Horizon Oil Limited (HZN) Earnings Call Transcript & Summary

Thank you for standing by. Welcome to the Horizon Oil Limited 2024 Annual General Meeting webcast. I would now like to hand the conference over to the Chairman of Horizon Oil Limited, Mr. Mike Harding. Please go ahead.

Well, good morning, ladies and gentlemen. My name is Mike Harding, and I'm the Chairman of Horizon Oil Limited. Before beginning the meeting today, we acknowledge the traditional owners of the country on which we meet today, the Gadigal People of the Eora Nation. We pay our respects to their elders past, present and emerging. I would like to welcome you and officially open our Annual General Meeting for 2024. I would also like to extend a welcome to those members who are joining via webcast. Based on the numbers of voting members in attendance, I declare a quorum for the meeting. Before I commence today's proceedings, I would draw your attention to the safety procedures for the venue. Should you hear an alarm, instructions will be broadcast at the building wardens what actions to take. If you're required to vacate, please make sure you don't use the lifts. The evacuation points are located in Wynwood Park as indicated on the map. And if you can follow that map, I will be right behind you. But there's going to be a...

There may be a fire test later on this morning, they've just informed me at the venue side.

So if it rings, don't go anywhere, but we'll have to stop for the duration. So I'd now like to introduce my fellow directors now. We did have them in an orderly fashion. Now they've gotten themselves in a real model as always. So I'm just going to show you names if you can remember who you are, right? So who's going first. Greg Bittar; Bruce, where is Bruce? Richard, Nigel, Sandra and Peter Goode. Also joining us is Vas, our Company Secretary; and Marc Upcroft, representing the auditors. Before beginning today's formal meeting, I would like to ask Vas, our Company Secretary, to outline today's procedures and protocols.

Thank you, Mike. All resolutions will be decided by way of a poll at the end of the meeting. The meeting will consider the items of business outlined in the Notice of Meeting sent to all shareholders on 18 October 2024. There will be opportunities for shareholders to ask questions and will be confined to the formal business of the meeting. Only those persons holding a yellow or blue card are eligible to ask questions. Paul Latunski of Computershare has been appointed as the returning officer. Following confirmation by Computershare, final proxy and voting results will be released to the ASX and the company's website later today. I'll now hand back to the Chair.

Thanks, Vas. As there may be holders who can't stay, then I'll now declare the meeting open on all items of business. Any undirected proxies will be voted in favor as Chairman. The meeting will consider the items of business outlined in the Notice of the Meeting sent to shareholders on the 20th of October. I would like to start the meeting in my formal address. This will be followed by the CEO's presentation. There will be an opportunity to ask questions on the presentation, and we will then proceed to the formal part of the meeting where the resolutions provided in the Notice of the Meeting will be put to the members. Now not a long one from me today, but we put this slide up to show where we were 6 years ago and where we are today. I'm not going to go through it. So you can just look at it and ask questions later if you want. Well, as announced in August, this will be my last AGM following which I'll retire from the Board. And I have to say I'm leaving with very mixed feelings. I'm very proud of what's been achieved by all concerned, especially our return to shareholders. I'll leave with a little sadness, but the time is right. We had a bit of a bumpy start, but I believe the company now is in a good position and standout from its peers. Over my 6 years as Chairman, we have significantly reduced debt levels, and the business has become a highly cash-generative oil and gas company, paying substantial distributions which are now amount to over AUD 200 million. Having recently completed the acquisition of a third producing asset and a well-established management team, I feel it's the right time for me to retire from the Board. I'm delighted that Bruce Clement has been -- as a Non-Executive Director for the last 4 years will take over me as Chairman, and Bruce will say a few words at the end. And Peter, who has agreed to join the Board, bringing all his years of experience in gas exploration to Horizon. And Peter will say a few words a little later -- not now, I will tell you. But let me do the resolution. So our strategic focus on reducing debt and costs focused on the key producing assets has not only strengthened our balance sheet but enabled us to maintain distribution to shareholders, which is core to our strategy, whilst also allowing us to look for assets if they meet our strategic investment criteria as per Mereenie. I have now been here for 4 consecutive years, and the company has paid AUD 0.03 per share in distributions. This has had a notable increase in our share price, and we've become a stand out company compared to our peers. As I stand down, I'm confident that the future is bright for our company. I'll miss my role here, and I've got many fond memories. Finally, I would like to thank the Board, the executive team, staff, consultants and, of course, our shareholders. I'll now hand over to Richard. Thank you.

