Horizon Oil Limited (HZN) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Horizon Oil Limited Full Year Results Webcast. [Operator Instructions] I would now like to hand over to Mr. Chris Hodge. Please go ahead.

Thank you. Well, welcome to the Horizon Oil 2021 Full Year Results Presentation. I am Chris Hodge, the company's CEO, and I am joined by Horizon Oil'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 and strategic outlook and direction before opening up for questions. So turning to the full year highlights. This slide provides an economic snapshot of the company's results for financial year 2021. It is very satisfying that despite the economic challenges presented by the COVID-19 pandemic, we met or exceeded all of our production and financial guidance with strong production and recovery in oil prices driving profitability and free cash flow generation. This strong performance, combined with cash inflows from the option proceeds and PNG sale, left the company with one of the strongest balance sheets in its history, paving the way for significant returns to shareholders. Importantly, and this should not be understated, operations were conducted safely and with no environmental incidents despite significant levels of activity at both fields. So with respect to the executive summary, the 2021 financial year can probably be best described as a tale of 2 halves: with a challenging first half, with continued low oil prices and production disruption at Maari, which was exacerbated by workover delays caused by COVID-19 restrictions. The second half saw production levels restored and enhanced following workover activities at both fields, infill drilling at Beibu, and these were aligned with a steady recovery in oil prices back above $70 per barrel. Pleasingly, the group generated strong cash flows and together with receipt of the USD 3.5 million from the sale of the PNG assets and USD 14 million option proceeds led to a material increase in net cash to USD 32 million. So with the strengthened balance sheet and greater confidence in future cash flows through continued strong production, higher oil prices, the company was able to provide significant returns of capital to shareholders through share buyback and initiatives and the recent $0.03 per share return of surplus capital. The company is now poised in a strong position, the result of a strong balance sheet, strong production and low operating costs. So I will now hand over to Richard Beament to take us through the financials in more detail.

