Oh, good morning, and thanks very much. Welcome everybody to today's presentation. With me is Kyle Keen, the company's CFO. And let's get started. We've come to the end of yet another strong year for the company, a year which has been transformative for the company, driven by the successful acquisition of the Mereenie asset. This acquisition was a crucial milestone, adding a third production asset to the company's portfolio, which provides several strategic benefits, a diversified production base, materially increased reserves, and a production base which extends well beyond the expiry of our existing assets.
And then the subsequent signing of a long-term strategic gas sales agreement with the Northern Territory Government and the recent, joint venture approval of a two-well infill drilling program so soon after completing the acquisition, were tremendous outcomes and really underscore the strategic merit of the transaction. Now, look, before I dive into the presentation, I wanted to acknowledge our chairman's recently announced retirement and the upcoming board changes. To our chairman, Mike Harding, I'd like to extend our gratitude on behalf of the board and the entire Horizon team for his exceptional stewardship and support over the past six years. Throughout this time, Mike collaborated with the board and shareholders to navigate numerous challenges, ultimately guiding the company to realign its strategy. Today, thanks to his leadership, Horizon stands out as a leading player in the junior energy sector.
Now, as noted in our recent ASX release, Mike will look to retire at the upcoming AGM. And obviously, at the end of the presentation, we'll deal with any questions. Moving over to the compliance statement. Look, during the course of the presentation, we'll make some forward-looking statements, and while we take every care in the preparation of these, actual results may materially differ depending on a variety of factors, and I encourage you to read the disclaimer in full.
Please also note that with the addition of a gas production asset, we'll start referring to oil and gas production and volume metrics on a barrel of oil equivalent basis, albeit that Mereenie was only included in the financials for the last three weeks of the financial year, following completion of the transaction, notwithstanding that we had an economic entitlement to production dating all the way back to 1 April 2023. I'll talk more on this a bit later. Again, before I get into the numbers, just wanna remind everyone that references to dollars are U.S. dollars, unless otherwise stated. So look, as can be seen through the numbers on this slide, we have had another very solid year, with continued strong free cash flow generation, leaving the company with a strong balance sheet and $26.2 million in net cash.
This was despite paying out roughly $37 million or over AUD 56 million in dividends during the year. The strong financial position has allowed us to declare a final dividend for FY 2024 of 1.5 cents per share, in line with the interim dividend paid in April. While sales volumes and revenue were lower for the year due to the expected decline of our Block 22/12 fields from a record production peak, profitability remained strong with a continued disciplined focus on costs. Statutory profit before tax for the year was $39.2 million, with EBITDA a substantial $71.5 million, well over AUD 100 million. Importantly, the free cash flow generation in the year was substantial, as despite the decline in production, CapEx was very modest, leading to a rapid buildup of cash, which Kyle will talk about later.
Just onto ESG, and while Horizon has had great success on the production and cash flow generation fronts in recent years, this slide also highlights the positive results achieved on ESG, and in particular on safety. As you can see in the chart, lost time injuries for Horizon have trended down over the past five to six years, despite the increased operational activity in Block 22/12. This is in stark contrast to the sector, which has seen a gradual increase in lost time injuries. This trend has been achieved in no small part by the continued safety focus of our operators. More broadly on ESG, we continue to focus on emission reductions, supporting the communities in the areas where we operate, and ensuring modern slavery risks are eliminated to the greatest degree possible in our supply chains.
On climate change, our carbon removal investment in Revy, formerly known as Nobrac, is making good progress with the first biochar being produced and accreditation of the project for carbon removal credits underway. We also see our investment into domestic gas as an integral part of supporting the energy transition, with the Mereenie Joint Venture signing a strategic gas sales agreement with rare earth miner, Arafura Rare Earths Limited. Gas from Mereenie will allow Arafura to process critical rare earth minerals, which are essential for the production of magnets used in motors for wind turbines and electric vehicles. The federal government's support to Arafura clearly demonstrates the strategic importance of Arafura's Nolans Project, which will initially rely on gas being supplied from the Mereenie field. And just turning back to the company's strategy and how we're delivering against it.