Very good morning, everyone, and welcome to today's AGM, both for those present in the room and for those online. Before I sort of dive into the presentation, I wanted to acknowledge Mike's recently announced retirement. And on behalf of the Board and the entire Horizon team, really thank him for all of his support, efforts and work over the past 6 years. The company navigated a number of unique challenges that we had over that time, and he collaborated with the Board and the shareholders to help us through to really realign the strategy and put us in the fantastic position we're in today. And perhaps at personal level as the Group CEO for the last 2.5 years, he supported me through my time transitioning into that role. And for that, I'm particularly grateful, Mike. I'd also like to welcome Bruce coming in to assume the Chairman role. I really look forward to working more closely with Bruce. Obviously, he's been hallmark of the company. He is a Non-Executive Director for the last 4 years. So he knows us and the company well, and I know we're in very safe hands as we go forward. And I'd also like to welcome Peter coming on to the Board, obviously, subject to shareholders approving his nomination today, but I know he'll bring a wealth of experience and really look forward to working with him. So look, I'll dive into the presentation. Mainly I'm going to go through a bit of an update on how we're sort of working on the strategy and achieving the strategy and then I dive into the assets and where we're looking to go in the future. First, we'll go to the customary compliance statement, particularly in relation to forward-looking statements, and I encourage you to read that at your leisure. But now on to the strategy and how we've achieved things over the past 12 months. For me, FY '24 was another very strong year for the company. We had excellent production from our main 2 producing assets, Maari and Block 22/12, and that was obviously complemented well by the acquisition of the Mereenie asset, which is quite transformative for the company, adding that third production asset that takes us out -- takes our production base out beyond the end of the decade. We really see that acquisition as a low risk addition of another nonoperated gas asset, domestic gas asset. And with the way we structured the financing of it, it has sort of no impediment to our current distribution stream and the ability to hopefully enhance it as we go out into the future. Particularly satisfied that following shortly after the acquisition and given the supply shortages of gas in the Northern Territory, we were able to land quite a strategic gas sales agreement with the Northern Territory Government for the next 6 years, which really underpins that investment. And obviously, with a short supply, you can imagine the gas prices are quite favorable as well. And that's given the joint venture also the confidence to conduct an infill drilling campaign, which is starting in only a matter of a few weeks. So FY '24, again, those 2 core producing assets, Maari and Block 22/12 helped us again deliver really strong financial results with about USD 71.5 million of EBITDAX generated on 1.3 million barrels of oil. That saw free cash flow generation of about USD 54 million, which helped us to pay those all important dividends that we've come to love. So we paid a AUD 0.015 per share interim dividend in April, and that was followed up with a AUD 0.105 per share final dividend paid just last month. As Mike alluded to, those dividends that got us over the $200 million of dividends and distributions having been paid over the last 4 years, which is quite an extraordinary outcome for a company of our size. And I think the real hallmark of the company is that not only have we been able to make those substantial distributions but we've been able to do that whilst paying down debt as well as by investing in production growth. And we've done that both in -- across the asset portfolio in Block 22/12 in particular, but also we've been able to do inorganic growth with the Mereenie acquisition all whilst paying those substantial dividends, which is really, really a standout in the sector. So if we just dive into the next slide, Mike's already sort of stolen the thunder a little bit, but I just wanted to take a bit of a look back over the last 10 years at cash flow generation and debt. And whilst we're very much focused on the last 4 years has been an exceptional period of cash flow generation and distributions. We do have to remind ourselves of where we started this journey, taking on substantial debt in order to develop the Maari and Block 22/12 assets, in particular, but really, what's been quite an incredible achievement is, but all the way through that period, whether we had oil price downturns and the like, we were constantly free cash flow generative and able to continue to reduce debt levels, which is a testament to really the quality of the assets that we have, but also the disciplined approach that we've had all through that journey. Normally in a company that is doing that, you would see the reserve base declining. But what is particularly, I guess, something that we're very proud of is that come the end of this in 2024, our reserve position is just under 10 million barrels of oil equivalent. Our reserve base, which is in fact, equivalent or as good as where we were back in 2015. So we've been able to invest in those assets, add reserves whilst paying down debt and paying substantial distributions, which again, I think, is a testament to the quality of the assets and that disciplined approach. Just diving into the next slide, I'll just have a few more comments on the share price. Mike's already stolen the thunder on this one as well. But I think the real thing I wanted to point out on this and just for everyone in the room and online, the yellow line there is the Horizon share price, adjusted for capital returns, but not dividends. And then you've got the oil price in the blue and in aqua, you've got the ASX 200 Energy Index. And you can see that over the first period, we largely track the oil price, which is not surprising for an oil