HORIZON Oil will not commit itself to investing in developments currently being planned in Papua New Guinea and China until the oil price recovers, company chief executive Brent Emmett has said.
Speaking at the release of the company’s half year results in February, Mr Emmett said it had no material operations planned apart from routine workovers in China and New Zealand and work on the Maari field.
“We will be doing the necessary amount of work to advance these projects, to maintain our government obligations that we take very seriously, but it is difficult to envisage that people in this environment will be investing a lot of money in fuel development,” he said.
The results came after the company announced a loss of almost US$42 million after sales revenue fell 22 per cent to US$41.2 million despite as 10% rise in production to 681.9 million barrels from the Maari and Manaia fields offshore New Zealand.
Mr Emmett said the loss was a solid underlying result in light of the prevailing oil price environment, with the loss having come on the back of an impairments totalling almost US$38 million.
Horizon wrote down the value of its 30% stake in the Repsol-operated Stanley field joint venture by US$10.5 million, while another 60% of the write downs were recorded against exploration assets, Horizon chief financial officer Michael Sheridan said.
In its announcement, Horizon said Repsol was continuing a review of project design, execution and timing before entering contracts for fabrication and construction of project facilities.
Horizon said it was likely Repsol would carry out a phasing of development and other capital costs at the Stanley site, “matching the gas demand for power generation with the requirements of regional mining, industrial and domestic consumers.”
Mr Emmett said Repsol was also close to finalising a gas and power sales project with the Ok Tedi mine over gas from the Stanley field.
“This is a relatively modest project, but most importantly it will set the scene for supplying the much much larger Frieda River project, and that is the main game for the commercialisation of the Stanley field,” he said.
Horizon was also still working on its two development plans for the Elevala Ketu fields in PRL 21, with a final decision to be made in the second half of the 2016 calendar year.
The company would not be cutting capital expenditure, Mr Emmett said, adding that he did not see scope to reduce it further.
“We do see scope to further reduce operating expense and have already achieved some reductions this year,” he said.
“We have a strong focus on reducing our debt and meeting our obligations.”