The full-year results continue to demonstrate the successful results being achieved through the clinical execution of our strategy. We've continued to focus on maximizing free cash flow generation, which was sustained by robust production from our Block 22/12 asset in China. While production rates from Block 22/12 naturally declined in line with expectations, this was off a record production base, with substantial investment made in earlier financial years in getting the highly successful 12-8 East field into production. Maari production was also boosted early in the financial year, following successful workover operations, and with record premiums achieved, it had a more substantial contribution to cash flow, with production increased 18% on the prior year.
While Mereenie was only included for the last few weeks of the year, the three assets combined to generate $71.5 million in EBITDAX on over 1.3 million barrels of oil sales during the year. The field's cash operating costs remained low despite inflationary pressures, with continued robust oil prices ensuring substantial free cash flow generation. On free cash flow, we generated over $54 million, benefiting from the investment in production growth, particularly at Block 22/12 over recent years. The strong cash flow has allowed us to continue to prioritize distributions with the announced AUD 0.015 per share final dividend, following closely behind a further AUD 0.015 per share interim dividend, which we paid in April.
Together with the interim dividend, the overall dividend yield for the year is well over 15%, with the quantum determined to balance shareholder returns, future commitments, and maintenance of our liquidity levels. Prioritizing such returns to shareholders remains a key pillar of our strategy, with over 170 million AUD having been paid out in distributions over the past few years, and with a further 24 million AUD to be paid in October. This achievement is quite extraordinary for a company of our size, particularly given that we've done so while repaying debt and also investing in production growth and new business opportunities. On production growth itself, well, look, we continue to prioritize development of our substantial inventory of contingent resources with the earlier 12-8 East development, a core example.
We’ve just successfully completed a four-well Block 22/12 infill well program, which boosted production back up above the long-term field average of around 10,000 barrels of oil a day. Looking forward, we’re prioritizing further infill drilling and water handling upgrades. We’re also firmly focused on Maari life extension and the recently approved Mereenie infill program, which both aim to further develop the company’s substantial inventory of contingent resources. On new business, we completed the Mereenie acquisition, which we expect will complement our existing asset base very well. Importantly, while this is a new asset for us, our strategy remains unchanged, and we expect this addition will allow us to continue to focus on cash flow generation and distributions while still investing in production growth.
The funding structure of the acquisition was key in this regard, with the upfront purchase price wholly debt-funded, so as to not impede our liquidity for distributions and further investment in production growth.
Look, I was just covering off the financial year highlights. I've obviously touched on a number of these already. However, some additional key achievements were as follows: Despite the payment of $37 million in dividends during the year, cash reserves increased by over 20% to $52.6 million, driven by the substantial free cash flow generation during the year. Following the Mereenie acquisition, Horizon's combined daily production exit rate at year-end was roughly 5,000 barrels of oil equivalent per day. Horizon's 2P reserves at 30 June more than doubled from the prior year, as is covered in more detail on the next slide.
On shareholder returns, we added around AUD 120 million of shareholder value during the year through a combination of dividends paid and capital growth, with an FY 2024 total shareholder return of around about 50%. Now onto reserves. Presented here is the summary of Horizon's 2024 reserves and resources statement. As mentioned, we achieved a more than doubling of Horizon's 2P reserves at 30 June to 9.9 million barrels of oil equivalent. This was substantially driven by the Mereenie acquisition, but also enhanced by further conversion of Block 22/12 2C contingent resources to reserves, resulting mainly from the successful infill drilling during the year and sanctioning of a substantial water handling upgrade project, which is due to come online around the beginning of the 2026 calendar year.
Our 2C contingent resources also increased by over 90% to 13.3 million barrels of oil equivalent, driven by the Mereenie acquisition. Our focus continues on developing this substantial inventory of contingent resources with further infill drilling at Mereenie, recently approved by the joint venture. Look, I'll now pass over to Kyle to run through the financial results in more detail, and hopefully, he has a little more luck with the phone lines.
