Horizon Oil Limited (HZN) Earnings Call Transcript & Summary

Thank you for standing by and welcome to the Horizon Oil 2020 Full Year Financial Results webcast. I would now like to hand the webcast over to Mr. Chris Hodge, Chief Executive Officer; and Mr. Richard Beament, Chief Financial Officer, who will take you through the presentation. [Operator Instructions]

Welcome to Horizon's 2020 Results Presentation. I am Chris Hodge, the company's CEO; and beside me is Horizon's CFO, Richard Beament. I will make some introductory comments before handing over to Richard to run through the full year results. I will then cover the operational performance of our assets, strategic outlook and direction before opening up for questions. Before I go through the results, I'd like to emphasize that all references to dollars are U.S. dollars as this is the group's functional currency. All revenues are generated and received in U.S. dollars. While the headline result is dominated by the $67 million PNG impairment charge, it is important to recognize that this is noncash and represents an accounting judgment made due to the material uncertainties which persist in respect of our PNG portfolio. Importantly, this base business is very strong, as can be seen in the key financial highlights, with both the Maari and Beibu producing assets performing very well. As anticipated, sales volumes, which were just over 1.4 million barrels, reverted to be materially in line with the group's net working interest share of production, owing to the full recruitment of the company's remaining China exploration and development cost recovery entitlement. This was expected and foreshadowed in previous releases. Accordingly, sales revenue, EBITDAX and underlying profit before tax were lower than the prior comparative period. However, all other metrics were broadly in line with or better than the comparative period. In particular, the group's free cash flow generation enabled a material reduction in net debt, allowing for return to a net cash position for the first time in over a decade. The full year results continued to deliver on the objectives set earlier this year with continued strong production and cash flow generation. This was the result of high-margin production at both Maari and Beibu, where cash operating costs were maintained at below $20 per barrel. This cash flow then allowed for progressive debt reduction with a further $24 million of voluntary debt repayments. Pleasingly, the assets were able to maintain continuous operations throughout the COVID-19 lockdown period by a combination of local monitoring and strict hygiene procedures. The company had a decisive response to the collapse in oil prices with a defensive hedging executed, which resulted in hedge gains of $9 million, which helped to insulate the group's revenue and cash flow. Cost-saving initiatives were implemented at corporate level with a 20% reduction in headcount, primarily focused on the group's PNG operations. Operating cost reductions were also achieved over the group's producing assets, particularly at Maari. We're also encouraged by our exploration drilling success and continued low operating costs in Block 22/12 in China, which has led to the company seeking to pursue further infill, appraisal and exploration opportunities as well as sanction the development of the 12-8 East development. With the progressive de-gearing and continued strong cash flow generation, the company is poised for growth and has continued evaluating inorganic growth opportunities within the Asia Pacific region. On the HSE front, Horizon has performed well with no loss of containment incidents during the year. In terms of safety, the company's operated assets achieved a total recordable injury frequency rate of 0 for the 2020 financial year with no recordable injuries recorded over a period of 5 years. The current group performance, which includes nonoperated assets, outperforms the industry average for not [indiscernible] administered areas. During the year, the group also focused efforts on sustainability and for the first time has reported against the recommendations of the task force for climate-related financial disclosures and has produced a separate sustainability report with increased transparency. This has been released to the ASX and can be found on the company's website. I will now pass over to Richard to run through the financial results in more detail.

