Thank you for standing by, and welcome to the Horizon Oil Limited Half- Year Results Webcast. If you wish to ask a question via the webcast, please enter it into the Ask a Question box and click Submit. I would now like to hand the conference over to Mr. Chris Hodge, CEO. Please go ahead.
Thank you very much for the introduction. Good morning, everybody, and welcome to the Horizon Oil 2021 Half- Year Results presentation. My name is Chris Hodge, the company's CEO, and with me is Horizon Oil's Chief Financial Officer, Richard Beament. I will make some introductory comments before handing over to Richard to run through the half- year results. I will then cover the operational performance of our assets and strategic outlook and direction before opening up to questions. How quickly things can change. Just three short months ago at our AGM, consensus oil price forecasts for 2021 were around $45 a barrel, and we're now enjoying prices well in excess of $60, with the forecast outlook from a number of commentators exceeding $70 per barrel.
This is good news for Horizon as it continues with its strategy of maximizing oil production from its existing assets and continuing to rationalize costs wherever possible. We're here primarily to talk about the half year results, which can probably be best described as a tale of two parts. Firstly, a challenging first quarter, the result of continued low oil prices struggling to stay above $40 and reduced production caused by a need for well interventions at both Beibu and Maari. Normally, workovers such as these are carried out promptly, but in this case, were finalized only after delays due to a variety of COVID-related restrictions. We had a far better second quarter, which saw production levels not just restored, but in some cases improved following successful workover activities.
This fortuitously aligned with a steady recovery in oil prices back above $50 per barrel. Pleasing that the company remained cash flow positive throughout the half year, and together with the receipt of $3.5 million from the sale of the PNG assets, it led to a material increase in net cash to $10 million. Consistent with our strategy of maximizing oil production, and despite low oil prices at that time, we had sufficient confidence, primarily due to the low operating costs, to invest in organic growth. We recently announced the successful completion of two infill wells at Beibu, which has boosted production from the field back above 10,000 barrels of oil per day. The initial production volumes have come online at a good time for us as oil prices continue to rally above $60. That obviously bodes very well for cash flow generation.
We can now look forward to oil markets continuing to recover, the imminent and long-awaited workover of a significant well at Maari, and for the Beibu WZ12-8E project in China to commence production early next year. With the strengthened balance sheet, continued low-cost structure, and strong production, and with the PNG divestment completed, the company was able to recently announce the return of capital to shareholders through a number of share buyback initiatives. Put simply, we are focused on creating shareholder value. I will now pass over to Richard to run through the financial half year results in more detail.
Thanks, Chris. Now, look, before I go through the results, I'd just like to emphasize that all references to dollars are US dollars, as this is the group's functional currency, since all revenues are generated and received in US dollars. It's also important to note, in the accounts in particular, that the divestment of the group's PNG operations during the period has been treated and classified as a discontinued operation in the half year accounts. The PNG income and expenses for the period have been excluded from both EBITDAX and underlying profit in the presentation. Moving on to the half year highlights. The table on the right in this slide summarizes both the half year and full calendar year results through to 31 December 2020.
In the context of the challenging 2020 environment, with a depressed oil price and COVID-related production disruptions, as Chris mentioned, the half-year results were solid, with EBITDAX of $11 million and a modest statutory and underlying profit, demonstrating the resilience of Horizon's producing assets. Notwithstanding that realized oil prices were 39% lower than the prior comparative period at just over $41 per barrel and production was 14% lower at just under 650,000 barrels, the company remained cash flow positive, generating $10 million from operating activities. This cash flow drove the $9.5 million increase in net cash to $10 million over the half-year . The strong cash flow was underpinned by high-margin production at both Maari and Beibu, where cash operating costs were maintained below $20 per barrel.
