Horizon Oil (HZN) announces strategic alliance with Osaka gas in Papua New Guinea

Friday, May 24, 2013

The sale marks the beginning of a 60/40 strategic alliance between Horizon Oil and Osaka Gas, a leading global gas company and one of Japan's largest utility companies and LNG importers.

The principle objective of the partnership is to grow and develop the PNG assets for the purposes of supporting a mid-scale LNG project located on the coast in Western Province. The companies intend to exploit the full potential of the assets via early condensate production, local gas sales and LPG sales and to market their respective shares of petroleum products, especially LNG, on a combined basis.

Completion is conditional upon customary consents, regulatory approvals and grant of the development licence for Stanley field."We are delighted to welcome Osaka Gas as a strategic co-venturer in the development of our PNG condensate and gas assets. We and our existing joint venture participants have an aligned vision for the aggregation and commercialisation of gas and condensate in Western Province and Osaka Gas shares this vision.

Our upstream expertise is a good fit with Osaka Gas' experience in the LNG business and their ability to offtake the product. They will add significant value to our already strong joint ventures and the strategic relationship will allow Horizon Oil to play its part and participate in a substantive mid-scale LNG development, which will be a large and long term contributor to value. Shareholders will note that the milestone cash payments of the consideration are  structured to provide Horizon Oil with funding at critical stages of the integrated project execution.

Finally, while the potential production payment is a speculative upside for us, we assess it to have material value in the event condensate production from Stanley, Elevala and Ketu is in line with current certified reserves and resources."About Osaka GasOsaka Gas is the second largest gas company in Japan and has about 7 million natural gas customers in its service area located in the Kansai region.

With its portfolio of diversified energy businesses, Osaka Gas has been developing into a multi-energy services provider of natural gas, electricity, LPG, district heating/cooling and other services. Osaka Gas

has also been actively pursuing upstream investment opportunities in gas and oil projects. With its affiliated enterprises, the Osaka Gas Group is also active in various non-energy related business fields.

Osaka Gas imports over 8 million tons of LNG annually (about 10% of Japan's total imports), has interests in six LNG carriers and is the owner and operator of LNG terminals and a 60,000 km pipeline network.

Source: Horizon Oil