Thanks, Richard. As Richard has mentioned, it's important to note that the financial performance from the acquired Mereenie interest has only been consolidated from the eleventh of June 2024, being the date of completion of the transaction. Cash flows from the effective dates to the completion dates have been recorded as a reduction against the purchase price.
... This resulted in the reduction of the purchase price of approximately AUD 3 million, after covering CapEx for a recompletion program and a large part of the transactional costs. Moving to the financial and commercial highlights, the table on the right summarizes the 2024 financial year results against the prior comparative period. While the prior year was characterized by record production, a result of the 12-8 East development, the 2024 year is characterized by exceptionally strong free cash flow generation, despite the overall decline on year-on-year production. Production and sales volumes of 1.4 and 1.3 million barrels, respectively, generated revenue of $111.5 million at an average realizable price of approximately $86 a barrel.
I'll also highlight that with the deferral of a Maari lifting to July 2024, the company had approximately 119,000 barrels of crude oil inventory on hand at 30 June. This was sold in July 2024, generating in excess of $10 million of revenues, which will notably flow through to the 2025 financial year. With the maintenance of low cash operating costs below $25 a barrel of oil equivalent produced, the group generated EBITDAX of $71.5 million, and cash flow from operating activities of $64.2 million for the financial year. This strong cash flow and robust balance sheet allows the company to continue with the core part of our strategy, and declare a final dividend of AUD 0.015 per share.
The final dividend, coupled with the interim dividend of AUD 0.015 per share, results in the company returning to shareholders approximately 70% of our 2024 free cash flow, net of debt repayments. The cash flow waterfall chart continues to highlight what has been a constant theme for the company, and that being that the strong cash flows from the group's operating activities replenish cash reserves for shareholder distributions, while still ensuring funding is available for capital investments in our assets and the repayment of debt facilities. This year also highlights the capital efficiency of the Mereenie acquisition, which, due to it being predominantly debt-funded, only had a modest impact on the group's cash reserves.
During the financial year, the group generated operating cash flow of $64 million, which more than offset the $37 million in shareholder distributions paid, and $8 million for the final settlement of the group's previous senior debt facilities. This ensured the group completed the financial year with a strong balance sheet, with cash reserves in excess of $52 million. With this closing net cash position, the group has the required liquidity to pay the final dividends of AUD 0.015 per share, pay for the recently drilled development wells in Block 22/12, and the upcoming development wells at Mereenie for further organic growth in our assets, and the maintenance of an appropriate working capital balance, which includes some funds set aside for Maari's ultimate decommissioning.
On the next slide, we can see the full year financial results compared against the previous four years. As in previous presentations, we have included some detail of the impact of Beibu cost recovery revenue to assist with normalizing the results. The first slide highlights are following the prior period investment in the 12-8 East development, which resulted in record production for the 2023 financial year. The company's 2024 financial year reverted to the five-year average. In addition to the strong production performance from Block 22/12, we saw exceptional production performance in Maari, largely due to the reinstatement of production from the MN-1 well and the conversion of the MR-2A well to a permanent water injector. And despite limited CapEx spend, production in Maari has been flat for the past three financial years.
The revenue chart shows the $3.9 million contribution of the Beibu cost recovery sales during the period, and despite the deferral of Maari lifting to July 2024, the company generated revenue of $111.5 million, or 7% higher than the five-year average. This was notably aided by a robust oil price environment and continues to highlight the company's leverage to the oil price. With a strong production performance, the maintenance of low operational cash flows, and Beibu cost recovery volumes, the company generated EBITDAX of $71.5 million, and a statutory profit after tax of $25.9 million, both above the five-year average. During the year, cash operating costs were sustained below $25 a barrel of oil equivalent produced, slightly higher than in previous years.