The cash generated, combined with the proceeds on the sale of the group's PNG assets, allowed for progressive debt reduction, continued investment in our assets to drive organic growth, and a further buildup of cash from which to initiate capital management initiatives, including the recently announced on-market buyback of up to 100 million shares, representing approximately 8% of shares on issue, and an unmarketable parcel buyback, which seeks to tidy up the share register and reduce administrative costs associated with managing roughly 1,300 small holdings, representing about 30% of total shareholders. Both initiatives are designed to increase shareholder value whilst not placing strain on the company's balance sheet. Whilst production levels were lower during the half year against the comparative period, workovers were safely completed at both fields during a period involving significant logistical challenges due to COVID-19.
Pleasingly, production levels were able to be restored 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 half-year . In terms of safety, the company's assets achieved a total recordable injury frequency rate of 1.37, which outperforms 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 in August 2020. Dissecting cash flow. In the next slide, we can see that gross revenue of $27.8 million before hedge settlements of $1.6 million and cash operating costs of $13.5 million, combined to generate net operating cash flow of approximately $13 million for the half year.
After deducting corporate costs, cash taxes, and interest costs, which combined total $3 million, resulted in net cash inflows from operating activities of $10 million. Of which approximately a quarter was applied to the repayment of debt facilities, with the remaining cash of just over $7 million retained, which is available to fund the group's announced capital management initiatives. The proceeds on the sale of the group's PNG assets were largely reinvested in capital growth programs, including the Block 22/12 WZ12-8E development and the WZ 6-12 infill drilling. To help dissect the half-year results further, the next chart shows the key elements which have driven the lower underlying profit result, and clearly shows the significant impact of the reduction in revenues due to the 39% lower realized oil price and 18% reduction in sales volumes.
As can be seen, the 23% reduction in operating costs of $7.5 million, combined with reduced taxes and royalties, helped to mitigate against the $17 million decrease in revenues resulting from the lower realized oil price. Continued discipline in spending across the business during the period helped to keep the company in an underlying profit position. To help drive lower costs, the company has reduced headcount by approximately 30% over the past year, scaled back exploration activities with an overall approximately $1.8 million reduction, primarily attributable to the group's PNG operations. Noting that the PNG reduction was largely included within discontinued operations in the accounts. Continued to pay down debt, which coupled with lower LIBOR rates, drove down interest costs. Turning over to the next slide, we can take a look at the full 2020 calendar year results compared against the previous four years.
As in previous presentations, we have 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 beginning of calendar year 2019. The first of these slides shows that base production and sales for the 2020 calendar year was just shy of the five-year average, with the COVID-driven reduced production at Maari impacting sales volumes. Importantly, much of the lower production at Maari has now been restored. With the additional infill well at Beibu and the remaining Maari workover to be completed over coming months, we would anticipate sales volumes returning to around the five-year average. Importantly, Beibu production has been very consistent over the five-year period.
It is this consistent production, together with low operating costs, which had been the predominant driver of Horizon cash flow over recent years, and provided the confidence to further invest in infill drilling and the WZ12-8E development. Maari production has also been a significant contributor, particularly over the last three years, owing to the successful acquisition of an additional 16% interest in the Maari-Manaia fields during 2018. The chart also clearly shows the contribution of Beibu cost recovery volumes to sales volumes in calendar year 2016 through 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 have recovered strongly through early calendar year 2021, which bodes very well for higher forecast revenues and cash flow generation in 2021. This chart also highlights the improvements made in balancing Horizon Oil's production portfolio in recent years, with the relative revenue contribution from Maari increasing from less than 25% in 2016 to over 36% in the current year following the 2018 acquisition. The next slide again shows the relative impact of lower oil prices on the group's profitability in the 2020 calendar year. Pleasingly highlights the resilience of the asset portfolio in continuing to generate strong EBITDAX and return an underlying profit despite the challenges faced in calendar year 2020. This result is driven by the group's low cash operating costs, which were again maintained below $20 per barrel.
Importantly, the group was able to continue to reduce per barrel operating costs despite the 14% reduction in production, highlighting the significant improvements made. While some cost savings resulted from deferrals of work, we expect that the majority of cost savings are 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 occurred during 2016.
The chart on the right shows how this strong and sustained free cash flow generation has aided the company in driving debt reduction in recent years, with a return to a strong net cash position of $10 million. The resilience of the cash flow, coupled with the rapid de-gearing and return to a net cash position, has provided the confidence to initiate the announced capital management initiatives. I will now pass over to Chris to provide an update on our asset portfolio and the outlook for the company.
