HZN 7.14% 7.5¢ horizon oil limited

this may tell the story

  1. 1,058 Posts.
    The following may give an idea as to the value of the
    Maari field in New Zealand and the offshore China project.



    15 May 2003
    Horizon Oil is preparing to develop two oil projects that have the potential to have a very
    significant impact on shareholder value.
    These are the Maari Field and nearby Manaia prospect in PEP 384 13 offshore New
    Zealand, in which the company has a 10% interest, and the cluster of oil discoveries in
    Block 22/12 offshore China, in which Horizon Oil has a 30% interest. On current planning
    Block 22/12 is anticipated to begin production in mid 2005, with Maari to come on at the
    end of 2OO5. Both projects fit the stated Game Plan of participation in lower risk
    development projects (as well as high potential exploration) with the objective of building
    Horizon Oil to a value peak within 3 ...... 5 years. (Further background on these projects is
    attached.)
    Such is the scale of these projects relative to the company’s current size that the company
    has engaged a highly experienced independent consulting firm, Resource Investment
    Strategy Consultants (MSC), to assess the reserves of these projects together with their
    upside potential. ‘The study will also provide critical advice on capital requirements and
    other development issues. Of particular importance to shareholders it will provide a
    soundly based and independent estimate of the net value of these discoveries to Horizon
    Oil. ‘The company plans to release the key results of the study, which begins this week, to
    all shareholders as soan as the study is completed, anticipated to be mid June. (Further
    background on RISC is attached.)
    The proposed study will assist the Board and management in planning for the
    developments, their financing and implementation. Most importantly though, it will
    provide shareholders with an independent evaluation of Horizon Oil’s principal assets and a
    view of their upside potential. The Board advises shareholders to review carefully the
    results of the study, when they become available.
    Horizon Oil’s Chief Executive Officer, Mr Brent Emmett, said:-
    For further information please contact:
    Mr Brent Emmett
    Telephone: (+GI 2) 9332 5000
    Facsimile: (161 2) 9332 5050
    Email: exptorationl~~horizonoil.com.au
    Or visit Horizon Oil’s website: www.horizonoil.eom.au
    Horizon Oil acquired a 10% interest in PEP 38413 from OMV New Zealand Limited
    (UMV) in January of 2003 for a consideration of US$ l .5 million plus 10% of the costs of
    the Maari 2 appraisal well (gross US$5 million), drilled in January 2003, which was
    designed to establish a commercial level of proven reserves and provide reservoir
    information for development of the Maari Field. PEP 384 13 contains the undeveloped
    Maari and Manaia Fields. The fields are located in the offshore Taranaki Basin,
    approximately 35 km south of the giant Maui gas field and 120 km southwest of New
    Plymouth in a water depth of approximately l00 m.
    The operator of the appraisal and the development is UMV, (a company headquafiered in
    Austria with a regional office in Perth and substantial producing operations in Australia and
    New Zealand).
    The Maari and Manaia structures are simple dip-closed anticlines at all reservoir levels with
    top seal provided by interbedded marine shales. Hydrocarbons are encountered at three
    levels in the Maari structure: the M2A Sands, the Moki Formation and the Mangahewa
    Formation. The Moki Formation is the principle reservoir in Maari.
    The Maxi Field was discovered by the Moki- l well in 1983 and subsequently appraised by
    Moki-2A in 1985, Maari- 1/1 A in 1998, and Maari-2 in 2003. The Moki- l well flowed G60
    bopd from the Moki Formation and a horizontal production test at Maari- l A flowed 4400
    bopd from the same interval. Maari-2 was not tested but confirmed a significant oil column
    in the Moki Formation and in the shallower M2h sands. The oil is 38"hPI and low GOR:
    200-350 scfhbl. The Maari and Mmaia Fields are covered by a 500 sq km 3D seismic
    survey.
    At the time of farmin Horizon Oil estimated proven plus probable reserves in the Moki
    Formation of the Maari Field to be 35 million barrels of oil (mmbo). Further commercial
    potential was also recognised in the other reservoirs at Maxi and at the Mmaia Field.
    The Maari-2 well spudded on 8 January 2003 and reached TD on 19 January 2003 at a
    depth of 1495 mRT. 'The overall objective of the well was to demonstrate the presence of
    an oil column in the southern part of the field and to prove a minimum economic level of
    reserves.
    The well objectives were achieved and the results demonstrated a significant oil column (at
    least 41mj with no gas cap in good quality reservoir and no evidence of pressure