producer. Once we get to sort of the middle of 2022, we get the significant divergence away from both the oil price and the energy index. And that coincided quite neatly with us bringing on the 12-8 East field in Block 22/12. And you saw the rapid ramp-up in production. We had reserve upgrades as the result of that with constant drilling activity. And then more recently, the Mereenie acquisition coming in and perhaps answering that lingering question that I know the markets had on us as to what happens once Block 22/12 falls away later this decade. So look, I think that's quite a good illustration of the value that we've continued to add, and that acceleration away from the oil price is a testament to the quality of the assets and that disciplined approach we've had. So let me just dive into the assets themselves. We'll start with Block 22/12. It was again another really good year for Block 22/12. Production from the field averaged around about 9,500 barrels of oil a day on a gross basis, which again is roughly the long-term field average for the past 11 years since the field came into production, really a testament to the quality of the asset and our ability to continue infill drilling and keep production rates up. To that end, we had a 4-well infill drilling program, which was successfully executed. And towards the end of the financial year, we bumped up over 10,000 barrels of oil a day. We recognize this deal does continue to decline, and so you should expect that. But again, we've continued to mature further infill drilling opportunities, and we're quite hopeful of conducting another drilling campaign during 2025 in order to continue to keep those production rates going. The other thing that's quite an important one on Block 22/12 is water handling capacity upgrades, and I'll touch on it a bit later, but we had [Technical Difficulty] a substantial water handling capacity upgrade project, which will come online. We expect towards the end of 2025 calendar year that will see production rates lift, and you'll see it in our production forecast. Importantly, we don't have to put in capital for that project. We pay an ongoing water handling tariff. And so it won't be a drain on our capital once that comes in, but you will see a material lift in production rates. Moving on to Maari. Look, it was a really good year for Maari. Maari production, it's just under 5,000 barrels of oil per day for the year. That's roughly in line with the average production from Maari for the last 6 years. So quite a testament to the quality of that asset. And importantly, we don't need to keep putting capital in on Maari for infill drilling with the water [Technical Difficulty] and just the general reservoir pressure in some of the other fields. Maari production is expected to continue to have fairly flat production out into the future with minimal capital required. That, in addition to continued positive results being seen on the quality of the asset and the asset integrity, has given us the confidence to lodge a license extension application with the government. The whole joint venture was aligned in that. And whilst we expect that will take 12, 18 months for the regulator to approve it, given the energy security concerns in New Zealand and with the National Party in power in New Zealand, we expect that will come through. And certainly, we've had positive feedback from the government and regulators to date. On to our most recent asset, the Mereenie asset. So we announced back in February that we had acquired or entered into an agreement to acquire a 25% nonoperated interest in the Mereenie oil and gas field. For those not familiar with it, it's about 250 kilometers to the west of Alice Springs. The field has been in production since the 1980s. So it's a long-life asset. Important to recognize that it was primarily focused or the development was initially focused on really producing oil. Gas in the middle of the desert wasn't seen is that valuable back then. And really, whilst it's been providing some gas to the territory over those decades [Technical Difficulty] the last sort of 5 years has become a really focused gas production asset once the interconnected the Northern Territory gas market with the East Coast by opening the Northern Gas Pipeline. And so we see quite a lot of opportunity within the asset. It's a 40-kilometer long structure, over 40 kilometers long. And as I said, we're sort of imperfectly developed as a gas field where the focus was on oil. And so infill drilling opportunities remains and hence, since we've got a program underway imminently to start tackling that. And I guess if you look at the makeup of the venture [Technical Difficulty] you had Macquarie Bank owning half and Central Petroleum, they weren't really -- certainly with Macquarie Bank there, they're not a natural oil and gas developer. So we do see substantial opportunity in the asset. As I mentioned, we were able to execute some new long-term gas sales agreements with the Northern Territory government more recently, and that really underpins both the investment and the new drilling campaigns with some pretty solid pricing. Whilst I can't divulge our pricing, all I can say is that you will see a market increase in cash flow from this asset as we unwind the legacy gas contracts and we move into the new regime. Might just move on to the next one, I've just got a slide here to help people perhaps understand the Northern Territory gas supply or market a little bit better and where we find ourselves in quite a favorable position. So this slide has got really the main gas production assets in the territory. You've got Mereenie there at the bottom in the yellow. In the green, you've got other Amadeus Basin fields. That's effectively all the onshore gas fields. And in the light blue, you've got the offshore Blacktip field, which you can see has been in rapid decline and perhaps causing quite a lot of supply issues. And in the dark blue, you've got diverted LNG supply from impacts in Darwin LNG. Now the Northern Territory gas market, the demand is roughly about 60 to 80 TJs a day and quite different to the rest of the country [Technical