Ann: Quarterly Activities Report, page-17

Bruce,

IMC Loan

HZN must refinance the RBL by Nov18 from memory.  Clearly this is on the verge of happening, otherwise HZN would be running around trying to arrange alternate financeing.

I believe that it is high;y likely that the remaining usd$20m higher-cost IMC loan will be repaid as part of the RBL-refinancing.  Now, this will likely be a combination of cash and an increase in the RBL

Cost Recovery Entitlement

FYI, a brief explaination of CRE.  CR Oil is 60% (from memory) of production.
All JV partners recover past costs based on their interest in the JV until they have recovered their past costs.

HZN funded/funds CNOOC's costs during exploration, and CNOOC funds it's own development ocsts.

Currently CNOOC has recovered all it's past development costs, so HZN is entitled to CNOOCs share of CR Oil as well as HZN's share.

Once HZN has recovered past costs / CRE, then each partner is entitle to its share of CR Oil.  Not sure how it works, but CR Oil may simply become Profit Oil once all costs have been recovered.

Not sure if I have been very clear.

HZN (orginal interest) had 55% of BG, and once CNOOC backed-in for 51%, HZN has 26.95% (current interest).

Another way of looking at (and it is more complex than this) it is that when

1. CNOOC has costs to recover: HZN share is 26.95% * Profit Oil (40%) plus 26.95% * CR Oil (60%) = 26.95%
2. CNOOC has recovered all costs: HZN share is 26.95% of Profit Oil (40%) plus 55% (pre-CNOOC) * CR Oil (60%) = 43.78%
3. All costs have been recovered: HZN's share is 26.95%.  I think that cost recovery oil becomes profit oil, but I am not certain.  There may be some tax/royalty implications, but again I am unsure of the details.