Horizon Oil Reports Gas/Condensate Discovery in PRL 21 in PNG

The Tingu accumulation is potentially similar in size to the Elevala gas-condensate field (2C contingent resource of approximately 400 billion cubic feet of gas and 22 million barrels of condensate). Horizon Oil, as operator of PRL 21, is currently carrying out FEED (front end engineering and design) of the Elevala and Ketu field developments. The Tingu gas-condensate accumulation will be incorporated in the development scope.

Participants in the PRL 21 joint venture are:

• Horizon Oil (Papua) Limited: 45 percent (Operator)*
• Talisman Energy Niugini Limited: 32.5 percent
• Kina Petroleum Limited: 15 percent
• Diamond Gas Niugini BV: 7.5 percent

Horizon Oil’s CEO, Brent Emmett, commented:

"This is an outstanding result for us in terms of:

• adding potentially 100 million barrels of oil equivalent in gas and condensate contingent resources to the reserves of PRL 21, in which Horizon Oil is operator and holds a 27 percent interest
• a combined development of Elevala, Ketu and Tingu has the potential to be a condensate recovery project of substantive scale
• providing a material increase to the gas resource in our PNG acreage, bringing us closer to achieving the threshold resource, when aggregated with other gas accumulations, required to feed a mid-scale LNG project and
• providing further confirmation of the low risk nature of the foreland basin play and the abundant hydrocarbon generation and entrapment

This last point, in particular, is encouraging for our shareholders, in view of Horizon Oil's large acreage holding in the play - 3,050 square miles (7,900 square kilometers) gross - much of which is centred on the condensate rich gas "sweet spot" of the western Papuan Basin. We have a large inventory of undrilled leads and prospects and the Tingu-1 result, which came in very close to our pre-drill prognosis, makes us increasingly confident of the ability of our technical team to expand the resource base further."

* Horizon Oil's interest reduces to 27 percent upon completion of its recently announced partial sale of its PNG interests to Osaka Gas Co. Ltd. In addition to aggregate milestone based consideration of $204 million, the sale provides for production adjustments in favor of Horizon Oil from Osaka Gas where threshold condensate reserves are exceeded. Subject to confirmation of the condensate reserves at Tingu, Horizon Oil may be entitled to a greater than 27 percent interest in the condensate reserves.