Thanks, Chris, and good morning, everyone. Turning to the detailed financial results. In this slide, we can see that production volumes were just under 1.5 million barrels, which was modestly lower than the prior year, owing to natural reservoir decline and the temporary shut-in of wells, particularly at Maari late in the year. Workovers to restore production at Maari are currently underway. Sales volumes were just over 1.4 million barrels, which is previously mentioned by Chris and, as expected, reverted to being materially in line with the group's net working interest share of production, owing to the recoupment of the company's remaining Block 22/12 exploration and development cost recovery entitlement. Sales volumes attributable to the cost recovery entitlement reduced to just under 2,500 barrels whilst in the prior comparative period, they were just under 300,000 barrels. Whilst I will go into more detail on the impact of this in other slides, as a reminder, this cost recovery recoupment was essentially an entitlement to additional barrels of oil to compensate the foreign joint venture partners for the incremental expenditure incurred by them on exploration in the permit. In Block 22/12, Horizon paid for 55% of historical exploration costs. However, on CNOOC back into the development projects, our working interest was reduced to 26.95%. Our incremental expenditure on exploration was predominantly recouped from production over the 2017, '18 and '19 financial years, essentially inflating sales revenue whilst costs were recouped. Crude oil sales revenue of $84 million was generated during the year, resulting from a net realized oil price of just under $59 per barrel, down from just under $66 per barrel in the prior year. Whilst oil prices were materially impacted by the collapse in oil demand resulting from the COVID-19 pandemic during the second half of the year, revenue was supported by the company's commodity hedging. Throughout the year, 53% of sales were hedged with a hedging gain of $9.1 million realized on 760,000 barrels hedged at a weighted average price of $64.05 per barrel. While sales revenue was notably lower due to reduced production volumes and a lower realized oil price, the reduction in cost recovery revenues contributed most significantly to the results with an approximate $19 million impact on revenue, EBITDAX and profit before tax. Pleasingly, operating costs were 21% lower than the prior year and helped to offset the lower revenue earned. Cash operating costs were reduced to a very competitive $16.79 per barrel produced, helping to underpin EBITDAX of $50.6 million. The statutory loss before tax was $44.2 million, which after adjusting for the $67.3 million noncash impairment expenses pertaining to the group's PNG assets, which were recorded at the half year and the $8 million noncash unrealized gain on the revaluation of options issued under the 2016 subordinated loan facility, resulted in an underlying profit before tax of $15 million. The continued strong operating results drove $36.7 million in operating cash flow generation for the period, continuing to drive debt reduction and resulting in a 101% reduction in net debt to return the company to a modest net cash position of $0.5 million. Closing cash on hand was just under $26 million, providing ample liquidity for operations and providing financial security in the current economic climate. Now dissecting cash flow, in this next slide, we can see that gross revenue of approximately $75 million before hedge settlements of $9 million and cash operating costs of approximately $27 million combined to generate net operating cash flow of approximately $57 million for the year. After deducting corporate, general and administrative costs, cash taxes, which is the biggest component of this item at over $11 million, and interest costs, which altogether combined to a total of approximately $20 million, resulted in net cash inflows from operating activities of $36.7 million, of which approximately 2/3 was applied to the repayment of debt facilities. A further $8 million of cash reserves were invested in capital growth programs, including the successful China Weizhou 6-12 M1 exploration well during the period. Now to help dissect the result further, the next chart shows the key elements, which have driven the lower underlying profit result and clearly shows the significant impact of the reduction in revenues following the full recoupment of cost recovery volumes at Beibu. As can be seen, the 21% reduction in operating costs helped to substantially offset the approximately $7 per barrel decrease in realized oil prices and 8% lower production volume. The other significant contribution to the profit result