Horizon Oil Posts Record FY26 Production as Acquisitions Lift Reserves 51%
Key Takeaways
- Horizon Oil reported record net production of 2.15 MMboe for FY26, a 33% increase on the prior year's 1.62 MMboe, driven by the Thailand gas assets and Cue Energy acquisitions.
- Two acquisitions expanded the portfolio to nine producing assets across five countries, lifting current production to approximately 7,300 boepd following Cue's consolidation in June 2026.
- 2P reserves grew 51% to 13.6 MMboe and 2C contingent resources rose 61% to 19.8 MMboe, with approximately 200% reserve replacement achieved after FY26 production of 2.1 MMboe.
- Operating cash flow reached US$47.2 million, up 32% year-on-year, funding AUD 2.5 cents per share in FY26 dividends and cumulative shareholder distributions now exceeding AUD 270 million.
- A dense near-term catalyst pipeline spans all five countries, including Palm Valley appraisal drilling already underway, Mahato infill wells in progress, and a proposed 2027 Sinphuhorm three-well infill programme.
Record FY26 production and an enlarged five-country platform headline Horizon’s results
In its FY26 results presentation, Horizon Oil (ASX: HZN) reported record net production of 2.15 MMboe for the year ended 30 June 2026, with current production lifted to approximately 7,300 boepd following the completion of the Cue Energy acquisition in June. Two transformative acquisitions — the Thailand gas assets and the controlling stake in Cue — expanded Horizon’s footprint to nine producing assets across five countries. The company delivered an 18% total shareholder return for the year and declared AUD 2.5 cents per share in FY26 dividends (1.5 cps interim plus 1.0 cps final).
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FY26 investment highlights at a glance
Horizon’s FY26 results reflected the integration of Thailand (from 1 August 2025 on an equity-accounted basis) and Cue (consolidated from 17 June 2026). Underlying revenue — which includes Horizon’s proportionate share of Thailand joint-venture revenue — reached US$107.2 million, while statutory consolidated revenue totalled US$84.2 million. The company recorded EBITDAX of US$56.4 million and operating cash flow of US$47.2 million, up 32% year-on-year, while maintaining cash operating costs below US$25 per barrel of oil equivalent.
| Metric | FY2026 | FY2025 |
|---|---|---|
| Production (MMboe) | 2.15 | 1.62 |
| Sales volumes (MMboe) | 1.98 | 1.62 |
| Underlying revenue (US$) | $107.2m | $105.3m |
| EBITDAX (US$) | $56.4m | $54.8m |
| Operating cash flow (US$) | $47.2m | $35.9m |
Horizon closed the year with US$37.4 million cash on hand and net debt of US$11.3 million — a shift from the prior year’s net cash position of US$13.7 million — following the two acquisitions, dividend payments totalling US$33.1 million, and US$10.6 million in debt repayments. The company recorded statutory profit after tax of US$11.1 million for FY26. Approximately 130,000 barrels of crude inventory remained on hand at 30 June 2026, subsequently sold in FY27 for over US$10 million in additional revenue.
Two acquisitions reshaped the portfolio and drove reserves growth
Horizon’s acquisition strategy during FY26 delivered material scale and diversification. The Thailand acquisition, completed with an effective date of 1 August 2025, added effective interests of 7.5% in Sinphuhorm and 60% in Nam Phong. This transaction brought 3.9 MMboe of 2P reserves as at the 1 January 2025 effective date, with 3.4 MMboe recognised after accounting for production to completion, and a further 0.8 MMboe added through subsequent activities. The Cue acquisition, which closed on 17 June 2026, secured a 57.03% controlling interest in Cue Energy and contributed 2.6 MMboe of 2P reserves to Horizon’s portfolio.
The combined effect of these transactions, alongside portfolio revisions, drove 2P reserves up 51% to 13.6 MMboe (from 9.0 MMboe at 30 June 2025) and 2C contingent resources up 61% to 19.8 MMboe (from 12.3 MMboe). The company achieved approximately 200% reserve replacement after accounting for FY26 production of 2.1 MMboe. 2U prospective resources increased by over 450% to 14.3 MMboe, driven primarily by Thailand opportunities. The growth was delivered across three categories:
- Acquisitions: Thailand and Cue transactions added 5.9 MMboe of 2P reserves
- Revisions and transfers: Portfolio-wide technical reviews added 0.7 MMboe
- Production offset: FY26 production reduced reserves by 2.1 MMboe
The acquisitions delivered scale, geographic diversification, and a material infrastructure-led growth runway across the enlarged five-country portfolio.
What “2P reserves” and “reserve replacement” mean for investors
2P reserves refer to the sum of proved (1P) and probable (2P) reserves — oil and gas volumes that are considered commercially recoverable with a reasonable degree of certainty based on current technology, economics, and regulatory approvals. 2C contingent resources represent discovered volumes that are not yet considered commercially viable, often requiring additional appraisal or development decisions. 2U prospective resources are undiscovered volumes estimated from geological and geophysical data, carrying higher risk but significant upside if drilling succeeds.
