Horizon secures Stanley project funding

HORIZON Oil has finalised a $US160 million ($A153 million) reserves-based lending facility which will meet its share of development costs for the $300 million Stanley field gas condensate recovery project in Papua New Guinea’s Western Province.
Horizon secures Stanley project funding Horizon secures Stanley project funding Horizon secures Stanley project funding Horizon secures Stanley project funding Horizon secures Stanley project funding

The debt facility, with a term of six years, is jointly mandated by a consortium of international banks and is underpinned by Horizon's production and development assets.

Horizon chief executive Brent Emmett explained the company's decision to finance development through lending and hedging a portion of its Maari oil field production in New Zealand.

"The board has preferred this debt funding approach to the alternative of raising new equity with resulting dilution because it takes full advantage of the considerable existing value in the asset portfolio, particularly Maari," he said.

"At current [London Interbank Offered Rates], interest on funds drawn on the facility will be 4-5%, an attractive cost of development capital."

The Stanley condensate project aims to produce 140 million cubic feet of wet gas per day to result in the initial recovery of about 4000 barrels of condensate per day using a two-train refrigeration plant in the field.

First production is targeting the end of 2013.

Stanley contingent resources were independently certified to be 361 billion cubic feet of gas and 11.4 million barrels of condensate in November but in January Horizon said its final investment decision approval allowed these condensate resources to be classified as reserves.

Horizon and Canada-based Talisman Energy each own a 50% stake in PRL 4, with the latter pursuing a strategy to aggregate 2-4 trillion cubic feet of gas in the region.

Horizon expects a petroleum development licence for the Stanley project to be awarded in the September quarter.

Once this milestone is achieved, equal-owners Horizon and Talisman will have their stakes scaled back to 38.75% each as the PNG government will earn a 22.5% stake.

The lending facility will also be used for further expansion at the Maari/Manaia fields in New Zealand and for exploration in its acreage in offshore China.

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