Thanks, Chris, and good morning, everyone. Look, before I go through the results, I would like to emphasize that all references to dollars are U.S. dollars unless otherwise stated as this is the group's functional currencies since all revenues are generated and received in U.S. dollars. It's also important to note that the divestment of the group's PNG operations during the year has been treated and classified as a discontinued operation in the full year accounts. And so the PNG income and expenses for the year have been excluded from EBITDAX and underlying profit in the presentation. And for comparative purposes, we've also normalized the FY 2020 results to also exclude the PNG discontinued operations. If we move over to the full year highlights, the table on the right in this slide summarizes the FY '21 results with a comparison against the prior year. Notwithstanding the depressed oil price during the first half of the year and the COVID-related production disruptions Chris mentioned, the full year results were strong with EBITDAX of $36 million and an $8 million statutory and underlying profit after tax, demonstrating the strength of Horizon's producing assets. Despite realized oil prices being 15% lower than the prior comparative period at just over $50 per barrel and production being 10% lower over at 1.33 million barrels, the company generated strong cash flows from operating activities of over $23 million. The cash -- this cash flow coupled with the $14 million option proceeds were the substantial drivers of the $31.2 million increase in net cash to $31.7 million. The strong cash flow was underpinned by high-margin production at both Maari and Beibu, where cash operating costs were again maintained below $20 per barrel despite the lower production levels. The cash generated combined with the option proceeds and PNG sale proceeds allowed for progressive debt reduction, continued investment in our assets to drive organic growth and a significant buildup of cash from which to initiate the approximately USD 37 million in capital management initiatives, including the on-market buyback of 20.3 million shares, an unmarketable parcel buyback of 2.7 million shares, which tidied up the share register and reduced the administrative costs associated with managing approximately 1,000 small shareholdings, representing about 20% of total shareholders; and most importantly, the recently completed AUD 0.03 per share capital return. All initiatives were designed to increase shareholder value whilst not placing strain on the company's balance sheet. Whilst production levels were lower during the first half of the year, investment in infill drilling at Beibu and workover activities at both fields were safely completed during a period involving significant logistical challenges due to COVID-19. Pleasingly, production levels were able to be increased in time to benefit from rising oil prices. On the ESG front, Horizon Oil's assets performed well with no loss of containment incidents during the year. In terms of safety, the company's assets achieved a total recordable injury frequency rate of 1.02, which well outperformed the industry average for NOPSEMA-administered areas. The group continues to focus efforts on sustainability and governance as set out in the group's sustainability report released this morning with the annual report. Importantly, we have further enhanced our emissions disclosures and continue to report against the recommendations of the Task Force for Climate-Related Financial Disclosures. We've also prepared a 3-year ESG action plan to refine our goals, targets and activities in our ESG priority areas. Now if we dissect the cash flow, in this next slide, we can see that approximately 2/3 of net cash inflows from operating activities of $23.2 million was applied to the repayment of debt facilities and the share buyback initiatives, which together totaled $15.4 million. With the majority of remaining cash from operating activities of just under $8 million reinvested in capital growth programs, including the Block 22/12, 12-8 East development and Weizhou 6-12 infill drilling, the proceeds on the sale of the group's PNG assets of $3.8 million, which included $300,000 in working capital adjustments, together with the options proceeds of $14.1 million, were retained and used to part fund the recently approved $0.03 per share capital return. Now to help dissect the full year results further, the next chart shows the key elements, which have driven the consistent underlying profit result of approximately $8 million and clearly shows in the white bars the significant impact of the reduction in revenues due to the 15% lower realized oil price and 11% reduction in sales volume. As can be seen, the 12% reduction in operating costs, 46% reduction in financing costs combined with reduced taxes and royalties helped to materially offset the $20 million decrease in revenues resulting from lower realized oil prices and production. Continued discipline in spending across the business during the year helped to keep the company in a consistent underlying profit position. Now recognizing the change to Horizon's business following the PNG divestment and in the pursuit of driving lower costs in the company, we've implemented significant restructuring during the year and in recent months. Through a combination of planned redundancies and staff resignations, we have reduced headcount by approximately 50% over the past 18 months to just 12 employees and incurred just under $400,000 in restructuring costs during the year to effect these changes. Approximately half of those individuals leaving the business have done so in this calendar year, such that the annualized cost savings amounting to about $1.5 million will only be fully realized in future years. As part of this restructuring, the company's key management personnel have been cut in half to just 2, being Chris and myself. We will look to optimize the cost structure going forward, but we need to make sure we have the necessary resources to extract the substantial remaining value from our existing assets. Turning over to the next slide. We can take a look at the financial year results compared against the previous 4 years. As in previous presentations, we've included some detail of the impact of Beibu cost recovery revenue in earlier years to assist with normalizing the results. As mentioned previously, this was additional revenue earned in earlier years to reimburse the company for historical exploration expenditure in China and was largely recouped by the end of the 2019 financial year. So moving to sales volumes. The first of these slides shows that production and sales for the 2021 financial year was just shy of the 5-year average, with natural reservoir decline and the COVID-driven reduced production at Maari impacting sales volumes. Importantly, much of the lower production at Maari has now been restored. And with the additional infill wells at Beibu, combined with the scheduled 12-8 East development production during the second half of next year, we would anticipate sales volumes returning to near the 5-year average. Importantly, Beibu production has been very consistent over that 5-year period. It is this consistent production, together with low operating costs, which has been the predominant driver of Horizon cash flow over recent years and provided the confidence to further invest in infill drilling and the 12-8 East development during the year. Maari production has also been a significant contributor, particularly over the last 4 years owing to the successful acquisition of an additional 16% interest in Maari during 2018. The chart also clearly shows the contribution of Beibu cost recovery volumes to sales in FY 2017 and 2019, 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. Once we strip this away, we can see the significant impact of the lower oil price during the current year. Pleasingly, oil prices recovered strongly through the second half of the financial year and continue to trade around $70 per barrel, which bodes very well for higher forecast revenues and cash flow generation in FY '22. Revenue over the first half of FY '22 will be supported by recently executed hedging through a mixture of swaps, options and collars, which provide oil price protection to approximately half of Horizon's forecast production through to 31 December '21 at a weighted average price of $69 per barrel, whilst also retaining exposure to rising oil prices. The next slide, again, shows the relative impact of lower oil prices on the group's profitability in the '21 financial year but pleasingly highlights the resilience of the asset portfolio and continuing to generate strong EBITDAX and return a consistent underlying profit despite the challenges faced in FY '21. This result is driven by the group's low cash operating costs, which were maintained below $20 per barrel. Importantly, the group was able to sustain per barrel operating costs well below $20 per barrel despite the 10% reduction in production, highlighting the significant cost improvements made. While some cost savings resulted from deferrals of work, we expect that the majority of cost savings is sustainable over the longer term and continue to forecast costs remaining below $20 per barrel over the coming year. 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. Whilst this again shows the impact of the lower oil price and production on free cash flow in the current year, it highlights the capacity of the business to sustain free cash flow generation through oil price cycles with the prior downturn having impacted FY 2017. Now I've saved the best chart for last with a net cash, net debt chart on the right. Here, we can see how the strong and sustained free cash flow generation from the group's assets has driven consistent and sustained debt reduction from a net debt position of over USD 108 million at the end of FY 2017 to a strong net cash position of $31.7 million in only 4 years. That represents free cash generation over a 4-year period of over USD 140 million, approximately AUD 200 million. Our focus is to continue to drive this free cash flow generation from our assets out into the future by extracting maximum value from our assets. The resilience of the cash flow, higher oil prices coupled with this rapid degearing and return to a significant net cash position provided the confidence to implement the various capital management initiatives during the year and returned significant value to shareholders. I'll now pass back to Chris to provide an update on our asset portfolio and the outlook for the company.

