Horizon Acquires 7.5% Interest In Sinphuhorm & 60% In Nam Phong Producing Gas Fields

Horizon Oil Limited (“Horizon”) is pleased to announce the execution of a share sale and purchase agreement (the

“Agreement”) through one of its wholly owned subsidiaries (Horizon Thailand Investments Pty Limited) with Exxon

Mobil Corporation (“Exxon” or “Seller”) which results in the acquisition of a 7.5% working interest in the E5N and EU1

development licences, onshore Thailand, which contain the producing Sinphuhorm conventional gas and

condensate field, and a 60% interest in the E5 development licence, onshore Thailand, which contains the producing

Nam Phong conventional gas field. The acquisition is proposed through a consortium, with Horizon to acquire 75%

of the shares in Exxon Mobil Exploration and Production Khorat Inc. (EMEPKI) with Matahio Energy (“Matahio”)

acquiring the residual 25% and agreeing to manage EMEPKI employees and operatorship of the Nam Phong field on

behalf of the consortium.

Horizon’s headline cash consideration for the 75% holding in EMEPKI is US$30 million, with an effective date of

1 January 2025, plus up to US$7.5 million in contingent payments over the next six years which are subject to certain

conditions being met. The upfront cash consideration will be substantially funded from a credit approved

amendment to our existing Macquarie Bank debt facility which will provide additional debt capacity for the

acquisition of up to approximately US$22 million, with up to a further US$10 million of finance made available

following completion of the acquisition.

The funding structure, together with the expected free cashflow generation from Sinphuhorm and Nam Phong allows

for the continuation of Horizon’s distribution strategy. The transaction remains subject to customary completion

conditions.

HIGHLIGHTS

This a compelling opportunity which requires minimal capital to gain access to a relatively low risk suite of gas

producing assets, which offer attractive returns and rapid payback with upside. The proposed transaction offers

Horizon the following:

• Acquisition of 3.9 MMboe of 2P Reserves as at an effective date of 1 January 2025 associated with the acquisition

of a 7.5% working interest in Sinphuhorm, and 60% working interest in Nam Phong gas fields. Based on the

headline consideration of US$30 million (net to HZN), this represents an acquisition cost of ~US$7.7/boe.

• Positive cash flow generation from a well-understood reservoir; stable and predictable gas production of

approximately 2,000 boe/d net to Horizon, based on current rates (approximately comparable with current net

Block 22/12 boe/d production rates), with the asset running at close to 100% uptime in 2024

• It is anticipated that, due to the effective date of 1 January 2025 and proposed debt funding, the impact on

Horizon’s existing cash reserves on completion will be less than US$10 million.

• Gas is contracted under a long-term gas sales agreement with PTT as the buyer for ultimate use in a regional

power station for electricity generation.

• Represents a Thailand country re-entry and establishes a low-cost platform for growth in Thailand and SouthEast Asia, partnering with both PTTEP and Matahio as operators, at the same time providing further

diversification of the Company’s production base.

• The acquired assets are exposed to limited abandonment obligations (currently estimated at c.US$5 million net

to HZN).

• Potential to enhance value through life extension at both fields, infill drilling, facility upgrades and

optimisations, together with additional opportunities in both assets.

Horizon CEO, Richard Beament commented:

These assets are excellent additions to our portfolio - complementing, diversifying and expanding our production

base. With combined net daily boe production similar to our current Block 22/12 fields, and with existing concessions

running into the next decade, these assets have the potential to allow Horizon to sustain production at current preacquisition levels through into the 2030’s. In partnering with Matahio, we have structured the transaction to play to

Horizon’s strengths as a non-operator, being also right sized, requiring minimal capital and with upside. We are

delighted to have identified another inorganic growth opportunity which meets our strict investment criteria of

acquiring assets which allow for the continuation of our capital distribution strategy.

We are pleased to re-enter Thailand, a jurisdiction we know reasonably well from our time as offshore explorers

between 2006 and 2008. Whilst financial pressures during this period, primarily driven by Maari development capex

commitments, led Horizon to divest its Thai interests, we have always viewed Thailand as an attractive jurisdiction

for oil and gas investment.

The consideration payable for the acquisition is well supported by the contracted gas offtake from the assets, which

has enabled Macquarie Bank to provide a substantial debt funding package on attractive terms.