Difficulty] 80% on gas power generation to keep the lights on and to run air conditions and the like. There's also some big miners up in the territory. You've got McArthur River, the Tanami mine and they're all big gas users. And the territory has got a desire and an expansion program to bring on more mines such as Arafura's Rare Earth mine and others. So there's increasing demand and supply is not looking particularly great. What I've overlaid here is a little box here that basically shows the additional supply that's required over and above the 60 to 80 TJs a day, which is required to service domestic market, which is necessary if you want to be able to send gas into the East Coast via the Northern Gas Pipeline. So what that means is that if you've got 80 TJs a day, fine the Northern Territory gas market is serviced, but nothing is flowing East. If you get -- you need another 20s, you need to get over 100 to allow gas to flow into the East [Technical Difficulty] see for the period from 2020 to 2022, there was plenty of gas [Technical Difficulty] about. And so gas -- our gas was going off into the East Coast as well as servicing the territory. Now things started to get a little bit messy once we got to the middle of 2022. The Blacktip field, which was so instrumental in supplying gas to the territory and the East Coast, started to encounter problems. And so you've seen the Northern Gas Pipeline not having sufficient volumes to flow gas East. And more recently, you've seen there's not even a gas coming from the onshore field and Blacktip to even service the domestic market. And so they've had to divert LNG cargoes, which obviously creates some problems for the country and for the government geopolitically. Hence why the government has been very keen to put their foot on as much gas as we can possibly produce. And you can see in this slide, the government can see whether who's been the sort of stable producer all the way through this period. Whilst they've got some hope that the Beetaloo basin will provide some incremental volumes, that's still a bit untested and untried and there's a bit of a lag. But this is really some of the strategic benefits we see in the investment. It's why we're drilling infill wells and it's why we see greater opportunity in the asset. There's quite a lot of contingent resources remaining in Mereenie. There's an overlying structure called the Stairway formation, which is largely undeveloped. It's 2C contingent resources are virtually equivalent to the fee reserves we carry today, and the venture is looking at how we can bring on that gas. And I was up in the territory couple of weeks ago meeting with the government ministers and they are very supportive of us coming into the venture Horizon, but also of the venture getting after more gas as they see it is quite critical, not just [Technical Difficulty] demand, but to hopefully meet future demand from new mines. I'll move on just a bit of a look at the outlook, first of all, on production. So look, I've got a slide here, which you've -- let's please go to the next one, which you will have seen in earlier presentations. This is our future production forecast outlook going to put the standard caveats around forward-looking statements. But look, we put on here, and this is just Horizon consolidated. And so you've got the yellow bar there at the bottom, which is our forecast Mereenie production. We've put it at the base now because it goes way out into the 2040s. On top of that, you've got Maari's production in the dark blue out to the end of the current production license. But then in the aqua, we've added on the expected life extension now that we've lodged that application. And we see that asset going out quite credibly out into the early 2030s. On top of that, we've added Block 22/12's production. And you can see this step-up from the end of the year, and that's that additional production from the water handling upgrades that we expect to come online. And then on top, we've added our indicative future activities, which, again, is largely predicated on further infill drilling in Block 22/12. We haven't added to this further potential drilling and upside in Mereenie. And as we mature our thinking and see further activity from the venture, we'll likely look to do that. But I think the core takeaways from this is we now have a production base with Maari and Mereenie, which is very likely to take us out through to the end of the decade with production of around about 1,500 to 2,000 barrels of oil equivalent per day out in the early 2030s. And obviously, with Block 22/12, providing the real financial horsepower over the next 4 years, keep that distribution stream going. Obviously, we continue to look at further opportunities. But again, as Mike alluded to, they have to meet our metrics, and we really want them to be able to enhance our distribution capacity and not constrain it. And just on the last slide I've got is just going back to the asset base and, I guess, the activity that's going on. And I've touched on most of these. Block 22/12, further infill drilling being looked at in that water handling capacity upgrade project. Maari, the firm focus is on that license extension application. And in Mereenie, we've got the infill wells, which are, as I said, likely to be spud in the next month. And then looking at further upside opportunity, particularly in that Stairway formation that I mentioned. But also there's other infill well opportunities within the existing formation, which are continuing to be matured as well. So quite a busy year, and we find ourselves in a very favorable position with a strong balance sheet, good production from those 3 assets, and it leaves us in a pretty nice spot. All of this, of course, isn't possible without an exceptional team, and I'd just like to thank the entire Horizon team. A number of them are in the room, but the executives, the staff and our judicious consultants, who can't be forgotten with such a core team, none of the results we've achieved would be possible not just this year but over the last [ umpteen ] years as well. And I'm happy to -- with that, pass back to the Chairman.

