Horizon Oil's FY24 Financial Results and Strategic Acquisition of Mereenie
HORIZON OIL LIMITED (HZN) Share Update August 2024 Tuesday 27th
Horizon Oil Announces Strong FY24 Financial Results and Mereenie Acquisition
Horizon Oil Limited (ASX: HZN) has released its financial results for the year ending 30 June 2024, showcasing strong cashflow generation, a significant acquisition, and continued shareholder returns.
Instant Summary:
- Final unfranked dividend of AUD 1.5 cents per share announced.
- Total dividend distribution for FY24 amounts to AUD 3.0 cents per share.
- Cashflow from operating activities reached US$64.2 million.
- Completion of Mereenie acquisition, adding 6.4 mmboe of 2P reserves.
- Revenue for the financial year was US$111.5 million.
- Profit before tax stood at US$39.2 million.
- Material reserves upgrade with 2P reserves more than doubling.
Financial Performance
Horizon Oil reported a robust financial performance for the year ending 30 June 2024. The company announced a final unfranked dividend of AUD 1.5 cents per share, bringing the total dividend distribution for the year to AUD 3.0 cents per share, equivalent to approximately AUD 48 million returned to shareholders.
Cashflow from operating activities was strong at US$64.2 million, benefiting from prior investments in production growth. The company's cash reserves increased by over 20% to US$52.6 million, after paying approximately US$37 million in distributions and repaying US$8 million of debt.
Mereenie Acquisition
Horizon Oil successfully completed the acquisition of a 25% non-operated interest in the Mereenie oil and gas field, adding 6.4 mmboe of 2P reserves. The acquisition was fully funded by a new 5-year debt facility from Macquarie Bank. This strategic move diversifies and expands Horizon's production base.
Gross production for the three weeks post-acquisition was 0.4PJ of gas and 5,740 bbls of oil. The Mereenie joint venture also secured a long-term strategic gas sales agreement with the Northern Territory Government, ensuring firm gas supply until 2030.
Operational Highlights
Horizon Oil's net working interest share of production and sales volumes was within guidance, despite natural reservoir declines. The company's revenue for the year was US$111.5 million, with a profit before tax of US$39.2 million. The EBITDAX for the financial year was US$71.5 million.
Additionally, Horizon achieved a material reserves upgrade, with 2P reserves more than doubling compared to the previous year, largely due to the Mereenie acquisition and transfers from contingent resources.
The successful acquisition of Mereenie and the strong financial results are likely to positively impact Horizon Oil's stock price. The significant increase in reserves and continued cashflow generation reinforce the company's growth potential and financial stability.
Investor Reaction:
Analysts are expected to react positively to Horizon Oil's strategic acquisition and robust financial performance. The company's ability to maintain strong cashflow and return substantial dividends to shareholders is likely to bolster investor confidence.
Conclusion:
Investors should keep an eye on Horizon Oil's future developments, particularly the integration of the Mereenie acquisition and the company's ongoing exploration and production efforts. The continued focus on shareholder returns and strategic growth positions Horizon Oil well for future success.