Horizon Oil : Annual Report for the year ended 30 June 2021

HZN ADVISES ANNUAL FINANCIAL RESULTS

The results for the financial year ended 30 June 2021 are set out in the attached results announcement, Preliminary Financial Report (Appendix 4E) and Annual Financial Report. All references to reserves and contingent resources within the financial report are drawn from the Horizon Oil 30 June 2021 Reserves and Resources Statement contained in the attached Annual Report.

HIGHLIGHTS

Production and Financial metrics within / exceeding FY21 guidance range

• Production and sales volumes for the 2021 financial year were both within guidance at 1.3 million bbls.
• FY21 revenue exceeding the top end of Horizon's guidance range at US$63.6 million.
• EBITDAX exceeding the top end of Horizon's guidance range at US$36.4 million, with statutory profit after tax of US$8.0 million.
• Net cash increased to US$31.7 million at 30 June 2021, aided by the receipt of A$18.3 million on exercise of the 300 million outstanding options held by Samuel Terry Asset Management.
• Additional hedging implemented to protect cashflows from commodity price volatility covering approximately 50% of forecast production to 31 December 2021. 300,000bbls are hedged using a mixture of swaps, collars and options with a weighted average floor price of ~US$69/bbl, with the majority of instruments retaining exposure to higher oil prices.

China Beibu Gulf WZ12-8E Development to produce first oil in Q1 2022

• Construction and fabrication of the facilities for the WZ12-8E development remains on schedule. Key milestone achieved with the wellhead platform moved onto the water in preparation for towing to the field - first oil anticipated in Q1 CY2022.

Capital Management including capital return of 3 cents per share

• An AUD 3 cent per share (~US$35 million) equal share capital return was paid on 23 August 2021 following approval by shareholders at an extraordinary general meeting (EGM) on 10 August 2021.
• On-marketshare buy-back undertaken with a total of 20.3 million ORD shares having been bought back at an average price of AUD 8.7 cents per share.
• Off-marketunmarketable parcel buy-back completed resulting in the acquisition of 2.7 million shares being bought back at a price of AUD 8.3 cents per share.

COMMENTING ON THE RESULT, HORIZON'S CHIEF EXECUTIVE OFFICER, CHRIS HODGE, STATED:

"This has been a highly significant and pleasing financial year for Horizon.

Despite the economic headwinds encountered during the first half of the year, a strong recovery in oil prices during the second half combined with continued strong production from both Maari and Beibu contributed to favourable results. Cashflow generation accelerated during the year which, aided by a one-off capital injection of A$18.3 million from the exercise of options, supported the Board's decision to initiate a number of significant capital management initiatives, including the recent 3 cent per share capital return.

Looking ahead, encouraged by a strong oil price outlook, we are focusing our efforts and influence on how to maximise production and revenue from the producing fields and especially to the successful commissioning of the WZ12-8E field in China.

We are optimistic for another good year ahead."

2021 ANNUAL FINANCIAL RESULTS ANNOUNCEMENT

A financial summary and key financial and operational results are set out below: [All figures are presented in United States dollars, unless otherwise stated].

FINANCIAL SUMMARY

	HORIZON 2021 FINANCIAL YEAR RESULT			30 JUNE 2021		30 JUNE 2020		CHANGE
			US$'000		US$'000		%
	Oil and gas sales	bbls	1,265,725	1,427,521	(11%)
	Oil and gas production	bbls	1,334,814	1,475,562	(10%)
	Sales revenue		63,571	84,025	(24%)
	EBITDAX1		36,391	51,392	(29%)
	Statutory profit/(loss) for the period			8,009		(55,139)		115%
	(Profit)/loss from discontinued operations		(3,147)	71,535	104%
	Financing cost/(income) - Unrealised movement in value of options		2,930	(8,047)	(136%)
	Underlying profit after tax			7,792		8,349		(7%)
	Cash on hand			44,436		25,920		71%
	Cashflow from operating activities		23,161	36,731	(37%)
	Senior debt facility2		12,740	25,431	(50%)
	Net Cash2			31,696		489		>100%

Note 1: EBITDAX and underlying profit are financial measures which are not prescribed by Australian Accounting Standards and represent the profit under Australian Accounting Standards adjusted for interest expense, taxation expense, depreciation, amortisation, exploration expenditure and profit/loss from discontinued operations. The directors consider EBITDAX to be a useful measure of performance as it is widely used by the oil and gas industry. EBITDAX and underlying profit information has not been audited, however it has been extracted from the audited annual financial reports for the periods ended 30 June 2021 and 30 June 2020.