We are delighted to be able to partner with Matahio, an independent energy company focused on Southeast Asia

and Australasia which operate onshore and offshore oil and gas fields in New Zealand and the Philippines. Our teams

are like minded and have collaborated extremely well over many months to bring this deal to a close. We look forward

to working with them closely as we move forward to complete this transaction. We are also delighted to partner with

PTTEP, as both operator of the Sinphuhorm gas field and JV partner in Nam Phong. We have been extremely

impressed with the work they have done at Sinphuhorm over recent years, in particular, the multi-well drilling

campaign and the immensely successful booster compression project which was commissioned in 2024.

Upon completion, the acquisition will increase Horizon’s net daily production by ~2,000 boe/d, and Proved and

Probable (2P) reserves by 3.9 million barrels of oil equivalent as at 1 January 2025. This compares with Horizon net

Proved plus Probable reserves of 9.9 MMboe reported as of 30 June 2024 (nb not adjusted for production to 1 January

2025).

The acquisition is expected to meaningfully increase net operating cash flow over the next 5+ years and provide a

substantial production base beyond the end of the decade. The assets provide the Company with further

diversification into gas production in a country with growing gas demand. The power station using the gas from these

fields has a key role in providing essential energy for domestic consumption in north-east Thailand and aiding the

country to achieve its energy transition objectives.

We look forward to finalising the transaction over the coming months as we finalise debt facility documentation,

transition matters and customary approvals.

Blocks E5N & EU1: Sinphuhorm gas field (Horizon net 7.5%)

The onshore Sinphuhorm gas and condensate field is located 500 km NNE of Bangkok and was discovered in 1983

and commenced production in 2006. The field is an N-S trending inversion related anticline, and the reservoir is the

Permian age fractured carbonate Pha Nok Khao (PNK) formation, which contains dry gas with a low gas condensate

ratio currently c.2 bbl/MMcf.

The field has been developed with eleven wells drilled from three well pads in the central and southern parts of the

field. Pressure depletion trends confirm reasonable connectivity across the field, with tie-in of the recently drilled

PH-14 in the north planned for 2026. The field produced an average of 127 TJ/d (122 MMscf/d) gross sales gas in

December 2024. A total of 637 PJ gross sales gas (611 bcf) and 2.3 MMbbls of gross condensate had been produced

by the end of 2024, equating to an estimated 63% recovery factor to date. The field is a depletion drive reservoir

with estimated final recovery factor of 82%.

The Sinphuhorm wells are tied back to a central gas plant with 140 MMscfd capacity and the ability to stabilise small

amounts of condensate. The plant, with its simple design, enjoys high reliability, uptime and performance, with a

long track record of safe operations. Operating costs are very low at approximately US$2.2/boe (excluding tax and

royalties) and decommissioning costs net to our acquisition 7.5% interest are estimated at less than US$2 million.

Raw gas from Sinphuhorm is transported along a 64-kilometre pipeline to the PTTEP Public Company Limited (PTTEP)

operated Sinphuhorm Gas Processing Plant (GPP) before being exported for use in the Electricity Generating

Authority of Thailand (EGAT) operated Nam Phong power plant, the largest in north-east Thailand. Sinphuhorm gas

is contracted under a long-term take-or-pay GSA with PTT Public Company Limited (PTT) as the gas buyer. Custody

transfer of the gas is at the outlet of the GPP. The current GSA extends over the remaining term of the concession,

which expires in March 2031. Gas demand has consistently exceeded 90 MMscf/d over the last four years and is

expected to remain strong in the foreseeable future amid declining regional supplies and high import prices. The

Sinphuhorm gas price is linked to high sulphur fuel oil. Sinphuhorm condensate is sold to PTT under a long-term

condensate sales agreement.

A gas compression project at the field in 2024 successfully increased gas production rates. Horizon estimates that

at the 1 January 2025 effective date, the field contained gross 2P Sales Gas reserves of 187.1 PJ (179.5 bcf) and

0.2 MMbbl of condensate (Horizon net 14.04 PJ Sales Gas and 0.02 MMbbls condensate).

Block E5: Nam Phong gas field (Horizon net 60.0%)

The onshore Nam Phong gas field is located 440 km NNE of Bangkok and 60km south of the Sinphuhorm field, was

discovered in 1981 and commenced production in 1990. The field is a fault bounded, N-S trending anticline formed

by inversion tectonics, overlying a reactivated and eroded fault block containing the Permian age fractured

carbonate PNK reservoir, which contains dry gas.

