Horizon Oil : 2017 ANNUAL REPORT AND NOTICE OF AGM

24 October 2017

The Manager, Company Announcements Australian Securities Exchange Limited Exchange Centre

20 Bridge Street

Sydney NSW 2000

Horizon Oil Limited ABN 51 009 799 455

Level 6, 134 William Street, Woolloomooloo NSW Australia 2011

Tel +61 2 9332 5000, Fax +61 2 9332 5050 www.horizonoil.com.au

In accordance with Listing Rule 4.7, attached are Horizon Oil Limited's Annual Report for the year ended 30 June 2017 and the Notice of Annual General Meeting to be held on Friday, 24 November 2017.

The Notice of Annual General Meeting will be sent to all shareholders. A printed copy of the 2017 Annual Report will be mailed to those shareholders who have made the election to receive it. Copies of these documents can be downloaded from the Company's website www.horizonoil.com.au.

The Annual General Meeting will also be available on live webcast. To register, please copy and paste the link below into your browser:

http://webcasting.boardroom.media/broadcast/59ee9642b08d2638bd14f9e9

Yours faithfully,

Assistant Company Secretary

Horizon Oil Limited ABN 51 009 799 455

Annual Report 2017

2017 Highlights

Oil sales 17

incl. China cost recovery oil (mmbbls)

1.42

Maari Beibu

Cost recovery gain

Revenue

incl. hedging and China cost recovery (US$m)

Hedge loss Hedge gain Maari Beibu

Cash operating cost per barrel sold

(US$m) 15

14

13

Net operating cash 17

flow after opex

16

incl. hedging, China cost recovery

and excl. extraordinaries 15

(US$m)

14

13

Exploration and 17

development expenditure

16

(US$m)

15

14

13

NZ China PNG Other

2P Reserves + 2C 17

Contingent Resources

16

(mmboe)

15

2P 2C

14

Total 2C Contingent Resources are calculated after the acquisition of a 20% economic interest in PRL 40 and divestment of a 20% economic interest in PRL 28 occuring subsequent to

30 June 2017, subject to customary PNG government approvals. 13

Refer table 5 on page 9 for further details.

7.9

8.5

24.5

34.0

15

18

51.7

52.2

78.0

25

81.1

101.5

94.8

91.4

93.6

129.2

116.1

135.7

137.1

Horizon Oil Annual Report 2017

2017 Highlights

Oil sales volumes 3% higher than FY 2016 at 1,421,940 barrels, generating revenue of US$68.5 million

Average cash operating cost down 21% to US$11 per barrel of oil sold, driven by further cost savings in response to lower oil prices and a reduction in tariffs applying to Beibu Gulf production

Net operating cash flow from oil sales after operating expense of US$51.7 million, in line with FY 2016; forecast to average US$50 - 60 million pa out to calendar 2022

Free cash flow breakeven cost over FY 2017 of US$32 per barrel (incl tax, interest and all capex)

Net debt reduced to US$108.5 million (from US$131.9 million at 30 June 2016)

Beibu Gulf and Maari fields continuing to produce steadily at combined rate of approximately 4,000 bopd net to Horizon Oil, with remaining cost recovery production entitlement in Beibu Gulf equivalent to US$89.6 million

Good progress made on planning for the 1.5 mtpa Western LNG development project in Papua New Guinea with main project elements now in pre-FEED; acreage position strengthened and 2C resource materially increased as a result of strategic acquisitions

1

2

3

1. China

   Block 22/12 26.95%/55%

   (Production/Exploration)

2. Papua New Guinea

   PDL 10 (Stanley) 30%

   PRL 21 (Elevala/Tingu/Ketu) 30.15%

   PRL 28 (Ubuntu) 30%1

   PPL 40 (Puk Puk/Douglas) 20%1

   PPL 372 95%

   PPLs 373/430 100%

   PPL 574 80%

3. New Zealand

PMP 38160 (Maari/Manaia) 10%

2017 Highlights 1

Chairman and Chief Executive Officer's Report 2

Reserves and Resources Snapshot 6

2017 Reserves and Resources Statement 7

Board of Directors 12

Consolidated Results 12

Activities Review 13

• Production 14

• Development and predevelopment 18

• Exploration 20

Annual Financial Report 21

Sustainability Report 40

Shareholder Information 93

Glossary 95

Company Directory 97

1 Calculated after the acquistion of a 20% economic interest in PRL 40 and divestment of a 20% economic interest in PRL 28 occuring subsequent to 30 June 2017, subject to customary PNG government approvals. Refer to table 5 on page 9 for further details.

HHoorriizzoonn OOiill AAnnnnuuaall RReeppoorrtt 22001177 1