Thank you, Richard. Detailed here is the geographic focus area for the company, which continues to be the Asia Pacific region. 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 whilst still managing risk. Our focus is to work with the operators of these fields to extract maximum value from our low cost production. These assets are the lifeblood of the company and provide significant leverage to the oil price for investors, aided by low cash operating costs, which remain below $20 per barrel. Turning now to China. Detailed on the map are the Block 22/12 fields, which are operated by CNOOC and Roc Oil. Horizon holds a near 27% interest in the producing 6-12 and 12-8 fields, and a 55% interest in any remaining exploration areas.
The oil fields are tied back to centralized CNOOC infrastructure, where oil is meted for sale and transferred via pipeline to the Weizhou Island terminal. These fields continue to reliably provide approximately 70% of Horizon's cash flow. The next slide provides a summary of our China fields and shows the historical production performance from Block 22/12. These are conventional oil fields which ordinarily suffer from natural reservoir decline. Impressively, however, the joint venture has managed to sustain gross production at an average of over 9,100 barrels of oil per day for the last five years. While production during the half year dipped below the long-term average, a workover program followed by the successful two well infill program has restored and increased production back over 10,000 barrels per day. Current production is approximately 10,200 barrels a day.
These 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. In the near term, production rates are forecast to be maintained by the recently completed two well infill drilling program, but will gradually decline throughout the year. Production is forecast to be increased above 10,000 barrels a day in early calendar year 2022, when the 12-8 East development comes online. The objective of the joint venture is to continue to maintain production rates well into the future, as has been successfully achieved in the past. Further infill and near field appraisal opportunities are being considered by the joint venture to replace reserves and maintain production rates.
Importantly, our decision to continue to invest in production opportunities during the pandemic has provided the company with the opportunity to accelerate revenue and free cash flow generation as oil prices recover. Our ability to invest in these organic growth projects 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, and field decommissioning costs have been prepaid into a sinking fund. Accordingly, these fields are expected to continue to generate strong free cash flow for the group over the medium to long term. Turning now to China Block 22/12, the new development. The final investment decision for the 12-8 East development was confirmed by the block joint venture during the period, with fabrication of the wellhead platform was well advanced, and as you can see the photos are on the slide.
The development provides an additional production hub in the block to develop the remaining discovered reserves, including v 12-8E and 12-3 fields, with the first phase of the development expected to recover 0.6 million barrels of 2P reserves net to Horizon. With the installation of a new wellhead platform, which is tied back to the 12-8 West platform, as shown in the schematic on the slide, further infill and near-field appraisal opportunities can be accessed with the objective of fully exploiting remaining opportunities in the block through subsequent development phases. Upfront capital costs for development have been minimized through leasing of the platform, with key elements of both the development and operating costs contractually linked to the oil price, acting as a natural hedge to ensure the first phase of development is insulated from oil price volatility.
The development remains on track for first oil in early calendar year 2022, with the average incremental gross production rate in the first year of production expected to be approximately 4,000 barrels of oil per day. Horizon Oil's share of overall development costs are forecast to be approximately $15 million, phased predominantly throughout the remainder of this year and into 2022, with approximately $2.6 million incurred to date. All development costs can be readily funded from forecast free cash flow. We remain quite optimistic with this development as the timing of first oil is looking to be quite favorable, with many commentators anticipating even higher oil prices by year's end as oil demand returns to pre-pandemic levels. Turning to Maari and Manaia fields in New Zealand, Detailed on the map are the fields which are currently operated by OMV, in which the company has a 26% interest.
The 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, driven by continued water injection into the fields. The next slide provides a summary of Maari and shows the historical production performance over the last three years. As with Beibu, while these are conventional fields which normally suffer from natural reservoir decline, initiatives implemented in recent years, primarily involving water injection and production-enhancing workovers, have reduced field decline, with daily production at an average of approximately 6,000 barrels a day for the last three years. While production rates during the half year were impacted by the shut-in of three wells, two workovers were completed during the period to restore production, as can be seen in the historical production chart.