Yes. Thank you, Rich. So turning now to the overview of the portfolio. On the slide here 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 production licenses, which ensures we have an appropriate level of influence while still managing risk. Our focus is to work with the operators in these fields to extract maximum value from our low-cost production. The assets, of course, are the lifeblood of the company and provide significant leverage to the oil price for investors aided by low cash operating costs, which remained below $20 per barrel overall. Turning to the reserves slide. The proven and probable reserves for the group was 6.7 million barrels, which represents a 1.4 million barrels reduction, and that reflects the annual production achieved with minor technical adjustment. Moving to the next slide, Block 22 in China. So detailed on the map are the Block 22/12 fields, which are operated by CNOOC and ROC Oil, and which the company has a 26.95% interest in the producing 6-12 and 12-8 East fields and a 55% interest in any surrounding exploration areas. As depicted on the map, the oil fields are tied back to a centralized CNOOC infrastructure where oil is metered for sale and transferred via pipeline to the Weizhou Island terminal. These fields continue to provide reliable, strong cash flows, contributing approximately 70% of Horizon's cash flow. The next slide provides a summary of our China fields and shows the production performance over the last 5 years. These are conventional oil fields, which ordinarily suffer from natural reservoir decline. However, the joint venture has managed to sustain gross production at an average of over 9,300 barrels per day for the last 5 years. Whilst production during the half year dipped below long-term average, a work program followed by a successful 2-well infill program has restored and increased production back to over 10,000 barrels per day. However, current production is approximately 8,000 barrels of oil per day. The sustained production rates at Beibu have been achieved through infill and near-field drilling, installation of additional water handling capacity and production optimizing well workovers. Indeed, we have, just this last week, completed 4 workovers in the 12-8 West field and from which we expect to increase gross production by 1,000 barrels of oil per day. The production is forecast to be increased back above 10,000 barrels of oil per day during or soon after quarter 1 2022 when the 12-8 East development comes online. The objective of the joint venture is to continue to sustain production rates well into the future as has successfully been achieved in the past. Further infill and near-field appraisal opportunities have been worked up by Horizon in-house and are currently being considered by the joint venture in order to replace reserves and sustain production rates. Our ability to invest in such organic growth is driven by Block 22/12's low cash operating costs and favorable fiscal regime. The current producing fields have a current contractual and economic production life until 2028, 2030 for 12-8 East, 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 longer term. Turning now to the next slide, through -- China Block 22/12 infill and production enhancement. Crude oil sales from the fields totaled 800,000 barrels at a net realized oil price of $54 per barrel and a low cash operating cost of just $12 per barrel. In early 2021, we drilled 2 infill wells to target undeveloped reserves in the 6-12 area, the northern group of fields. Both wells were successful and commenced production in February. As for the outlook, I previously mentioned, we anticipate increasing oil production by some 1,000 barrels a day as a result of the recent workovers, and we're working very closely with our joint venture partners to agree on infill and appraisal targets for drilling in the financial year ahead. Turning to the field cross sections on the right. They're rather too small to see the detail, but there are some points of interest. The upper cross section slices across the northern group of fields and illustrates the geological complexity and therefore, the scope for further infill drilling. The scale is some 4 kilometers from the producing platform on the left to the shallower field on the right. One of the recent infill wells was drilled into this structure and the other into the shallow fork band anticline in the middle, which contains multiple thin sands. Getting these wells right takes significant amounts of planning and expertise, and we work closely with our joint venture partners to achieve this. The lower cross sections runs from west to east from the 12-8 West field on the left to the 12-8 East development on the right. And as you can see, the geology is quite different. Fewer and thicker sands and structurally more subdued with broad low-relief anticlines. Once again, we work closely with our partners to ensure that infill opportunities and drilling trajectories are optimum. Turning to the next slide about 22/12. This project is very much taking shape, and we look forward to the leased wellhead platform being towed to its location. This is imminent. I think it may be occurring tomorrow as is the laying of a pipeline to connect with the 12-8 West field. Once the platform has been installed, the drilling of 6 producing wells will commence along with 1 water injector. We anticipate first oil during the first quarter next year with gross oil production to average some 4,000 barrels of oil per day during the first year. And looking to the diagrams on the right, these depict 5 horizontals drilled into the low relief shallow reservoir with 1 well drilled into a deeper structure and 1 water injector also drilled into that deeper horizon. This new wellhead platform not only produces