Following the drilling of exploration and appraisal wells in 1981 and 1982, four initial development wells were drilled

from 1989-1991 with first gas production in December 1990. During 1997 – 1999, an additional three infill wells were

drilled to increase field capacity up to 132 TJ/d gross (130 MMscf/d) to fulfil the sales contract requirement. Nam

Phong is a depletion drive reservoir and production has declined as reservoir pressure declines and is currently

producing approximately 6.6 TJ/d gross (6.5 MMscf/d) (Horizon net 4.0 TJ/d). Of the total nine wells drilled, seven are

producing today. Operating costs are low at approximately US$11.7/boe (excluding tax and royalties) and

decommissioning costs net to our acquisition 60% interest are estimated at less than US$4 million.

Production from the Nam Phong field is sent to the nearby EMEPKI operated Gas Stabilisation Unit (GSU) which

consists mainly of a produced water knock-out system and a dehydration unit. From the GSU the dehydrated gas is

exported to the adjoining PTT operated gas metering station. Custody transfer of the gas is at the outlet of the GSU.

PTT on-sells the gas to EGAT which operates the Nam Phong power plant situated approximately 3 km west of the

GSU. There is no condensate currently being produced at Nam Phong.

Horizon estimates that at 1 January 2025, the field contains gross 2P Sales Gas reserves of 13.9 PJ (13.3 bcf) (Horizon

net 8.3 PJ)).

Consideration and debt funding

The gross headline cash consideration for 100% of the shares in EMEPKI is US$40 million, with an effective date of

1 January 2025, plus up to US$10 million in contingent payments which may become payable over the next six years,

subject to certain conditions being met. Horizon will purchase 75% of EMEPKI (net headline cash consideration of

US$30 million plus up to US$7.5 million in contingent payments), with Matahio paying the balance. The headline

consideration will be substantially funded from a credit approved amendment to our existing Macquarie Bank debt

facility which will provide additional debt capacity for the acquisition of up to approximately US$22 million, with up

to a further US$10 million of finance made available following completion of the acquisition. It is anticipated that,

due to the effective date of 1 January 2025 and proposed debt funding, the impact on Horizon’s existing cash

reserves on completion will be less than US$10 million. To help simplify the security structure, as part of the

transaction funding Horizon will extend a loan to Matahio covering US$5 million of the purchase price secured

against their 25% shareholding in EMEPKI. This loan attracts interest payable to Horizon at SOFR + 9% together with

a 3% establishment fee, with the facility amortising to maturity at 31 December 2027.

The credit approved amendment to our existing Macquarie debt facility comprises the following:

• Tranche A - an increase in the Mereenie available debt from approximately AU$40 million to AU$50 million.

The additional AU$10 million of debt capacity is supported by the recent infill well results and recently signed

strategic gas sales agreements (GSA), including the 6-year GSA signed with the NT Government. This tranche

amortises through to maturity at 30 June 2029 and continues to attract interest payable at BBSW + 5%.

• Tranche B1 – an additional US$15 million of finance to be drawn to initially fund the acquisition which is

supported by cashflows from Block 22/12. The USD 15 million tranche is secured against Horizon’s existing

Block 22/12 and Maari security package which remained on foot following maturity of Horizon’s Syndicated

Revolving Cash Advance Facility in July 2023. This tranche amortises to maturity at 31 December 2027 and

attracts interest payable at SOFR + 5%.

• Tranche B2 – an additional US$10 million of finance to be made available following completion of the

acquisition to fund any further development of the secured assets and for general corporate purposes. This

additional tranche is supported by cashflows from the acquired interest in Sinphuhorm and remains subject

to security being provided over Horizon’s 75% shareholding in EMEPKI and updated technical diligence on

Sinphuhorm prior to drawdown. This tranche amortises to maturity at 31 December 2027 and attracts

interest payable at SOFR + 6%.

The amendments outlined above to our existing Macquarie debt facility are credit approved but remain subject to

documentation.

The incremental gearing associated with this acquisition is modest, amounting to an initial additional

~US$22 million which represents a little over Horizon’s historical 6-month free cashflow generation. With the

addition of the Thai assets and subject to the maintenance of current oil prices and production, cashflow generation

is forecast to increase leading to rapid degearing whilst also allowing for the continuation of the Company’s

distribution strategy. The additional US$10 million Tranche B2 facility provides the Group with further liquidity and

financial flexibility if required.