Pleasingly, production rates from the field have been very stable over the recent months, with little or no decline, highlighting the effectiveness of water injection into the field. The operator is progressing plans to work over the MR-6A well over the coming months, which is anticipated to restore a further 1,000 barrels of oil per day to production. Current production from the field is approximately 5,500 barrels of oil per day. Pleasingly, the current operator, OMV, made significant strides during calendar year 2020 to reduce the overall cost structure at Maari through various initiatives, which sets up the operation to continue to deliver strong cash flow generation into the future. While we are encouraged by the potential value to be unlocked by Jadestone as new operator and joint venture partner, we commend OMV for their management of the asset, particularly through the challenges faced in 2020.
They delivered safe operations, drove the cost structure down, and have restored production to levels which ensure strong, stable cash flows. Completion of the sale transaction between OMV and Jadestone Energy remains subject to joint venture and New Zealand government approvals, which have been delayed due to Covid-19 and the New Zealand government elections. OMV and Jadestone Energy continue to express their commitment to the transaction and extended the long stop date to 30th of April 2021. OMV will continue as operator of Maari until and subject to completion of the proposed transaction. Turning now to the outlook. The outlook for the company is very positive. We have strong operational cash flows as the result of higher oil prices, sustained low operating costs at less than $20 a barrel, and production has been increased by successful infill drilling.
We're targeting between $25 million to $35 million US in cash flow from operating activities. We have a strengthened balance sheet and expected acceleration in cash flow generation over the next year is forecast to provide us with the capacity to repay the majority of the outstanding debt, which matures in July 2022, to fund continued growth of our existing assets, particularly via the 12-8E development and possible additional drilling, fund the announced capital management initiatives, and seek out further growth opportunities. With a strengthened balance sheet and strong cash flow, our focus is on delivering shareholder value. This is to be achieved through maximizing the value of our base business, basically nurturing our producing assets to extract maximum value. Providing return to shareholders.
This has been initiated with the announced buyback programs, with an aspiration to commence regular distributions to shareholders targeting up to 30% of free cash flow per annum. Finally, delivering suitable growth opportunities with the intention to create long-term value so that we have the potential to sustain reserves to shareholders well into the future. One final word. Our sector is changing at a rapid rate, as are the views of our stakeholders and society at large. We must adapt if we are to flourish. Accordingly, the company continues to focus on ESG, environmental social governance, and has significantly enhanced our disclosures in this area as set out in our sustainability report released during the half year.
We're developing an ESG action plan to drive the continuous improvement of our sustainability or non-financial performance over the next 3 years. We very much look forward to the year ahead and hope that it will be a successful one. Just on the final slide is the financial year 2021 guidance, assuming no material adverse operational or economic changes. That concludes the formal part of the presentation. We have a screen in front of us. We can see several questions coming through. If you can just bear with us for a moment or two or for a half a minute or a minute, we'll just put the speakers on mute, and we'll just see what questions we have and so that we can commence answering them.
Our first question, Richard, is the Board considering undertaking a share consolidation?
Look, that is something that the Board has considered and is considering. Obviously, our focus has been on maximizing shareholder value, and so we've initiated with our share buyback, which obviously we see as the best way to maximize value in the near term. We may consider a share consolidation in the near future. I guess we're very conscious of the administrative requirements and having to seek shareholder approval, but it's something we may look at in the not-too-distant future.
Okay. Our next question is: Is there any planned debt retirement in the second half of 2021? If so, how much is required in dollar terms?
We've got obviously $23 million of gross debt outstanding to be repaid by July 2022. There's about $15 million, which is contractually required to be repaid in 2021 calendar year. Roughly about $6 million of that in the first half of calendar year 2021.
Okay, the next question we have here is, firstly, they appreciate the share buyback. Is it possible for the company to return capital to shareholders via cash capital returns in a tax-efficient manner? Will future cash returns be via dividends or capital returns?