from the 12-8 East field but also allows access to remaining discovered resources, 12-10-1, for example, as well as prospective opportunities. This is the first phase of development and is expected to recover some 0.6 million barrels net to Horizon. If this is successful, 2 further phases are possible. Total development costs are linked to the oil price, such that based on the current oil price, about $70 a barrel, Horizon's total share is USD 19 million. $3.1 million of that has been paid to date with the majority of the remainder coinciding with the commencement of production. Now turning to the Maari/Manaia fields in New Zealand. Detailed on the map is the Maari and Manaia fields, which are currently operated by OMV in which the company has a 26% interest. These fields generate approximately 30% of Horizon's cash flow and are anticipated to continue to produce stable production and cash flows over the coming years. I mentioned that OMV is the operator. Nearly 2 years ago, OMV advised of its intention to sell its 69% working interest to Jadestone subject to regulatory approvals. Over the initial several months, OMV and Jadestone worked cooperatively to transition the operatorship. However, regulatory approval was not forthcoming. The lack of regulatory approval was and still is a hot political issue related to liability for abandonment. This is fueled in New Zealand by Tamarind failing in its obligation to abandon Tui and that's been exacerbated by a similar occurrence in Australia. So as far as we know, the deal is still live, and the operatorship transition is therefore still in limbo, pending legislation to be enacted by the New Zealand Parliament. The future remains unclear. However, OMV in the meantime has stepped up, has initiated several cost-saving measures, and it's taking its responsibilities as operator very seriously. As such, the field is being well managed. So the next slide provides a summary of Maari and shows the historical production performance over the last 3 years. As with Beibu, these are conventional oil fields which suffer from natural reservoir decline. However, initiatives implemented in recent years providing primarily involving water injection and production-enhancing workovers have reduced field decline with daily gross production at an average of approximately 6,000 barrels a day for the last 3 years. So while production rates during late 2020 were impacted by the shutting of 3 wells, 2 workovers were conducted during the period to restore production. And pleasingly, production rates from the field have been very stable over recent months, no decline in the main Maari Moki reservoir, highlighting the effectiveness of water injection into the field. A third workover was completed earlier this year. However, the well is currently offline to assess low levels of sand production. Current production from the field has reduced at 4,500 barrels a day pending MR6A coming on -- back online and a replacement ESP required for a workover on well MR8A. So with respect to field optimization, crude oil sales in the field totaled 460,000 barrels with a net realized oil price of $58 per barrel and a cash operating cost of $25 per barrel. Production during the year was reduced due to COVID-19 delays. I've already touched upon the operatorship issue, but if and when Jadestone take the reins, we have a deep understanding of the field and as such, can facilitate a smooth transition, focus being on maximizing longevity and therefore, value. Looking ahead, we hope to reinstate production from MR6A with the installation of a temporary desander on the wellhead platform, replacing ESP on MR8A, see increased production rates following the conversion of MR2A to an injection well and continue with optimization of the cost structure. So turning now to the outlook. Despite the recent oil price wobbles, we continue to be bullish on oil price. The world remains highly dependent upon oil and investment in new suppliers increasingly subdued as ESG and climate pressure [indiscernible]. We intend to capitalize on these higher prices to deliver value. So looking at the components. Strong operational cash flows these increased at a rate of USD 8 million per annum for every incremental $10 per barrel increase in oil price, married to a sub-$20 cost of production -- married to a sub-$20 per barrel cost of production we are targeting in the order of USD 20 million to USD 25 million of free cash flow assuming current oil prices. We are disciplined in our investments. We will repay USD 13 million of debt during the financial year, and we will continue with smart investments, 12-8 FID, infill drilling, increased water handling capacity, et cetera, selected workovers to keep Beibu production flat. We estimate some $15 million to $20 million of CapEx during the upcoming financial year, primarily for the 12-8 East development costs. We aim to increase shareholder value through cash -- through capital management initiatives where appropriate, delivering on organic growth opportunities at 12-8 East and the like, and we will maintain opportunity -- we will maintain optionality for growth. What we're seeing is increasing numbers of attractive brownfield opportunities are being available for minimal consideration. We can and should be in the mix for these sorts of opportunities. And last but not least, we have an increased awareness and focus on ESG, environmental, social and governance. We continue to encourage our operators to maintain the highest standards of safety and asset integrity, and we recognize that nonfinancial performance is increasingly important in today's world, not only for our bankers and insurers but also for our investors and actually for ourselves. So that concludes the formal presentation, and we will now turn to the questions.