Thank you, Richard. We can now have questions on Richard's presentation. There will be time for questions on the formal resolutions later on. So hand up there already.

Joss Craig, happy shareholder. When the Board looks at allocating capital and you're obviously definitely a price taker in a lot of this stuff. How do you wrap your head around future projections of the oil price and all of that that's going on at the moment when there seems to be such a divergence of opinion?

Look, good question, challenging question. Look, we're not -- I guess, we look at all the data available around oil prices. I think as a general feel we think longer term, the oil price will remain relatively robust. And again, that view is something we've held for quite a long time, particularly as the world continues to look to decarbonize, the amount of exploration spend is continuing to decline, not just domestically, but all around the world. And so our expectation is that there will continue to be constraints on new supply coming into the market, this is a longer-term view. And indeed, it's not just -- I guess it's not just that there's not exploration happening. You've got banks pulling funding, making it harder for people to develop things. And you just need to pick up the paper here in Australia every day and see the -- getting new approvals on anything is becoming increasingly challenging. So all of that in our minds gives us a feel of there's a fairly resilient commodity price. We tend to look at all the various sources of data. We're not suggesting we understand it all. But we follow Bloomberg and all the various data points to get a view. But most importantly, whenever we assess a project, we look at how robust it is on a downside scenario with a lower oil price. We also look at the term over which the cash flows might be generated. So where you might have cyclical downturns, which we've seen. Generally, the market recovers over a period. So if you're concentrating your risk in a short window that can give you potential challenges and you may need to hedge some of your production in order to manage that risk. But over the longer term, we feel that prices will be reasonably robust.

