The Company’s strategy is to strive to maintain steady production from our producing fields in China and New Zealand. This will be achieved with continuing well workovers, optimisation of production systems – for example, water injection in Maari field – and infill drilling. Staged development of the WZ 12-8E and associated oil accumulations in China is important to achieving this goal. Hand in hand with maintaining production levels will be the continuing focus on controlling operating costs. In combination, these efforts should deliver a stable cash flow to the Company over the next five years or so.
To advance commercialisation of Horizon Oil’s material position in the large-scale Western LNG project in Papua New Guinea. Of course, the liquids component of the resource (condensate and LPG) is valuable, but this is essentially a gas asset. The Board believes that the transition of the Company from an oil to gas producer is the right one, as gas increasingly dominates energy consumption in Asia, leading to a forecast tightening of the LNG market from the mid 2020s.
With a well balanced portfolio of high margin oil production in China and New Zealand, a dominant interest in a material condensate-rich gas resource in Papua New Guinea targeted for development as a mid-scale LNG project and a sustainable balance sheet, the Company’s Board and management have a high level of confidence that Horizon Oil is optimally positioned to take advantage of improving oil prices and the strengthening demand in Asia for LNG. As investor confidence returns to the oil and gas sector, we expect these factors will play a significant part in attracting greater interest in Horizon Oil and its assets.
Horizon Oil has various risk management policies and procedures in place to enable the identification, assessment and mitigation of risks that may arise. Whilst the Company can mitigate some of the risks described above, many are beyond the control of the Company. For further information in relation to Horizon Oil’s risk management framework, refer to the Corporate Governance Statement.