Thank you very much, Chris and Rich. So the first question we have is in relation to the Beibu gulf asset. Is there any optionality to extend the permits for Weizhou 6-12 and 12-8 West -- and 12-8 East fields beyond 2028 and 2030, respectively. And if so, what are the conditions to achieve an extension, including any monetary payments?

Okay. I'll take that one, [ Des ]. So the question is optionality to extend the China Beibu assets and if so, what are the conditions. The 2028, 2030 dates are pretty much a hard stop. They're some 7 years away. I would expect as we move forward into the next couple of years, we will start addressing this issue. If there is the opportunity to extend, we would need to offer significant investments to CNOOC. And I would hope and expect that we will be having a discussion and negotiations to see if it's possible to extend these licenses.

Thanks for that, Chris. Second question, again with Beibu. Why are crude oil sales in FY '21 of 801,000 barrels being Horizon Oil share materially below crude oil production of 873,000 barrels. And we're on the assumption that our production was metered through a pipeline back to CNOOC facilities and therefore production as such should broadly align.

Yes. Look, I can cover that one. Look, essentially, it's governed by the PSC. So our entitlement is governed by PSC. Yes, we have a 26.95% working interest in the field, but there's through that -- through essentially that petroleum contract there is some VAT, which goes in kind to the Chinese as well as some small royalties, which also are taken in kind. So essentially, it reduces our entitlement to roughly around 25%. Obviously, in earlier years, we benefited from cost recovery and we -- in fact, we went up to about a [ 40% ], 45% entitlement whilst we were recouping our exploration costs. So it does vary a little bit, but at the moment, it's around about that 25% of share of production.

Thanks for that, Rich. Next question, well done on a good result. You mentioned that China development costs fluctuate based on different oil prices. I just wondered, firstly, how material that is and secondly, what oil price you've assumed in the CapEx outlook for FY '22.

I can cover that. So this relates to the 12-8 East development; and as we mentioned, capital costs and production costs are essentially pegged to the oil price with a little bit of a natural hedge. Look, it is quite material. The contract essentially allows for differing CapEx and OpEx based on a price -- oil price ranging between, off the top of my head, about $35 a barrel on the downside and up to about $75 per barrel on the upside. On a CapEx basis, and I think we had this in an earlier announcement, essentially, that pricing range from -- marries up with about $11 million CapEx at $35 a barrel all the way up to $19 million, $20 million at the top side. So we've assumed in our outlook, $70 a barrel for the purposes of the $19 million we've disclosed. Obviously, if it goes much higher, it doesn't make any meaningful difference, but if it goes lower, then, yes, it will -- it's a reasonably linear kind of adjustment.

Great. Thanks for that, Rich. The next question we have is does the forward strategy include to shelve the search for new oil assets and concentrate on our 2 existing assets.

