agm takeaways

First up a well run meeting. Wont bother with the actual resolutions and voting - all carried with 98%+ support.

Y'all can read his prepared presentation. I'll organize my comments along the lines of the Assets. All commentary below is my best effort at note taking and memory and reflects my opinion (which is now Buy)

New Zealand:

Forward looking it would appear that NZ is likely to be close to a double in bopd for the exit rate CY 2014. Repairs to FPSO completed, and there is some reconfiguration of the field to improve existing recovery that say takes up existing (net) production to about 1,000 bopd.

The Manaia-2 is a successful EXPLORATION well (it will be P&A). The success is the second sand reservoir beneath the existing producing reservoir in the Mangahewa formation (beneath existing producing well) which showed virgin pressure. What this means is that a development well will be drilled from the platform later next year (est gross is $35M - $40M for such a well. Now on basis that Whio is successful, our WI is 10% - so our net cost is $4M but that is against the additional of gross 10Mmbo recoverable (best guess) so net to HZN its 1Mmbo with netback in the $70 range - that's a great return).

Significant investment occuring in Maari (gross +/-$300M) where approx 4-5 wells are to be drilled 2014.


China:

Not alot to say here - all systems go - great project, ahead of schedule, under budget, extending the field with Phase2.

Pretty much running at around 4,400 bopd (net), which still has upside after the remaining 5 wells come off natural flow and onto downhole ESPs.

So this confirms the 2013 Exit rate of 5,500 bopd for production (which $100K per flowing bblo yields $550M valuation). For MC then subtract net debt ($176M as at Jun 30) and we aren't to far off where we should be now (IMO)


PNG:

OK now this is where it gets exciting (for me). First, second and third it is about the PDL being issued.

Previous point raised by me regarding unitization has been addressed - parties have agreed (no details). Just the Gas Agreement and Development forum. I feel this will be coming "shortly".

So that creates the $65-$70 payment from OG - thus reducing net debt which will improve MC and SP.

Now HZN very cleverly included the ability to deliver feedstock gas to LNG facility (that would be to XOM) as counting to receiving the $13oM for FID LNG project.

The quote was "Selling 500Bcf for $4Mcf" (actually said in Gj but I can't work in that metric) and collecting $2B" - that's a deal I would every day.


Very positive future IMO. Looking at the forecast conservatively for FTM exit at say 6,500 bopd @$100K multiple - so $650M less net debt of say $100M or less - gives $550M min (to which upside needs to be considered) - which gives SP of say 45cps near term (<12 mths)

All IMO.