included the substantial reduction in financing costs resulting from the material debt reductions made over the past year totaling $24 million, combined with the successful refinancing completed in November 2018, which lowered funding costs from approximately LIBOR plus 5% to LIBOR plus 2.75%. Corporate, general and administrative costs were slightly higher than the prior year due predominantly to cost pertaining to the PNG investigation conducted during the period whilst other income was lower as the prior year result included $4.4 million associated with one-off Maari insurance claim recoveries. Turning over to the next slide, we can take a look at the financial highlights for the 2020 financial year compared against the previous 4 years. In the next 3 slides, we have included some detail of the impact of cost recovery revenue over the years to assist with normalizing the results. The first of these slides shows that base production and sales for the current year exceeded the 5-year average with consistent strong production volumes from both Maari and Beibu. Importantly, Beibu production has been very consistent over the 5-year period with the higher underlying production in Beibu in FY 2019, largely driven by flush production from 2 infill wells drilled during that year. It is this consistent production, together with low operating costs, which has been the predominant driver of Horizon cash flow over recent years and provides the confidence to further invest in infill drilling, the 12-8 East development and further appraisal opportunities in Block 22/12. Maari production has also been consistently strong with the material increase in base production levels for the last 2 years, owing predominantly to the successful acquisition of an additional 16% interest in the Maari/Manaia fields during 2018. The chart also clearly shows the contribution of Beibu cost recovery volumes to sales volumes in FY '17, 18 and '19, which has now ceased as historical exploration expenditure amounts have been recouped. The revenue chart also clearly shows the contribution to revenue of the Beibu cost recovery sales. Pleasingly, once we strip this away and despite the modest reduction in production volumes and lower realized oil prices in FY 2020, revenues were maintained above the 5-year average. This chart also highlights the improvements made in balancing Horizon Oil's production portfolio in recent years, with the relative revenue contribution from Maari increasing from less than 24% in 2017 to over 44% in the current year following the 2018 acquisition I mentioned earlier. The next slide shows the significant improvements made over recent years to earnings and profitability, with EBITDAX of just over $50 million and a strong underlying profit before tax of approximately $15 million for FY 2020. These strong earnings were not only generated from the continued strong production but through material reductions in cash operating cost per barrel, which were maintained below $20 per barrel produced. Impressively, cash operating costs in the second half of the year were reduced to below $12 per barrel produced. These cost reductions were largely driven at Maari following a number of initiatives implemented by the operator. The company continues to maintain relatively low general and administrative costs, which, as I mentioned earlier, increased marginally during the year owing to additional costs incurred associated with the investigation into the PNG allegations. The next slide shows the continued strong free cash flow generation with the orange line in the chart on the left normalized to exclude the cost recovery cash flows. This again highlights the strong performance in FY '20, with the second highest free cash flow generation in the past 5 years despite the economic headwinds during the second half of the year. Importantly, it shows the disciplined investment in exploration and development activities over recent years. It is noted that the FY 2018 investing cash flows included approximately $17.6 million associated with the acquisition of the additional 16% interest in the Maari field mentioned earlier. This strong and sustained cash flow generation has aided the company in driving debt reduction in recent years, as can be seen in the chart on the right, with an impressive 101% reduction in net debt in fiscal year 2020 to a modest net cash position of $0.5 million. This significant debt reduction has strengthened the balance sheet, providing greater resilience during the current economic climate and placing the company in a favorable financial position to pursue growth opportunities. I will now pass over to Chris to provide an update on our asset portfolio and the outlook for the company.