    compartmentalization in the field. The overall result indicates that the minimum
    commercial reserves required for development are present and that the proven plus
    probable reserves for the Moki Formation in the field will considerably exceed the pre-
    appraisal estimates.
    A better than expected result was also achieved at the shallower M2A sand level. More
    work is required to quantify reserves, which constitute valuable additional production
    potential to a Moki Formation development, along with the Mmaia prospect.
    Development planning is underway. An indicative development scheme would comprise
    horizontal producers supported with gas lift, horizontal water injectors, subsea wellheads
    and an FPSO. Development capital expenditure, assuming leasing of the FPSU, would be
    approximately US$] 15 million. First production target would be late 2005 at an initial rate
    of about 30,000 barrels of oil per day.
    BIock 22/12, Offshore China (30%)
    Block 22/12 is situated in the Beibu Gulf, west of Hainan Island, offshore China. The
    permit was obtained at 100% equity by Horizon Oil and farmed out in two stages in 2002 to
    a group including Roc Oil, who assumed operatorship.
    Acquisition of the new, block-wide 3D seismic survey was completed in September 2002,
    with a total of 417 sq km recorded.
    Block 22/12 contains five discovered fields and a number of prospects which are being
    appraised with the 2003 3D seismic. The joint venture expects to drill 3-4 wells in late
    2003, targeting exploration prospects and appraisal of existing discoveries. The estimated
    field sizes vary from 5 to 25 mrnbo recoverable for the discovered fields and a similar range
    for the undrilled prospects. Depending upon location and reservoir properties, the
    threshold economic reserve for the first development would be 15-25 mrnbo. Since the
    fields and prospects lie relatively close together, the joint venture plans to appraise and
    develop clusters of reserves, which in combination will result in a material development
    project. The platform and pipeline infrastructure, which would be required in the initial
    development would also serve subsequent developments and result in lower unit capital
    costs for incremental developments.
    The combination of shallow water, good drilling conditions and nearby infrastructure
    provide the opportunity for development of these accumulations in a tie-back scheme and
    engineering studies designed to assess the feasibility of early production from minimal, low
    cost development facilities are underway.
    The initial focus will be on the Wei 12-8-2 and 12-8-1 fields, with the Wei 12-3-1 and 12-
    2-1 accumulations adding further reserves to any development. There are several satellite
    leads with hydrocarbon-like amplitude responses in the vicinity of the 12-8 discoveries,
    which may also add incremental reserves. Another cluster of leads exists near Wei G- 12- l
    to the north lying between the Wei 12-8 field and Weizhou Island, which are due for
    definition later in 2003.
    A range of development options has been studied and two cases involving tie-in to CCLZ
    facilities have been identified to have similar costs;
    The Base Case option involves a wellhead platform(s) and oil transport to Weizhou
    Island through a new un-insulated pipeline;
    The alternative case involves a wellhead platform(s) and wet oil transport to a
    processing platform alongside the Wei 12- l platform, then dry oil transport to
    Weizhou Island using the CCLZ facilities and pipeline.
    The relative merits of these cases require further study but the Base Case is the preferred
    option at this time. Both options require capex of the order of US$70-80 million. Base
    Case first oil production is anticipated to commence Q3 2005. The timing of “second and
    subsequent oil” i.e. satellite developments is yet to be refined.
    The target for submission of a conditional Oil Development Plan is July 2003 and planning
    is underway for the exploration and appraisal programme to commence in Q3 2003.
    Resource Investment Strategy Consultants (RKC)
    RISC was founded in 1994 to provide advice to the oil and gas industry on the acquisition,
    development, management and sale of assets. Based in Perth, Australia, the company has
    to date completed many hundreds of assignments for over 200 clients in more than 20
    countries across Asia, West Africa, North Africa, Middle East and Australia. Since January
    2001 KISC has been the principle technical and economic advisor on transactions whose
    total value has exceeded USt620 billion.
    Further corporate information about RISC, including a summary of their experience, can be
    found on their website http://www.risepl.com.au.
    Sydney
    15 May 2003
 
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