I think neither of us have said it though the oil price is one thing, but the discipline we've had so far, Mereenie is the first one as to -- whenever we're looking at in the future, ideally should be in our own backyard in Australia. Gas, free cash flow more or less on day 1, not big long development expenditure, and I don't want to be the operator. And they are the 4 things, right, before we worry about the oil price. And that taken us 6 years more or less to find Mereenie because we looked at so much around the world to get it.

My name is [indiscernible]. Just a short question followed by a longer one. First question, you mentioned MR6a the workover in the Mangahewa formation at Maari. You did the workover, but is there any result on that yet or any production...

Apologies, I didn't cover that too much. But yes, look, MR6a, that's been a bit of a long awaited work over there. Look, it was successfully completed in September. Wells come back online and flowing today. I think I mentioned in the quarterly, they did shut it in for a short period there. They've resumed production from that well. It's continuing to flow and there's encouraging early signs. They're still assessing it, and they're trying to get a test purely on it. At the moment, it's sort of co-mingled flow. And hence, it's a little bit hard to quite read exactly how much production we're getting, and we've got another workover going on at the same time. So it makes it a little bit tricky. But we'd expect to have more clarity on how much it's contributing, where it's coming from, hopefully, over coming months.

My second question is on Mereenie. I think we all like the Australian gas theme, especially the East Coast gas theme and you've talked a little bit about what sort of production we need to fill the NGP and to get into that East Coast market. When I look at the quarterly report, the EBITDAX from Mereenie is around about 8% of our annual EBITDAX. The annual EBITDAX was about USD 71.5 million. If I look at the last quarterly, which gives a probably a full quarter of Mereenie production. The EBITDAX is about USD 1.5 million, so that's I got 8%. Now although that's nice, and to go to your point, it does having contracted product in the stream, it takes a bit of a roll out of it. But really 8% of EBITDAX, it's not moving the dial significantly. So it relies a lot on your infill program and getting into the Stairway formation and so on. You didn't have any sort of prognostication there about what the potential is to expand Mereenie. But just sort of directionally, can you just talk about what could Mereenie get to?

Look, I think, first and foremost, I would just come back to, and I did comment on it. You saw in that quarterly, the gas pricing, we were -- realized gas price is about $6.20. I think it was 80 gigajoule. Most of the contracts up till now are all legacy contracts, which date back to contracts that were entered into a number of years ago, some even before the NGP was open. So it was reflective of a silo market. A lot of our contracts -- in fact, we've got contracts next year going East, which are more reflective of the East Coast pricing. And obviously, with the NGP opening up all of our contracts are far more reflective of more East Coast gas pricing market because the territorians understand that we've got an option, we can either sell East or sell to them. Obviously, the constraints on the market now make it even worse because the alternate for the government utilities is buying off LNG, which is eye-watering numbers. So obviously, kind of divulge what the gas prices are, but obviously, those contracts roll in or the new contracts roll in from the beginning of next calendar year and with substantially higher prices. So you will see the -- effectively that coming through. Our basic expectation if you look over the next few years, I would see Mereenie contributing to free cash flow around about what Maari's doing today. I think you'll sort of see a movement in that direction broadly. And we pay taxes in New Zealand on an all-in basis, and Mereenie has got some tax shield. So I think you'll see free cash flow not too dissimilar. And that's before we go into any further development beyond the current infill wells, which are in the program. I mean, Mereenie has got roughly, I think, the field capacity, the actual infrastructure can go up to 58 TJs a day, I think it is. So there's -- we could double field production potentially. Obviously, that needs capital spend on wells, and we've got to find the right targets. But that's perhaps the opportunity and obviously, the marginal return on new wells is quite substantial. So there's potential. Obviously, we've got to do the work, but there's potential you could almost double Mereenie production, if you can crack the nut on the Stairway formation and drill that up, like we've drilled up the [ peculiar ] formation. And yes, could be quite a good long-term...

