HORIZON Oil is considering a series of development options for its resources in Papua New Guinea’s Western Province, following a 43 per cent rise in profit after tax to US$18.3 million.
The profit boost, which was driven by the success of its New Zealand operations, came as the company completed the drilling of the Stanley 3 and Stanley 5 development wells, which it managed on behalf of the operating joint venture.
Stanley, now operated by Repsol following its acquisition of Talisman Niugini last year, was expected to start production before the end of 2017, with Repsol expected to deliver a revised development concept before the end of 2015.
Speaking in an investor presentation following the release of the results, company chief executive Brent Emmett said he appreciated the patience of investors in waiting for the start of production from Stanley.
“We are seeing some good progression there and our assumption for production at Stanley is that gas sales commence to Ok Tedi in 2018 with larger gas sales anticipated in 2020,” he said.
Horizon had also cut its discretionary and exploration costs and was putting pressure on suppliers and service providers to keep costs down as the company sought to develop new reserves, he said.
“Perversely the current low oil prices will enable us to develop those reserves, because we are seeing tremendous cost deflation, so we can keep those projects moving forward,” he said.
Among the plans for 2016 is more development of PRL 21, the Elevala/Ketu project, which Horizon operates with a 27% stake, and on which seismic data was acquired through the year.
Mr Emmett said the company had previously looked to develop condensate first and secure a buyer later – a strategy he said no longer made sense with lower oil prices.
Fortunately, he added, commercialisation pathways for the projects were now opening up, particularly when looking at development plans for the P’nyang field, part of the PNG LNG project and located roughly 70kilometres north of the Horizon project.
“One of the options there, and it is a very real one, is as a brownfield add on to the P’nyang development, which is what the partners in P’nyang call the northwest hub area,” Mr Emmett said.
Horizon said the potential development of an export pipeline connecting the P’nyang gas field to the existing PNG LNG system at Kutubu offered the potential for a gas aggregation project involving a number of fields including Stanley and Elevala/Ketu.
“We anticipate the partners in P’nyang [will finalise] in the first half of next year their appraisal of the P’nyang field and are moving towards a final investment decision … by the end of 2017. A very viable opportunity exists for us to have our gas as a part of that development,” Mr Emmett said.
“But we are not going to hang our hat on that – once again that would be getting into the ‘hope’ category,” he said, adding that the company was continuing to progress planning with partner Osaka Gas for a greenfield mid-scale energy project at Daru Island.
“I saw some progress results on that the other day, and it is looking very promising,” he said.