drill additional infill wells later in calendar 2026.
Questions: Thailand operations and Mereenie exploration upside
During Q&A, Beament said Horizon’s experience in Thailand has been “really rewarding,” describing a strong working relationship with operator PTTEP. He pointed to the speed of reaching final investment decision on the Nam Phong compressor as evidence of effective collaboration.
Asked about periods of lower Sinphuhorm output, Beament attributed the changes to a planned maintenance outage at the EGAT power station, including a five-year turnaround on one gas turbine and subsequent work on the second turbine during August–September. He said production had returned to above 100 million standard cubic feet per day and was expected to be maintained at that level “for the foreseeable future.”
On potential testing of the Stairway formation at Mereenie, Beament said the joint venture’s immediate priority is infill drilling in the existing Pacoota reservoir to meet Northern Territory gas demand, while noting that the Stairway formation remains a priority and is still under consideration for a future campaign.
Looking ahead, management outlined a 12-month activity plan focused on bringing Block 22/12’s liquid handling upgrade online, continuing optimization at Maari following the permit extension, planning additional Mereenie gas infill wells, and advancing the Nam Phong compressor and Sinphuhorm tie-ins to support higher production and cash flow from the second half of calendar 2026.
About Horizon Oil (ASX:HZN)
Horizon Oil Limited, together with its subsidiaries, engages in the exploration, development, and production of oil and gas properties in China and New Zealand. It holds interest in the Block 22/12 oil field in Beibu Gulf, China; and the PMP 38160 Maari/Manaia oil fields in New Zealand, as well as engages in the exploration and evaluation of hydrocarbons. Horizon Oil Limited was incorporated in 1969 and is based in Sydney, Australia.