This is due mainly to the expected decline in Block 22/12 production, combined with a higher cost structure for the 12-8 East development, which includes the platform use. The free cash flow charts on the left highlights the strong free cash flow generation of $54.5 million for the financial year, which follows the rapid payback of the 12-8 East developments in the five-month period. It also highlights the importance of reinvestment in our assets, in Block 22/12 in particular, with the company generating its second highest free cash flow results some 11 years after Block 22/12 first came onto production. Lastly, and consistent with previous presentations, I'll save the best chart to last.
We have the net cash chart on the right, and this is the first time I can refer to the chart as net cash, without referencing any period in the last five years of net debt. This chart highlights that following the company moving into a net cash position in 2020, that we have managed to maintain a net cash position in the past four financial years, despite returning over AUD 170 million in distributions to shareholders. It further highlights that despite predominantly debt funding the Mereenie acquisition, the company has maintained an appropriate level of liquidity with a net cash position of $26.2 million at 30 June 2024. This allows us to continue to focus on further organic growth opportunities, with the aim of extracting maximum value from our assets.
I will now pass back over to Richard to provide an update on our asset portfolio and an outlook for the company.
Look, thanks, Kyle. And so yeah, look, I'll just run through the producing assets, starting with Block 22/12 in China. Look, this was yet another good year for Block 22/12, with an average gross production rate of around about 9,500 barrels of oil per day, roughly in line with the long-term field average since production began over 11 years ago. It's quite extraordinary, really, to have sustained production rates at these levels for such an extended period. Whilst the field naturally declined during the year, as we mentioned, that was entirely in line with expectations, with the investment in the successful 12-8 East field in earlier years, having boosted production to record levels.
Our four-well infill program, together with a workover campaign in the second half of the year, was successfully executed and restored production back above 10,000 barrels of oil per day by year's end. These new wells will also naturally decline, such that the joint venture is continuing to evaluate and mature further infill drilling targets for a potential drilling program in calendar year 2025. In addition, a significant water handling capacity upgrade project was sanctioned during the year, which is expected to be online from early calendar year 2026. This project is expected to help boost oil production rates later in the field life. Now, look, as highlighted previously, Block 22/12 continues to have a large portfolio of future opportunities, which can add reserves and boost production rates, comprising of infill and appraisal wells and facility upgrades.
On this slide, we continue to highlight the location of the various opportunities, all of which are being actively evaluated and matured by the venture. The immediate focus is on evaluating the results of the recent infill drilling program, which the locations are marked in red. And using that knowledge together with historical data and reservoir analysis from the fields, to mature a further infill well program for calendar year 2025. Just turning over to New Zealand and Maari, where we've continued to see stable reservoir performance. The successful workover of the Manaia-1 well around the middle of last calendar year boosted production rates back above 5,000 barrels of oil per day on a gross basis.
With sustained water injection into the main Maari Moki reservoir, together with the maintenance of good facility uptime, average daily production has been largely sustained throughout the year at just under 4,900 barrels of oil per day gross, without the need for significant CapEx. This sustained production led to that 18% increase in Maari production for the year, which I mentioned earlier. Look, operating costs for Maari continue to be relatively modest in the context of the current oil price, with cash flow enhanced from the strong premiums being received on oil sales into our primary East Coast Australian market. The immediate focus of Maari is on a workover of the currently shut-in MR6A production well, which aims to reinstate oil production from the Maari Mangahewa, and to exploit a previously unproduced Matipo Sandstone behind pipe opportunity.
Look, following some repairs to the workover unit during the year, the workover is expected to be completed imminently. In addition, the continued strong production from the Maari field, together with the recent five-year extension to the FPSO class certification, has given the joint venture confidence to prepare a license extension application to seek to continue production beyond the current 2027 permit expiry. The license extension application is now well advanced, and we expect it to be lodged later this quarter. Now on to our most recent addition to our pool of assets. We announced back in February that we'd entered into an agreement to acquire a 25% non-operated interest in the producing Mereenie oil and gas field in the Northern Territory.