Thank you, Richard. So firstly, with respect to the operations and the overview, the map here, detailed is the geographic focus area for the company, which continues to be the Asia Pacific region. And as you can see, we currently have material joint venture interests in each of our licenses, which ensures we have an appropriate level of influence while still managing risk. Detailed on the reserves slide is our 2P reserves position. We were able to add an additional net 600,000 barrels of 2P reserves, replacing approximately 50% of reserves produced during the period. The additional reserves were recorded following our approval of the China 12-8 East development as well as joint venture approval for a 2-well infill drilling program for later this calendar year. The consistent substantial replacement of 2P reserves in China over the past 3 years is illustrated in the bar chart as achieved through appraisal and infill drilling and optimizing production through increased water handling capacity. The Beibu joint venture continues to progress drilling opportunities, which we will expect to lead to further reserves replacement in the future years. Detailed on this map are the producing 6-12 and 12-8 fields, which are within Block 22/12 and which are operated by CNOOC and in which the company has a 26.95% interest. In addition, Horizon holds a 55% interest in any exploration areas. As you can see on the map, the ore fields are tied back to a centralized CNOOC infrastructure where oil is metered for sale and transferred via a pipeline northwards to the Weizhou Island terminal. The remaining reserves and contingent resources are summarized on this slide in the orange box. And as I will explain later on, the joint venture is maturing plans to develop the 2C contingent resources over the coming years through further infill drilling and appraisal activity. This slide provides further background on our China fields and shows the historical production performance from Block 22/12. These are conventional oil fields, which suffer from natural reservoir decline. Impressively, however, the joint venture has managed to sustain gross production at an average of over 9,300 barrels of oil per day for over 7 years since our first oil production. Production in recent months has dipped below the long-term average. However, a workover program is currently underway to restore and enhance production with a target of increasing production back to about 10,000 barrels per day. Current production is approximately 8,600 barrels per day with wells continuing to clean up following those workovers. In the near term, production rates are forecast to be sustained through the recently approved 2-well infill drilling program scheduled later this calendar year and that will be followed by the 12-8 East development, which is targeting first production in early calendar year 2022. The objective of the joint venture is to maintain production rates well into the future as has been successfully achieved in the past. Importantly, Block 22/12 production generates approximately 70% of Horizon cash flow due to its low cash operating costs, which are currently below $10 per barrel produced and aided by a favorable fiscal regime. The producing fields have current contractual and economic production life until 2028 and field decommissioning costs have been prepaid into a sinking fund. Accordingly, these fields are expected to continue to generate strong free cash flows for the group over the medium to long term. The next slide highlights key operational metrics for the year, with production and sales volumes in excess of 800,000 barrels and cash operating costs of just over $11 per barrel, currently reduced now below $10 per barrel. Pleasingly, production continued uninterrupted by the COVID-19 pandemic. Late last year, the 6-12 M1 exploration well was drilled successfully and intersected oil-bearing sands near to the 6-12 production platform. And given this drilling success, the lower Beibu operating costs and with the recovering oil price, the joint venture recently committed to develop this M1 field through an infill well from the 6-12 platform. A second infill well will be drilled into the producing 6-12 north field. These wells have added 0.5 million barrels of 2P reserves with the wells to be drilled later this calendar year. Further infill and near-field appraisal opportunities are being considered by the joint venture to replace reserves and sustain production rates. Following completion of basic engineering and CNOOC expert reviews, a final investment decision, FID, was confirmed by the foreign joint venture partners for the 12-8 East field development. CNOOC FID is anticipated shortly. The development provides an additional production hub in the block to develop the remaining discovered resources, including 12-8 East and the 12-3 and the 12-10-1 fields, with the first phase of the development expected to recover 0.6 million barrels of 2P reserves. With the installation of a new wellhead platform, which is tied back to the 12-8 West platform, as shown in the schematic on this slide, further infill and near-field appraisal opportunities can be accessed with the objective of fully exploiting remaining opportunities in the block through subsequent development phases. Upfront capital costs for the development have been minimized through leasing of the platform with key elements of both the development and operating costs contractually linked to the oil price, which act as a natural hedge to ensure the first phase of the development is insulated from oil price volatility. First of all, it is expected in 2022, early in the year, with the average incremental gross production rate in the first year of production expected to be some 4,000 barrels of oil per day. Horizon's share of overall development costs are forecast to be approximately $15 million phased predominantly through 2021 and 2022 calendar years. These costs can be readily funded from forecast free cash flow. Now returning to the Maari/Manaia fields in New Zealand. Detailed on the map are the Maari and Manaia fields, which are currently operated by OMV and in which Horizon has a 26% interest. The remaining reserves and contingent resources are detailed on the slide in the orange box. And as I have explained earlier on the coming slides, the joint venture is seeking to mature plans to develop the 2C contingent resources over the coming years. The next slide provides further background and shows the historical production performance for Maari over the past 3 years. As with Beibu , these are conventional oil fields which suffer from natural reservoir decline. However, initiatives