Let's keep going if there are no other questions. No? Okay. Let's turn to the formal meeting now. Given the Notice of the Meeting has been sent to all registered members, I move that the Notice of the Meeting is taken as read. The minutes of the previous Annual General Meeting have been approved and signed in accordance with the Corporation Act. A copy is available for inspection at Horizon's offices if anybody wish to do so. We will now move to the business of the meeting, which includes the resolutions to be put to the meeting. Prior to each resolution being discussed, the proxies that have been received today will be displayed. As I mentioned earlier, all resolutions will be decided by a poll, and the live vote is now open on all items of business. So the first item is to consider and receive the financial report, the directors' report and the independent auditor report for the year ended 2024. These documents have been made available to all shareholders. There is no requirement for shareholders to approve these reports. Accordingly, Item #1 is for discussion only, and there'll not be a vote on it. So let's open the floor to questions on the financial report, auditor's report.

[ Peter Bradon ], shareholder. I note at the 30 September net cash was reported at $33.1 million. So I'm just wondering I think the debt in the annual reports to about $26 million. So I'm just wondering with the drill -- baby drill who will be inaugurated in a couple of weeks' time, I'm thinking oil price and debt, what's your plan to eliminate the debt perhaps?

Look, obviously, the debt solely in relation to Mereenie, which as we alluded to, is underpinned by gas contracts. So essentially, completely unlinked to oil prices. So we're very confident that Mereenie production with those -- with that contracted offtake [Technical Difficulty] be perfectly able to service that debt. Obviously, we continue to balance our thinking on having debt in the company and paying interest when we've got surplus cash on the balance sheet. So we look at that judiciously and regularly. We're also mindful -- I guess, in this market, getting access to debt for oil and gas companies is becoming continually constrained. So it's a bit of a balance to be had in ensuring that we can get access to liquidity. At the same time, as -- make sure we've got that capital allocation right between paying down debt, distributing cash. But as I said, it's largely that's completely underpinned by the gas from Mereenie, which is hedged effectively by way of long-term gas offtake agreements over the debt term.

Any more questions? No. Okay. So we'll move on to Item 2, which is the adoption of the remuneration report. The meeting now needs to consider Item 2 adoption of the remuneration report for the year ending 30 June 2024. The Board unanimously recommends that shareholders vote in favor of the item. Proxies received on this item should be shown now. I think, any questions on the remuneration report? No. Okay. Thank you. Item 3a, election of Peter Goode as a Non-Executive Director. I'll ask Peter to say some words in a few minutes. But Peter has been appointed to the Board since the last Annual General Meeting of the company, who retires in accordance with the constitution of the company, being eligible for reelection as a Non-Executive Director. The proxy received in this relation to this motion are up there I think. The other directors, including me, unanimously recommend that shareholders vote in favor of this resolution. So Peter, why don't you say a few words, and then we will open the floor to questions to Peter.

Okay. Thank you, Mike. So good morning, everybody. So I'm surely mentioned here by background and profession. I've had 45-plus years working in the upstream oil and gas industry. 30 of that has been internationally. And about 15 of -- the other 15 here domestically in Australia. In terms of other activities, I'm currently the Chairman and Co-Founder of a company called GR Energy Services, which is one of the largest onshore completion companies in the U.S. onshore business. And I'll just sum up by saying I'm very pleased to have been invited to join this Board. I think it's a great company with a great future, and I look forward to contributing. Thank you, Mike.

