Ann: PRLs 4 and 21 Talisman Mitsubishi transactio, page-3

re: Ann: PRLs 4 and 21 Talisman Mitsubishi tr... re. HZN

HZN just announced the price paid by Mitsubishi for TLM interests in PRL4 and PRL21.

For PRL4, the price paid was in excess of USD$3.951 per percentage point. This values HZN's 50% interest in PRL4 in excess of USD$198m or AUD$188m at an exchange rate of $1.05.

For PRL21, the price paid was in excess of USD$2.951 per percentage point. This values HZN's 45% interest in PRL21 in excess of USD$133m or AUD$170m at an exchange rate of $1.05.

The TLM-MC deal values HZN's interest in PRL4 and PRL21 at USD$330m / AUD$315m.

HZN's market is AUD$351m at $0.31 yesterday 15/3/2012 versus the implied PNG value of AUD$315.

Maari and Beibu Gulf are worth a lot more than AUD$36m implied.

The TLM-MC deal is at 01/01/2012, i.e., before the Elevala result was known. Elevala was a success and will increase the value of PRL21 significantly. Firstly, the Elevala discovery has been derisked (it could have been a duster). Secondly, and more significantly, it appears that the Elevala structure is filled to spill. This means that there is very likely to be a resource upgrade in the order of 35% to 50%.

Conservatively, I believe that the Elevala success would make PRL21 at least as valuable as PRL4 on a percentage point basis. If this is the case, then PRL21 value would rise to AUD$169m. This values PRL4 and PRL21 at AUD$357m. More than HZN's current market cap.

If Ketu appraisal well is a success, it is realistic to expect the value of HZN's PRL21 interest to be valued in the vicinity of AUD$223m. This would give a combined PRL4 and PRL21 value of around AUD$400m - which is well in excess of HZN's market capitalisation.

Ketu is currently drilling, and is likely to be completed late April, 2012.

Cheers,
GDN