Look, we appreciate the question. Obviously, we've highlighted that it's our aspiration for future returns. Obviously, the current priority is the share buyback. Absolutely, when we consider capital management initiatives, we're very cognizant of the tax consequences for shareholders, and whether that be dividends. I think most people are aware we don't have franking credits available, as we don't pay any significant sums of Australian tax. It's something we're cognizant of, and certainly if we go down the future path of dividends, we'll certainly consider whether there are other more tax-effective ways to return capital.
Next question is: Can you please discuss and explain the $9.75 million of restricted cash under the cash facility, and what is the borrowing capacity of these assets?
The restricted cash, essentially, it's associated with a bank account, which is tied to our debt facility and all of the cash generated from Maari and Beibu essentially goes into that bank account, and it can be used to pay operating costs, capital costs associated with the assets. Subject to us meeting certain covenants compliance tests on a quarterly basis. We can then essentially distribute cash out of that account to our broader operations. Obviously, if we're doing capital management initiatives, we can do it. It's more restricted for a period, I would say, of sort of a quarter at best, before we can release those funds. As to borrowing capacity, as I sort of mentioned, the current debt facility runs out in July 2022, and we're essentially on a fairly fixed amortization profile through to maturity.
Obviously, the assets would have some further inherent debt capacity, but we haven't sought to refinance those assets or that debt facility at this time. We don't envisage doing so at this stage.
Okay, the next question is: when does the Beibu concession expire, and does infill drilling activity extend this concession?
The entire Beibu contract, it expires in 2030. The current producing fields, 6-12 and 12-8 West, they have an end date in 2028. For example, the 12-8 East development, subject to the performance of the production and future infill drilling, that development and any future drilling attached to that could go out to 2030. To go beyond that date would require essentially CNOOC to sort of provide that concession.
Can you please discuss and explain the New Zealand remediation provision? Specifically, what is the interest rate, and how does this unwind?
At present in the balance sheet, we hold a provision for decommissioning of the Maari facilities. It sits in the accounts of just under $29 million. Look, the interest rate on that, we use essentially the U.S. government bond rate, which is currently only about 1%. It unwinds over the remaining sort of license period for Maari, which runs out to 2027. Could be longer than that. Certainly, current production performance and oil prices would allow for that. Certainly, Jadestone, as potential new operator, have views to take the facilities out to the early 2030s. Currently, we unwind it out to the end of the current license period.
Okay. Next question we have is, Have you had any pushback from your senior lenders in relation to ongoing lending for the business beyond FY 2022, given the recent ESG overlay that banks are now applying to fossil fuels?
All of our banks continue to be supportive. They've made various announcements in the press around ESG and future funding for the fossil fuel sector. I guess it's part of our reason for focusing so heavily on ESG, in particular, having an action plan. That's certainly what the banks are expecting from us. Certainly won't have any particular ramifications on our existing debt facility, but for future financing, obviously, there'll be a very keen focus of the lenders on ESG credentials and what companies are doing.
Great. Thanks, Richard. Next question for you, Chris. Given there is a global shift away from fossil fuel energy sources such as oil over the medium term and likely gas over the longer term, rather than pursuing an acquisition strategy, wouldn't it make more sense to maximize cash flow from Horizon Oil's two high-quality assets and return most of this free cash to shareholders?
That's a very good question, and there will be a global shift away from fossil fuels. Notice you say there in the medium term and then with gas over the longer term. The thing is, at the moment, there's still a strong need for oil. There's been very little investment in oil over the last few years. At the moment, the majors are pulling out of oil at the moment. They're abandoning fields prematurely. There's a shortage of supply. The combination of several significant companies pulling out, the shortage of supply means there's a very good chance that oil price will rise significantly over the next decade. Probably all majors are precluded from participating in those investments. I think there's a very good opportunity for a company like Horizon to participate.
