From Morgan Stanley: June 20 = BUYHorizon Oil: Quick Comment:...

From Morgan Stanley: June 20 = BUY

Horizon Oil: Quick Comment: Beibu Development on Track
Horizon Oil (26.95%) has provided an update on its Beibu Gulf Project in China. The 10-well development drilling campaign on the WZ 6-12 platform is complete – ahead of schedule and within budget. Production from the WZ 6-12 field is currently 10,000 bopd gross, Horizon Oil’s share is 2,700 bopd and ROC Oil’s share (19.6%) is 1,960 bopd. The jack-up drilling rig has recently moved off the WZ 6-12 platform and onto the WZ 12-8W wellhead platform (to the south) for a five-well development drilling campaign. This campaign is forecast to finish in September. Production for the whole Beibu project is forecast to plateau at 16,000-18,000 bopd (ROC guides 15,000 bopd) at this time. Horizon’s share of this production would be approximately 4,500 bopd. Production from this development is currently at the higher end of HZN’s expectations. The development demonstrates confidence in CNOOC as operator, as the WZ 6-12 development was delivered safely, on time and within budget. The Beibu development provides Horizon Oil and ROC Oil with production growth. Cash flow will help Horizon Oil to fund its development programmes in PNG and New Zealand. We retain our Overweight recommendation.