implemented in recent years, primarily involving water injection and production enhancing workovers, have reduced field decline, with daily gross production at an average of approximately 6,500 barrels for the last 3 years. Production rates in recent months have been affected by the shut-in of 3 wells. Workovers are scheduled to restore production over the coming months with the first of these workovers already underway. Maari production generates approximately 30% of Horizon cash flow. And the current producing fields have a production license term and current reserves forecast until the end of 2027 with the potential to extend. Accordingly, these fields are also expected to continue to generate strong free cash flows for the group over the medium to long term. This slide highlights key operational metrics for the year, with production and sales volumes just shy of 600,000 barrels with operating costs reduced below $25 per barrel through cost-saving initiatives implemented by the operator. During the year, Jadestone Energy announced that it executed a conditional sale agreement to acquire OMV's 69% interest in the Maari project. We are encouraged by the potential value to be unlocked by a new operator and joint venture partner in the Maari project. Jadestone have strong operating capability and appear to have good alignment with Horizon on future production potential. Jadestone have also indicated further potential operating cost optimizations and potential for field life extension into the next decade. Completion of the transaction remains subject to joint venture and New Zealand government approvals. And OMV will continue as operator for the Maari project until and subject to completion of the proposed transaction. Turning now to PNG. Detailed on the map are Horizon's condensate rich gas resources, which lies south of the ExxonMobil and Oil Search's P'nyang gas field. P'nyang is planned to provide threshold volumes for an expansion train 3 of the PNG LNG scheme. The planned pipeline route from P'nyang to the PNG LNG facilities passes within 20 kilometers of the K2 field in PRL 21. Horizon's PNG joint ventures have historically been encouraged by the government support for third-party access to the pipelines, providing a potential commercialization pathway for the growth appraised resource of 2,200 petajoules of gas and 64 million barrels of condensate in the 4P licenses in which Horizon has an interest. Horizon holds an approximate 30% interest in the resource and is operator of 2 licenses constituting the majority of the resource. During the year, Arran Energy acquired Repsol's interest in PDL 10, PRL 21, PRL 28 and PRL 40, and assumed operatorship of PDL 10 and PRL 40. The new operator is seeking to progress a proposal for a condensate stripping operation at Stanley, and pleasingly received correspondence from the PNG Petroleum and Energy Minister withdrawing the notices of intention to cancel the PDL 10, PL 10 and Stanley gas agreement. While we have been encouraged by this and continue to consider that our PNG assets have significant potential value, there remain challenges to realizing that value in the short term. Negotiations for the planned expansion of PNG LNG broke down earlier in the year with the PNG government seeking for an increased [ stake ] in the project. Later in the year, the PNG government also amended laws dealing with the review and grant of development licenses for oil and gas projects. Among other things, the amendments provide for greater ministerial discretion in dealing with development license applications and allow for review of development proposals against the national interest test. This strong stance may have significant ramification for future oil and gas projects. This recent shift by the PNG government, coupled with the lack of tangible process in commercialization of Horizon's discovered resources, comparable market transactions, and unresolved license tenure issues led to the group in pairing its exploration and development assets in PNG to a carrying amount of $5.8 million. Whilst development of the gas resources in the licenses are delayed, the group continues to evaluate the potential for a condensate development for the PRL 21 discoveries, together with a PDL 10 condensate stripping development proposed by Arran Energy. The current oil price environment provides challenges such that the focus of work has been on refining and rationalizing development costs for any prospective development. In light of the above, the challenges presented by COVID-19 and a lower oil price environment, the company took steps during the year to rationalize the cost base of its PNG operations. Finally, the investigation into PNG bribery allegations, which were raised in the media, were also concluded late in the year with no breach of Australian foreign bribery laws established. Turning now to the outlook. Following the strong results in financial year 2020, the outlook for the company is very positive because we expect continued strong cash flow generation allowing for further progressive debt reduction. The immediate focus is on successfully completing a series of workover campaigns at Maari and Beibu, which are currently underway to restore production, and this will be closely followed by the Beibu infill drilling. The group's balance sheet has been significantly strengthened over recent years. However, with significant upcoming drilling and development commitments, coupled with volatility in the oil markets, it is prudent for the group to remain defensive. Therefore, we recently executed additional hedging to protect and secure revenues. At present, we have 400,000 barrels hedged through until the end of March 2021 at a weighted average price of approximately $40 per barrel, protecting a material portion of financial year '21 revenue from adverse oil price movements. The material reductions in debt over recent years have significantly strengthened the group's balance sheet, making it supportive of future growth. Due to the strong forecast cash flow generation, the current pipeline of organic growth opportunities such as further infill drilling and the 12-8 East development in China are all able to be funded from internally generated cash flow, ensuring gearing levels remain low. The company continues to focus on climate change, and we have significantly enhanced our disclosures in this area as set out in our sustainability report. We continue to work with operators of our producing fields to examine ways to further reduce our impact. This now concludes the formal presentation such that we will now turn to answering some questions.

