Horizon Oil shares jump 4.3% on ASX

Business, Normal

The National, Wednesday 01st Febuary 2012

SHARES in Horizon Oil Ltd jumped 4.3% up to A$0.24 yesterday on the Australian Stock Exchange the back of a spate of good news from the company’s stake in Papua New Guinea.
Yesterday’s jump followed increases of 6.88% on the previous two trading days.
The initial share price boost came from news on Jan 20 that the Elevala-2 appraisal well and subsequent sidetrack had proved better than anticipated.
This was followed by an announcement on Jan 24 that Horizon had picked up significant new acreage through a farm-in agreement with Eaglewood Energy Inc to earn a 25% stake in PPL 259 in Western Province.
Horizon would reimburse a proportionate share of sunk costs totalling US$2.5 million and carry Eaglewood for future seismic and drilling costs to a capped amount of US$6.375 million.
Horizon’s chief financial officer, Michael Sheridan, said the farm-in agreement would provide further oil and gas prospects and leads that would spread the company’s geological risk and create opportunities to prove up additional reserves.
He said Horizon believed its acreage in Western province represented a “sweet spot for liquids rich gas in the Papuan Basin foreland, which is centred on our planned production hubs at Stanley and Elevala/Ketu.”
Sheridan said a larger gas reserve base provided the scale needed for possible consideration of a small scale LNG (liquefied natural gas) plant at Kiunga or Drimdenasuk that could export LNG, LPG and condensate via the Fly River.
“The proposed road upgrade between Drimdenasuk and the Strickland River presents a likely pipeline route for transport of gas from the Elevala, Ketu and Ubuntu discoveries and other add-ons from PPL 259 along its route,” he said.
This news was capped by Monday’s announcement that a favourable final investment decision had been made on its 50% owned Stanley gas and condensate recovery project at the Stanley field, where a Canadian oil and gas major, Talisman Energy, is its partner.
The Stanley project was expected to support a 4,000 barrels a day condensate export operation and open up the prospect of gas-fired electricity generation for the Ok Tedi mine and for possible rural electrification programme for about 50,000 people in Western province.
If speedy government approvals could be obtained, Stanley could be exporting condensate by the end of next year.
Horizon’s share price has reacted positively to the news on solid turnover.
It has risen from A$0.215 on Jan 23 with turnover of more than 41 million shares in the last three trading days.
More than 12 million shares were traded yesterday and 21 million shares on Monday compared to a normal turnover of less than a million shares.