Ann: Strategic alliance with Osaka Gas in PNG , page-13

Morgan Stanley still has it as overweight, "eases cash concerns and threat of equity raising" Morgan Stanley views the price as "handsome" and notes Osaka Gas...as good partner... see below...

"HZN announced that it has entered into an
agreement to sell 40% of its interests in PNG PRL 4
(Stanley condensate/gas), PRL 21 (Elevala/Ketu
fields), and PPL 259 to Osaka Gas. The farm-down
creates a “strategic alliance” with the Japanese utility
company for the development of a small-mid-scale LNG
project for HZN’s gas resources, and also condensate
sales and local gas/LPG sales.
Osaka will pay US$74m up front for 40% interest in
PRL 4, PRL 21 and PPL 259. Osaka will pay an
additional US$130m to HZN upon FID for an LNG
project. Osaka will also have an option to farm in to
HZN’s other PNG permits – the recently acquired PPLs
372, 373 and 430. We view the total figure of US$204m
as handsome, and it signals market value for HZN’s
PNG gas and condensate resources. The structure also
provides an incentive to HZN to make progress towards
commercialization, in the form of small-mid-scale LNG.
Osaka as a potential off-taker, and potential financier
of any LNG development, lends credibility to the
potential commerciality of the venture. Osaka also has
interests in North West Shelf, Ichthys, Gorgon and
Wheatstone LNG projects."

"We see this deal as positive. It provides some cash for
HZN, needed to soothe market concerns on funding
while it is undertaking capex on Beibu (ramping up),
Stanley and Maari (NZ exploration/development
program in 13/14). It also dilutes HZN’s capex and risk
exposure for further development of its PNG resources.
We retain our Overweight recommendation."