So we have a couple of questions here on oil prices and hedging. So whilst current oil prices have recovered to some extent, what is the current level of commodity hedging for the upcoming financial year? Further, what is Horizon's view on the oil price in the short to medium term?

Okay. I can answer that one. So look, we -- as Chris mentioned, we've undertaken some additional hedging in recent months. And I can see another question here just asking about why we put in hedges at $36 a barrel and don't we look to hedge in higher prices, and that's obviously with the benefit of hindsight, but I think people need to remember that we had a very unprecedented collapse in oil demand, which, in fact, is still in existence following the COVID-19 pandemic. And we still -- until international air travel resumes, which is not foreshadowed for some time, demand will remain subdued. And coupled with that, we also had the increase in oil supply during the year when the -- essentially, the OPEC+ group had a bit of a falling out between Saudi Arabia and Russia, which led to an increase in supply of oil. So at that time, oil prices dropped to sub-$20 a barrel. So hedges at $36 a barrel certainly very sensible thing to do, particularly given our hedge policy is very much focused on ensuring we can meet both our capital commitments, our operating costs and our debt obligations. And with the group's all-in cash costs somewhere around $35 a barrel, covering all of those costs, taxes, et cetera, CapEx, we've seen very, very prudent at that time to put those hedges in place. And importantly, a lot of those hedges were very short-term focused and roll off over the next quarter. As Chris mentioned, we have put some additional hedging in place. So our current position is, we have 400,000 barrels hedged going out to the end of Q1 2021, and there's an all-in weighted average price of about $40 a barrel, so just shy of the current oil price. Again, that's -- those hedges are very front-ended and are very much focused on ensuring we can meet our capital obligations associated with the 12-8 East development, the infill drilling as well as our debt repayment obligations over that period. We do judiciously look at it. We certainly try to execute our hedging when oil prices are rallying. But obviously, without a crystal ball, that's not a not an exact science. Just going to that question about our longer-term view on oil prices, look, we see a gradual recovery over the next few years, and our forecast goes out to about $60 a barrel over the next 3.5 years with a gradual increase in prices over that time. I think current prices are somewhat in the balance, very much supported by the OPEC+ production cuts, and that's really the key driver of why oil prices are where they are today. And there's -- some concern, I suppose, that we have is, as oil prices recover further and we start to see shale oil coming back in the U.S., will that sort of lead to OPEC+ starting to open the supply gates, as they will be very uncomfortable giving up market share to the U.S. shale plays. And so we don't expect there to be a sharp recovery in oil prices from here. We would see a very gradual recovery until really that oil demand increases once international air travel resumes.

