Horizon Oil has signed an agreement with Todd Maari to acquire its 16% interest in PMP 38160 off the Taranaki coast of New Zealand.
With the proposed acquisition, which contains the producing Maari and Manaia fields, the company is set to increase its PMP 38160 joint venture (JV) to 26%.
Under the agreement, Horizon Oil is required to make a payment of $17.6m to Todd Maari in exchange for the interest.
The company noted that the larger interest will increase its proposition in the ongoing management of the fields, including reservoir management to maximise oil recovery and cost control.
Horizon Oil CEO Brent Emmett said: “The additional interest will be automatically incorporated in Horizon Oil’s reserves base debt facility, increasing the available debt capacity and enabling the majority of the purchase price to be funded by debt.
“Importantly, the acquisition will meaningfully increase net operating cash-flow from China and New Zealand, which we expect to average $60m-$70m over the next five years.”
Once the deal is complete, the acquisition is expected to increase the company’s net daily production from the existing 4,100bopd to 5,500bopd.
Furthermore, through the transaction, the company will be able to increase its net proven and probable (2P) reserves by 43% to 11.3 million barrels of oil, while proven and probable (2C) contingent resources set to rise up by 9% to 140.3 million barrels of oil equivalent.
Emmett further added: “The additional cash-flow is expected to enable reduction of the company’s net debt at a more rapid rate and to enhance future refinancing opportunities on improved overall terms.”
The transaction is dependent on both New Zealand Government Ministerial approval and that of the Overseas Investment Office, joint venture consent and other conditions.
Other stakeholders in the JV include OMV New Zealand, which is the operator with a 69% interest, while Cue Taranaki holds a 5% stake.
As of 2 November, gross production from Maari and Manaia fields stood at 8,840bpd of oil.