The acquisition was completed in early June, such that our FY 2024 financials only largely reflect approximately three weeks of production, so fairly modest. That said, the effective date of the acquisition was 1 April 2023, some fourteen months prior to the transaction completing, such that cash flow generated over that period was set off against the purchase price in the balance sheet, reducing the final amount paid.
Look, while there were some interruptions to production over the completion period due to some intermittency on the Northern Gas Pipeline, linking the Northern Territory market to the East Coast, recent gas sales agreements entered into within the Northern Territory with Power and Water Corporation, the Northern Territory Government, and Arafura, have effectively mitigated risks surrounding the Northern Gas Pipeline through to the end of the decade, with current production from the field over 25 terajoules a day on a gross basis. This has also provided the Mereenie joint venture with confidence to invest in further infill drilling, with two wells expected to be drilled early in the new calendar year. Importantly, the Northern Territory gas market is currently under some strain, and with Mereenie being the largest onshore producing field, it is well placed as a reliable long-term provider of gas to the territory.
Its importance is underscored by the recent signing of the GSA with the Northern Territory Government. Now just touching on the Mereenie transaction a little bit more, and I've sort of shown this slide in a slightly different incarnation earlier. You know, core to the company's strategy has been keeping an eye out for exceptional new business opportunities, which could complement the existing asset base, with strong investment returns and ideally an ability to enhance our distribution strategy. The completed acquisition meets all of these criteria, providing a relatively unique opportunity for the company to acquire a material non-operated position in a low-risk producing domestic gas asset, with a funding structure that allows our distribution strategy to be continued and potentially enhanced.
The acquisition, as I mentioned, has a number of strategic benefits, providing a low risk and readily fundable entry into the domestic gas market, which is forecast to have robust demand. The acquisition diversifies and grows the production base by adding a third asset, diversifies the product mix with the addition of gas, which is seen as a key fuel for the energy transition. Now, the Mereenie asset itself has several significant infrastructure-led opportunities, which provide some running room and upside potential in the asset, with a two-well infill drilling program recently approved by the joint venture. Look, now that we have three production assets in the portfolio, we've consolidated our production forecast into this next slide. As Mereenie production is forecast to be economic into the 2040s, it now acts as the long-term anchor, with long life and relatively stable production.
Maari sits on top of this, with similarly stable production out to the current license expiry at the end of 2027. We've included in light green or aqua, an indicative Maari life extension forecast, for which an extension application is soon to be lodged with the regulator. If the application's granted, Maari, together with Mereenie, provide a strong foundation for production out into the next decade, with a production-based forecast to be in excess of 1,500 barrels of oil equivalent per day. Then we add Block 22/12's forecast production in the dark blue, which will continue to drive cashflow generation out for the next four to five years.
Importantly, this base, Block 22/12 forecast, has been materially lifted from the previous forecasts as a result of the recently completed infill drilling and maturing of a planned liquid handling upgrade, which is expected to boost production rates from early 2026. On top of the chart, we've included our indicative future activities, which are largely focused in Block 22/12, including infill wells and other activities, which are all being actively matured, but which remain subject to joint venture and regulatory approvals, and of course, rig availability. While these are indicative only, our success in converting contingent resources to reserves at Block 22/12 has been a hallmark of Horizon's success over many years. While Maari has some potential for further growth beyond the license extension, we've excluded these from the forecast, as any meaningful activity remains subject to license extension being granted.
Mereenie also has further potential upside opportunities, which we may look to add to this chart going forward as the opportunities are matured. Nevertheless, I think the key takeaways here should be that the three assets provide the potential to sustain Horizon production at around four to five thousand barrels of oil equivalent per day for the next four years, with a production base from Mereenie and, and hopefully, likely Maari, expected to extend out beyond the end of the decade. This provides a runway for continued strong free cashflow generation and potential dividend payments for the longer term. Turning now to our operational activity plan for the next 12 months or so. Please note the timetable is indicative, as most activities remain subject to further evaluation, joint venture and regulatory approvals.
