grabbed a significant chunk of this today

bought HZN today on broker recommendation. Merrill Lynch has published an excellent 30 page report 7/4/10.

The first page provides a good synopsis.

Initiate with BUY and A$0.43ps PO, based on?
We initiate on HZN with a Buy rating and 12-month DCF-based price objective of A$0.43ps. HZN provides investors with exposure to significant upside through key development projects in PNG & China. Combined, these have the potential to lift headline production and underlying cash flows by more than three-fold in the next 3-5 years. With this growth underpinned by existing discoveries ? not exploration ? we believe that the shares offer a compelling risk/reward balance.

?compelling upside towards A$1.0ps, with?
Our BUY thesis is predicated on HZN?s ability to commercialise at least part of its significant gas/condensate resources in PNG. We believe the potential of these assets is currently undervalued by the market given: (1) it has secured a JV with a highly competent and well-funded global player (Talisman); (2) PNG?s attractive
fiscal regime; (3) expansion of gas infrastructure as a result of PNG LNG, &; (4)strong Asian gas demand growth, all supports the development case.

?near term catalysts, supported by?
We see a number of catalysts to drive HZN?s near term share performance ahead of its peers through 2Q-3Q10: (1) Chinese government approval for its Wei 6/12 development; (2) significant appraisal upside (~40mnbbls, gross) at its producing Maari oil field in New Zealand, and; (3) approval of the Stanley Development Licence in PNG along with completion of the Stanley-2 development well.

?a solid balance sheet and producing assets
With strong cash-flows from its Maari oil field and a small net cash position, we believe HZN is in a solid position to pursue its growth pipeline. The balance sheet could become stressed in a blue sky case, but using a more normal outlook we believe the company should be able to fund its share of Beibu Gulf and PNG liquids cycling without the need for additional equity.

Bear case is 28 cents
Base case is 43 cents
Bull Case is $1+