As to gas, you say the longer term, I think, we're forecasting in Australia that there's going to be strong gas demand for the next 10 to 20 years, and there's very much an opportunity there. At Horizon, we're very well set up. We've got a very strong team here. We've got a very good subsurface team. We're very well connected in the industry, and increasingly, we're finding that opportunities are coming. They're getting better and better, and we're able to discuss with the vendors directly rather than going through third parties. Overall, we're very optimistic about oil and gas. That the future, we're well set to invest further. That's our plan at the moment. I don't want to put one caveat in that, is that we're not just gonna grind on forever and ever.
If we don't get something significant or if in the next, let's just say, the next 12 to 18 months, and then we'll certainly be looking at the strategy which you pose there, which is to return the free cash to shareholders. Right now, we're very optimistic about the growth potential for Horizon.
The next question we have here is: have you started the on-market buyback, and if not, why not?
Look, as we sort of noted in our press release, I think it was on the 15th of February, we've lodged all of our required documents with ASIC. Essentially, you need to give them 14 days notice before you can commence the buyback. No, we haven't commenced as of yet. Off the top of my head, I think it's the middle of next week when we could commence that at the very earliest.
The next question we have here is that there have been rumors of future regulatory action in New Zealand as a result of several bankrupt offshore operators abandoning their abandonment liability and leaving New Zealand taxpayers holding the bag. Do you expect the New Zealand government to insist that rehab liabilities be cashed back into a sinking fund?
Look, it's been a fairly topical area. We certainly would expect that over the coming years, that there will be further regulation in this area. At the moment, it's a little bit opaque in New Zealand what the requirements are. Certainly, I think they're focused primarily, and there's probably no surprises here. This will be a focus from the regulator on Jadestone, in particular, coming into the venture. Do we expect them to insist on cash being put into a sinking fund? Certainly, they haven't approached us for that. Obviously, as a prudent company, we'd have to consider that. As I mentioned earlier, we don't see Maari decommissioning until toward the end of the decade, if not into the early 2030s. We don't see that as something that we'll have to do any time soon. Obviously, we'll wait and see.
Okay, the next question is on hedging. What is your oil hedging policy for the year and beyond as a % of oil production, especially given that the current oil price is above $60 a barrel?
Look, our current hedge position is at the 31st of December, we held 300,000 barrels hedged out to the middle of the year. That's sort of largely skewed towards this current quarter. There's 180,000 barrels for Q1 and 120,000 barrels for Q2 at a weighted average price of about $50 a barrel. We don't have any mandatory hedging requirements. Obviously, the policy we've had is fundamentally a risk management policy and one to ensure that we can meet all of our commitments. For this current period, the current hedges were largely put in place to ensure we could meet all of our debt repayment obligations and the China infill drilling. Once we're sort of through these hedges, we don't currently have a view to have significant hedges beyond that date.
Our next major capital commitment is the WZ12-8E development, and that has essentially a natural hedge within the project cost structure, where higher oil prices lead to a higher capital cost and lower oil prices lead to a lower capital cost. There's a very natural hedge in that project. We're very mindful oil prices are on the rise. There's a lot of positive sentiment around oil prices lifting, and so certainly, we're not in any particular hurry to put in place significant levels of additional hedging at this time.
Okay. The next one, Chris, is regarding the Jadestone transaction. Can you please provide an update, and is there a long stop date expiry on closing the acquisition? When do you expect the transaction to close?
Thanks. Look, there is a long stop date, and that long stop date is the 30th of April for this year. As it happened, I've spoken to senior managers at both Jadestone and OMV last week, and they're both fully committed to the transaction.
Yeah. Okay, the next one is regarding the share options, the outstanding IMC options. What is the latest exercise date and the exercise price per option?
The latest exercise date, it's around the middle of September this year, and the exercise price is AUD 0.061.
Okay. Next question we got here is, under what circumstances would a dividend be paid?
That's a very direct question. We made an ASX release last week, and I'll just read it again. Just the key part is our aspiration is to move towards periodic capital distribution to shareholders through a mixture of buybacks and dividends that are sustainable through the oil price cycle and when it is prudent to do so. The Board has determined a target payout ratio of up to 30% of free cash flow generated per annum. Our aspiration is we'd very much like to pay a dividend, but beyond what we've stated in the ASX release, I'm not really in a position to comment further.