So I'll take that question. Firstly, let me just say we are concentrating on our 2 existing assets. As I mentioned, we've got the 12-8 East development coming on, and we've got infill wells to work up. We also have, following the return of capital to shareholders, limited cash available. However, we are able to do 2 things at the same time. We've done a lot of work in the last year. There's a lot of people who know that we've been open to new ventures. So we're getting a lot of things coming to us at the moment, so we don't actually have to go out there and search. So we're able to sort of sit back and consider. What we're also seeing a lot of new ventures coming across -- as the larger companies are sort of scrambling for the exit doors as a result of ESG, we're seeing some really interesting opportunities becoming available. Typically, they're brownfield opportunities. And in an ideal world, we'd like to exploit the differences between effective date and settlement so that you can effectively acquire these assets with little or no cash outlay, I guess, much as we've seen with Jadestone and Maari. So yes, we are focusing on the existing assets very much so, but we are retaining optionality for growth possibilities. And if we can get something for really good value that's better than the alternatives, absolutely, we will consider that. That concludes my answer. Thank you.

Great. Thanks for that, Chris. The next question we have is, on a nominal basis, we have a pretty strong result on the cost front. Presumably, part of that is natural field decline, but it looks like we've also been able to bring down costs on top of that. The person who's asked this question was wondering how sustainable do we think that is going forward and how the China development might impact that.

I can probably take that one. Look, as I sort of alluded to, we obviously got sub-$20 per barrel operating cost at the moment, and our current forecast shows that, that will be sustained at least through FY '22. We think it's -- we see it as being quite sustainable to retain those levels. Yes, we have some natural field decline, but at Maari, that's fairly modest given the benefits of water injection. And at Beibu, with the continued investment in infill drilling under the 12-8 East development coming on, that will certainly help us to keep a lid on costs. The 12-8 East development, obviously, it adds significant new production. It has a different cost structure, but given the incremental volumes coming on, will enable us to keep those per barrel operating costs consistently low.

Great. Thank you, Richard. I think this question is also for you. Are there any immediate plans to further reduce the headcount in Sydney and reduce administration costs?

Look, as I mentioned, we've made significant cuts over the past 18 months; and in fact, a lot of those cuts have been made very recently with some recent redundancies and resignations. With the headcount now down to 12, we see that as an appropriate level for the stage of where the business is at. We need to manage our operators. It's important to recognize with OMV essentially looking to exit and Jadestone still some time away from coming in, we're essentially doing a lot of the technical work at Maari and similarly at Beibu, we've got a significant development, which is underway, and we need to keep a solid eye on both CNOOC and ROC managing what is a significant investment for the company. But obviously, we will continue to assess our cost structure and resourcing levels and adjust as we see fit.

Right. Thanks, Rich. The next question we have is for you, Chris. What actions are management undertaking or have planned to attract new investors to drive the share price higher?

Look, it's been quite a sort of tumultuous year with the oil price going up and down. We've been locked away for much of that year. I wasn't even able to get to [ AP ] this year, so I haven't even sort of engaged with people physically. Normally -- in a normal sequence of events, we'd be going to conferences. We'd be speaking to investors more directly. That doesn't excuse us. I think we haven't given an updated presentation for a while. We need to do that. We need to engage, I think, again, with shareholders. Now that we've given the capital return, we're going to take a deep breath, really sort of quantify our strategy and communicate. And so I think in answer to that question then, we will be refreshing our corporate presentation, communicating more with the shareholders and probably instigating a roadshow or to try and drive that share price higher and get the story out to more investors.

Great. Thanks for that, Chris. Richard, the next question is for you. Jadestone's presentation indicates that they are very hopeful, if not, confident they can double current 2P reserves and extend Maari life until 2038, [ rather ] at the end of this decade. What is Horizon's view on this?

Look, we share a lot of similarities with Jadestone's view. Our reserves position, resources position for Maari is quite similar. Currently, we hold 2P reserves out to the end of 2027, which is the end of the current license. There is capacity within New Zealand to extend the license. And you'll see in our reserves report, we hold significant 2C contingent resources at Maari, most of which is to do with extending the life beyond 2027. But we obviously -- we can't book them today until we've essentially got them right to extend. New Zealand is no surprise. New Zealand obviously has a lot of climate change activism and focus, and so we can't just take it for granted that we'll be able to extend the life of the field. But certainly, that's one of our key focuses.