Thank you, Peter. Any questions to Peter or me? Okay. Item 3b is the reelection of Sandra. Sandra is retiring by rotation in accordance with the constitution of the company, being eligible she is standing for reelection. Proxies received in relation to this should be shown up now. The other directors, including me, unanimously recommend that shareholders vote in favor of this resolution. So questions to me or Sandra, I guess. No. Let's move on to Item 4a, and that's the approval of the grant of Deferred STI Rights to Richard. The meeting now needs to consider Item 4a, approval of the grants Deferred STI Rights to the Managing Director. The details of the plan are set out in the details of the Notice of the Meeting. Proxies received in relation to this resolution has shown, I think. Any questions? Approval of the grant of long-term performance rights to Richard and approval of the grant of long-term performance rights to the Managing Director. The details of the rights are set out in the plan in the Notice of the Meeting and the proxies should be open now. Do we have any questions on this item? No. So Vas, just talk us through the voting, please.

Thanks, Mike. So as mentioned, Paul Latunski of Computershare Investor Services has been appointed returning officer for this meeting, and I'm satisfied as to Computershare's independence. If there is any person at this meeting who believes they are entitled to vote but is not yet registered, would you please raise your hand for assistance. Every member present in person or by representative, attorney or proxy, who holds a yellow admission card, is entitled to 1 vote for each share held. The resolutions on which you are required to vote by poll are items 2, 3a, 3b, 4a and 4b as set out in the Notice of Meeting.

Thank you, Vas. The counting of the results will take a little while, as you know, so I propose to close the meeting in a few minutes and announce the results to the ASX this afternoon. So Bruce, over to you, sir. It's all right when I was here, I think.

Thanks, Mike. As Mike spoke to earlier in the meeting, the Board has selected myself to take over from Mike as Chairman of the company. I've been a Director of Horizon for 4 years. Like Peter, I've been involved in this industry for 45-plus years, largely with Australian companies. More recently, I have become a Non-executive Director of Peach Energy, an Australian oil and gas producer, primarily gas and focused on the East and West Coast market. So in my dark past, [ when dim ] dark past, I've been involved with the assets that the company hold in Beibu Gulf, particularly through being CEO of ROC Oil in partnership with Verizon or when we developed those assets, also been involved with businesses in New Zealand over that period of time. And I had a stint with Santos’ while Mereenie was an asset belonging to Santos. So I'm very familiar with the assets. I'm very pleased to accept the role of Chairman, and I'd like to acknowledge and thank Mike for his contribution to the company over the last 6 years. It's been a standout period for the company. You can see that we've turned the company around in terms of share price and returns to shareholders over that period, and Mike has been a key part of that. So I think from the Board, and I certainly speak for the Board, we thank Mike for his contribution. And I personally look forward to continuing with the strategy. You heard Richard speak to the strategy of the company. You won't see significant changes in that. We will be looking for opportunities similar to Mereenie in the future, but very much focused on generating cash flow and profits out of our current assets and extracting the most value we can out of them. I think it's been successful over the last 4, 5, 6 years, and I look forward to more of that in the future. So I thank the Board for their support, and I thank Mike for his leadership of the company over this period of time and look forward to the future.

Okay. Thank you. And I'd just like to say thank you to you all. It's been a good innings. It's one when I look at all the boards I've been on -- I've just got to say it openly and honestly, this is going to give me more -- far more happiness than most of them. And we started off with a bumpy thing 6 years ago, but now it's in a fine condition, and it's a smart little company. And you've got your dividends, you've been nagging us about for 6 years, I suppose. You've just got to stop these guys spending it now. But Nigel, on the end, I've given them the authority now to make sure dividends are still paid. All right. Well, thank you very much, and thank you for attending today.