Okay. One question we've got here is the indication of an average oil price achieved since the start of 2021.
L ook, off the top of my head, it'd be roughly about $54, $55 for the period through the last couple of months.
Another question regarding the guidance. What oil price assumptions for 2021 for the sales revenue of $55 million-$60 million?
Just to clarify, that guidance was for the financial year 2021. Just through to the 30th of June. That doesn't cover the full calendar year. Obviously, half of the period is already done. The oil price assumptions we've used is between $55 and $60 a barrel. Obviously, current oil prices of $67 a barrel. We'll certainly be expecting we're at the upper end, if not above that guidance as of today. I guess, will those prices be sustained for the remainder of the financial year? That's to be seen. If we materially see those numbers moving, then we'll obviously update our guidance.
Next question is, can you comment on the type of assets that you're currently looking at? Can you comment on assets that you have looked at and decided not to proceed?
We've got a bit of a clean slate at Horizon. We've got these two producing assets in two companies. We've got no nucleus around which to build a new business. We've been looking at a lot of things, a great variety of things, with the underlying objective that we can provide value for shareholders and preferably over the long term, and that it's complementary to the existing assets. As we've indicated, we've been looking primarily in the Southeast Asia, Australasia region. We particularly like gas because gas can be longer lived, and it's a natural hedge to oil, and it's complementary to oil. Like I said, the key element is that it creates value. There might be something that we normally wouldn't look at, but because we can get it really cheap and it fits with the existing assets, that's something we may consider.
Is there anything that I can say that we've looked at and rejected? I'd prefer not to. I've steered away from that in the past because, in a sense, we're criticizing someone else's assets, and we have to work collaboratively in this industry. I prefer not to cast some sort of doubt on other company's assets. As I said previously, I think initially when I started this process, I've been in this seat for about a year. When we started the process of looking to see what opportunities were available, primarily we were looking at farm-ins from other companies. We were quite late in the queue. We were looking at opportunities from investment bankers, et cetera, et cetera, where they were competitive.
I think as we progressed through this year, the relationships that we have with other companies have got stronger, and we're finding that we're very much at the front end of deals. We're there negotiating directly with companies to sell something before they've even decided to sell it themselves or to participate with them. I'm more confident now in our ability to achieve something that's going to be a good fit for the company than I might have been a year ago. We're not in a rush. We want to get it right, and we're not going to keep going on to ad infinitum. Notionally, we're going to give only ourselves a year, a year and a half, but I'm very confident that we can get the right growth story for Horizon.
Okay, got another question here regarding the China block. They just want to check regarding the development of 12-8E and the WZ 12-3 fields, and whether they can start production at the same time or is it a phased development? Also, are there any plans for the WZ 12-10-1 block, and is this considered as WZ 12-10?
Look, the WZ12-8E development encompasses both WZ 12-8E and WZ 12-3. There's seven wells to be drilled in total. One of those wells goes into the WZ 12-3. Obviously, they largely will come on at roughly the same time, albeit that obviously as you drill the wells consecutively, they'll bring wells on as they drill them. They're expected to all come on broadly together. WZ 12-10-1, look, it's a discovery, a contingent resource, which is in fairly close proximity to the WZ12-8E facility. We haven't made a decision at this stage, but the joint venture may consider tying that back in as an infill well opportunity once the development's completed.
Okay. Final question I think that we've got at the moment. What will be the approach for the buyback in regards to how aggressive the company will buy shares, considering recent developments in the oil price?
Look, we obviously, at the current share price, just over AUD 0.09, we as many others in the marketplace consider this fairly undervalued. Certainly, we will get moving on this fairly aggressively once we start. I note that there's restrictions on the capacity to trade in your own shares. You can't buy essentially. We can only trade in a window of 5% above the five-day VWAP. There's restraints on that, and we won't be buying all the volumes on any given day, for example. There's limitations there, but at the current share price, we'd be fairly aggressively acquiring shares.
I think that concludes all our questions. I'd like to thank all those that have asked questions. I'd like to now pass you to the operator, who will conclude the webcast.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.