Look, as mentioned, we have a water handling capacity upgrade project underway at Block 22/12, which is expected to help increase production rates in future years. Further infill well opportunities also continue to be matured, with plans firming for a 2025 program. At Maari, we've got an immediate workover priority, aimed at reinstating production from the currently shut-in MR6A well, and as mentioned, other activity at Maari is really focused around our life extension works and life extension application, which we expect to lodge imminently, and finally, at Mereenie, the joint venture has recently approved the drilling of two gas infill wells, for which a rig contract was recently signed. The well aims to boost gas production rates from the fields, with incremental production essentially underwritten by a contingent offtake arrangement in the recently signed gas sales agreement with the Northern Territory Government.
The wells are expected to be drilled early in the new year. Look, so once again, we've got a reasonably busy calendar of activity, which is firmly focused on extracting more value out of our assets. I'd like to thank you for joining us today, and with that, Kyle and I will be pleased to answer any questions. So just give us ten seconds or so just to digest the questions. Okay, so the first question we have here is: What is the expected capital cost and capital call from China to fund the water handling upgrades and workover program?
... Thanks, Vas. So look, both of those activities are both indicative at this stage. They're both subject to further technical and economic evaluation, so I won't comment directly on the costs of those. But what we have said in the past is, in order to achieve the indicative activities in China, we generally spend between $10 million and $15 million to mark that value.
Just a little adding a little bit more on that. I mean, the water handling upgrade, there is no material incremental cost for that. For those who understand our China asset well, we pay a water handling tariff, so essentially a processing tariff for handling all the water and essentially that just becomes an ongoing operating cost. But it is a variable cost linked to the production, so if we do not produce more oil, we will not be paying any incremental costs.
Thank you both for that. The next question we have is: With the change of government in New Zealand, what is the likelihood Maari will get a license extension out to twenty thirty-one, noting the FPSO can operate until April twenty twenty-eight? And secondly, the potential for extending production post twenty thirty-one.
Look, as I suggested, I mean, we're reasonably confident on the license extension. If we weren't, we wouldn't be lodging the application. Obviously, the change in government is very positive. There's clearly a bit of an energy crisis in New Zealand, if you read the press, and there's a lot of support there, certainly internally within the government to extract more resources and extending a permit's, you know, fairly uncontroversial. But, you know, we can't take anything for granted. So we can't, you know, obviously guarantee that, but really the fact that the FPSO has been extended out to 2028 gives us some good confidence that the asset's in good working order.
And indeed, the application we see is yeah, fairly strong chance that'll get approved in reasonably short order. Albeit, these things do take time. It's got to go through a reasonable amount of consultation. And then potential for extending production beyond 2031, look, we wouldn't want to sort of count on that. You know, obviously it depends on oil price, what production looks like, you know, in six, seven years' time, which you know, we've got reasonable strong confidence on, on Maari production, given it has such a very gradual decline. But we'll have to wait and see on that. Look, we'll just give another 10 seconds here or so to see if there's any other questions coming through.
Oh, just got a question here around Mereenie. Obviously, that field's been on production for some time. You know, what's the opportunity? I think it's important to understand, you know, Mereenie, albeit it's been on production for a number of years, the structure there is about forty kilometers long. So it's quite an enormous structure, and it was originally developed, focused on the oil around the rim of the field. Really, gas really only came into focus once the Northern Gas Pipeline came on stream in twenty nineteen. So it's really only been focused on as a gas field, as its primary objective in the last sort of five or six years. So that's where we see significant opportunity.
There's a lot of gaps in the field, particularly at the crest of the structure, and that's where these infill wells are being targeted. You know, we see quite considerable upside opportunity as we go forward.
I think that concludes our questions for today. Once again, I'd like to thank you all for joining our full year 2024 results webcast. I apologize for the technical difficulty that we had, and thanks for persisting with us. You may now disconnect from the webcast.