Note 2: Represents principal amounts drawn down.

The Group's CEO, Chris Hodge, and CFO, Richard Beament will host a webcast on 26 August 2021 at 11.00am (Sydney time) to discuss the Group's operations and financial results for the Financial Year.

To register, please copy and paste the link below into your browser https://services.choruscall.com.au/webcast/horizon-

210826.html

Authorisation

This ASX announcement is approved and authorised for release by the Company Secretary.

2021 ANNUAL FINANCIAL RESULTS ANNOUNCEMENT

APPENDIX 4E

PRELIMINARY FINAL REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021 (ASX:HZN)

ABN 51 009 799 455

This Preliminary Final Report is provided to ASX Limited ('ASX') under ASX Listing Rule 4.3A.

This information should be read in conjunction with the Annual Financial Report for the financial year ended 30 June 2021.

Current reporting period:	Financial year ended 30 June 2021
Previous corresponding period:	Financial year ended 30 June 2020
Results for announcement to the market
			PERCENTAGE		AMOUNT
			CHANGE		US$'000
Revenue from continuing operations		Down	24%	to	63,571
Profit from ordinary activities after tax	Up	>100%	to	8,009
Profit for the period attributable to members	Up	>100%	to	8,009
Underlying profit after tax		Down	7%	to	7,792

Dividends/distributions

	AMOUNT PER SECURITY	FRANKED AMOUNT PER SECURITY
Final dividend	Nil	Nil
Interim dividend	Nil	Nil

During the financial year Horizon completed an on-market share buy-back with a total of 20.3 million ORD shares having been bought back at an average price of AUD 8.7 cents per share. An off-market unmarketable parcel buy-back was also completed resulting in the acquisition of 2.7 million shares being bought back at a price of AUD 8.3 cents per share.

Horizon Oil Limited received approval from shareholders, at an Extraordinary General Meeting (EGM) held on 10 August 2021, for an equal share capital return of AUD 3 cents per Ordinary share. Following approval at the EGM, payment was made to eligible shareholders on 23 August 2021.

APPENDIX 4E | PRELIMINARY FINAL REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021 (ASX:HZN)

Net Tangible Assets

	FY2021	FY2020
	US CENTS	US CENTS
Net tangible asset backing per ordinary share	6.9	6.3

Controlled entities acquired or disposed of

On 2 December 2020, the Group disposed of 100% of the share capital in Horizon Oil (PNG Holdings) Limited, Horizon Oil (Papua) Limited, Horizon Oil (Ubuntu) Limited and Horizon Oil (Ketu) Limited. The financial performance of these entities for the current and prior period has been disclosed as profit/(loss) from discontinued operations in the consolidated statement of comprehensive income. No controlled entities were acquired during the current reporting period.

No controlled entities were acquired or disposed of during the prior reporting period.

Reconciliation of profit after tax from ordinary activities to underlying profit after tax

	2021	2020
	US$'000	US$'000
Profit/(loss) after tax from ordinary activities	8,009	(55,139)
(Profit)/loss from discontinued operations	(3,147)	71,535
Financing costs/(income) - Unrealised movement in value of options	2,930	(8,047)
Underlying profit after tax	7,792	8,349

Notes:

Reports are based on audited consolidated financial statements.

All figures are presented in United States dollars, unless otherwise stated.

Underlying profit after tax is a financial measure which is not prescribed by Australian Accounting Standards and represents the profit under Australian Accounting Standards adjusted for unrealised non-cash financing costs associated with the revaluation of the options issued under the 2016 subordinated loan facility and the profit/loss generated from discontinued operations. Underlying profit after tax information has not been audited. However, it has been extracted from the audited annual financial reports for the financial years ended 30 June 2021 and 30 June 2020.

Authorisation

This ASX announcement is approved and authorised for release by the Company Secretary.

APPENDIX 4E | PRELIMINARY FINAL REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021 (ASX:HZN)

ANNUAL REPORT

2021

Horizon Oil Limited

ABN 51 009 799 455