We have also received a number of questions around capital management. So has the Board considered a capital distribution to shareholders in the form of dividends or share buybacks?

Thank you for those questions. Management and Board regularly considers the best strategy with regard to capital management. And we seek to strike a balance between financial capacity and strategic considerations. So the company is in a strong financial position following a period of de-gearing and strong free cash flow generation, but the impact of COVID-19 on free cash flow generation over the near term has been really quite significant and remains so, given oil price volatility. And in addition, we have some heavy capital commitments over the next few months, which for a while may return us into a net debt position. Accordingly, the Board has assessed that the company is currently not in a financial position to pursue a buyback. But we'll continue to reassess this and should the financial position approve ahead of forecast and suitable growth opportunities not be identified, the company will certainly reconsider its capital management options.

We've also received a number of questions around growth. So with Horizon's strengthened balance sheet, what is Horizon's growth strategy?

In the short term, it's very much a case of maximizing the value from the existing assets. So in practice, this means extracting as much value as we can from Beibu and Maari before the licenses expire. As already indicated at Beibu, we plan to drill 2 infill wells later in 2020, and we've got the financial -- the FID for 12-8 East has already been taken, and we can expect significant growth to come from that development. In addition, we have mapped several near-field appraisal infill opportunities, which we'd like to fast track. And with corporate -- with cash operating costs of less than $10 a barrel in Beibu, this strategy makes sense. In addition, we've been spending a lot of time undertaking a systematic asset search. We've been extremely active and reviewed some 30 possible assets with a focus in 2 areas, which is Southeast Asia and Eastern Australia with more emphasis on gas than oil. There are several deals around, but to date, we've erred on the conservative side given the volatile business environment, the need to preserve cash and, arguably, the better short-term growth opportunities within our existing asset base. And to complement these 2 strategies, we've also just been trying to be imaginative. This is a challenging business environment, and it can throw up some interesting and often game-changing opportunities at short notice such as distressed asset sales, potentially corporate deals, some good but unloved assets, which we could get for an excellent price. We've reviewed about 4 or 5 such opportunities and way -- while they may not be ideal from an asset point of view, they're typically exciting and have the potential to be transformative for Horizon. So we've got 3 strategies there, but very much the focus at the moment is on pursuing the growth through maximizing the value from the existing assets. Finally, I have to say that it's important that -- to stress that our strategy is not to grow at any cost. We are mindful of the need to deliver value to our shareholders, and if the right assets at the right price are not forthcoming, we will review that approach and adjust the strategy accordingly.

We've received another question here. Could you please provide us on -- an update on the Jadestone acquisition of OMV stake in Maari? And are there any opportunities to work further with Jadestone?

I can take that one. The acquisition is progressing. But as we mentioned in our announcement, still it remains subject to NZ's PAM approval. Obviously, with COVID-19 and, in particular, most recently, the delay to the New Zealand election, we would anticipate that will likely delay NZPAM approval, but at this stage, we expect that transaction will still go through, albeit later this year. Look, we're very encouraged by Jadestone coming in. They're a very capable operator, and I've got a lot of good initiatives planned for Maari, and we look forward to joining them in the joint venture, hopefully, in the near future.

Okay. We've got another question here. Is there any cost recovery associated with 12-8 East. Or is Beibu Gulf treated as a single entity and, therefore, 12-8 East exploration expense has already been recovered?

Yes. Look, fundamentally, most of the cost recovery associated with 12-8 East has already been recovered in -- as it is largely seen as one entity. There's some technicalities to that, but the remaining cost recovery associated with 12-8 East is in a few million dollar sort of category, and we wouldn't anticipate significant cost recovery volumes in the future associated with that development.

We just received a question here is. Is the Jadestone deal an asset or a share sale?

It was an asset sale agreement.

We just received another question. Will we be providing any guidance numbers on production, revenue and EBITDAX for FY '21?

Look, we will endeavor to, obviously. With the extreme volatility in oil prices in recent times, coupled with a number of these workovers that we're doing at the presence, we just want to bed them down before we'll seek to provide further guidance.

So we received a question generally regarding some of the one-off costs that occurred in FY '20, primarily around corporate and redundancy costs. Can you give an estimate of how these will compare to 2021 and how this compares to 2020?

Yes. So look, in the results and a lot of it is set out in the annual accounts, but we had roughly about just under $1.5 million of additional costs during the year associated with the PNG investigation, redundancy costs and so on. And I think in the accounts, you can see that our net G&A was just under $5 million. We'd anticipate those one-off costs are genuinely one-off and will be nonrecurring. And accordingly, I'd anticipate that our net G&A going forward is sub -- roundabout USD 4 million akin to sort of what it was in FY 2019.

We've received a number of questions regarding the investigation into matters occurring in PNG 10 years ago. Can management please provide an update regarding these matters?

The Board took the allegations very seriously and, as a result, recommended an in-depth investigation overseen by an Independent Board Committee. And Horizon confirms there's no breach of foreign bribery laws were established. And these allegations related to events more than 8 years ago. We are now very much focused on the present day and the opportunities currently before Horizon.

One more question here. Is the FID agreement in PNG with Osaka still valid? And is there an impact to that agreement?

Look, that agreement is still valid. Obviously, you've got to achieve FID with gas offtake for Osaka Gas. And as we've highlighted, there are a number of challenges in PNG at present in commercializing the assets. So we don't see that is forthcoming anytime soon.

Okay. I think that concludes the questions. So I'll now pass you back to the moderator, who will end the webcast.

Thank you. That does conclude our webcast for today. Thank you for participating. You may now disconnect.