Reserve replacement ratio measures whether a producer is replacing the reserves it extracts each year. A ratio above 100% means the company is adding more reserves than it produces, growing the resource base rather than depleting it. Horizon’s approximately 200% reserve replacement in FY26 tells you the company added roughly twice the reserves it consumed, positioning it to sustain production and dividends over the long term without relying solely on future exploration success.
Strong cash generation funds dividends, debt reduction and growth
Horizon’s capital allocation strategy centres on three priorities: maximise cash flow from operations, reinvest in high-return portfolio opportunities, and return capital to shareholders. The company generated US$47.2 million in operating cash flow for FY26, up 32% on the prior year, and delivered US$36.6 million in free cash flow after investing activities. Operating cash flow funded US$33.1 million returned to shareholders during the year and US$10.6 million in debt repayments, alongside selective investment in both organic development and the two transformative acquisitions.
Cumulative distributions to shareholders now exceed US$183 million (approximately AUD 270 million), underscoring the company’s track record of shareholder returns. The FY26 dividend structure requires clarity: Horizon declared AUD 2.5 cents per share for FY26 (comprising a 1.5 cps interim dividend and a 1.0 cps final dividend). However, AUD 3.0 cents per share was paid during FY26 — this figure includes the FY25 final dividend and the FY26 interim dividend, both of which were distributed within the financial year.
Net debt of US$11.3 million at 30 June 2026 remained modest relative to the transformative scale of the two acquisitions, with debt servicing supported by the enlarged production base and diversified cash flow streams.
Company Position
Horizon’s FY26 performance reflected record production, the successful integration of Thailand, the acquisition of a controlling interest in Cue, and continued focus on shareholder returns through disciplined capital allocation across dividends, debt reduction, and selective reinvestment.
Nine producing assets across five countries
Horizon’s enlarged portfolio now spans five countries, with each region contributing distinct cash flow characteristics and development upside. Thailand’s oil-linked gas pricing structure — tied to High Sulphur Fuel Oil (HSFO) benchmarks under long-term gas sales agreements with PTT — provides a differentiated, resilient revenue stream supporting approximately 20% of northeast Thailand’s power generation. The portfolio’s geographic spread reduces concentration risk and provides exposure to both oil and gas markets.
| Country | Key asset(s) | HZN interest | Current net production |
|---|---|---|---|
| Thailand | Sinphuhorm / Nam Phong | 7.5% / 60% | ~2,100 boepd |
| China | Block 22/12, Beibu Gulf | 26.95% | ~2,000 boepd |
| New Zealand | Maari | 28.9% | ~1,300 boepd |
| Australia | Mereenie, Palm Valley, Dingo | 29.3% / 8.6% / 8.6% | ~8.5 TJ/d + oil |
| Indonesia | Mahato / Sampang | ~6.4% / ~8.6% | ~400 bopd |
Australia’s Mereenie, Palm Valley, and Dingo assets provide long-life domestic gas exposure with established infrastructure and contracts extending beyond 2034. China’s Block 22/12 delivers reliable offshore oil production, while New Zealand’s Maari project contributes material offshore crude volumes. Indonesia’s Mahato PSC offers near-term oil infill drilling opportunities and exploration upside.
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Near-term catalysts and the value runway to 2035
Management outlined a material pipeline of near-term catalysts and indicative development opportunities across the portfolio, subject to joint venture and regulatory approvals. The forward-looking programme is grouped by region:
- Thailand: Nam Phong booster compression project targeting first gas; Sinphuhorm Pad D (PH-1ST1 and PH-14) tie-in completed; proposed 2027 Sinphuhorm three-well infill drilling programme, with long-lead equipment procurement underway
- Indonesia (Mahato): Two oil infill wells at the Bekasap field (PB-41 completed in August 2026, PB-42 spudded); GA-1 exploration well drilling expected during CY2026, subject to approvals; Phase 3 (OPL 3) development plan awaiting government approval for further Bekasap and Telisa reservoir drilling
- Australia: Palm Valley PV14 appraisal well spudded 25 July 2026, with PV15 to follow; Mereenie development review progressing to assess future well locations and gas demand
- New Zealand (Maari): MR3 workover completed; infill drilling maturation continuing; permit extended 10 years to 2037, providing long-term operational optionality
- China (Block 22/12): WZ12-8E Phase 2 development studies advancing, with potential for reserve additions subject to economics and approvals; ongoing workovers and water-handling capacity upgrades to sustain production
The company’s indicative production forecast supports base production and organic growth to 2035 and beyond, underpinned by 13.6 MMboe of 2P reserves, 19.8 MMboe of 2C contingent resources, and 14.3 MMboe of 2U prospective resources. Horizon has distributed or declared over AUD 290 million (18 cents per share) to shareholders over the past six years, with dividends remaining a stated capital allocation priority alongside disciplined reinvestment in the portfolio’s infrastructure-led opportunity set.
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