Looking through the merger presentation especially the 2C...

Looking through the merger presentation especially the 2C reserve numbers this deal is looking worse for ROC holders IMO.

1) ROC reserves taken from Jan 2014 and but HZN numbers taken from June 30 2013....HZN have produced almost 400000 barrels to end of 2013 so HZN 2P should be 15.6 million barrels rather than 16 million.

2)HZN reserves stated in BOE of which 63% is gas.... The relationship between oil and gas in BOE is typically 6:1 where 6BCF gas is equivilent to 1 million barrels of oil, which may be correct in terms of energy rating and historically price wise, but financially, at current world prices, 1 million barrels of oil brings in roughly $100 million revenue, whereas , to bring bring in $100 million in revenue, gas would have to sell at $16 per MCF for that ^BCF of gas to bring in the same revenue.

Not knowing what ratio was used to get the BOE ratio in the report places the 2C reserve figure for HZN under a big question mark IMO.... my back if the envelope calculations get a ratio of 8BCF to 1 million barrels of oil based P 24 of the HZN 2013 AGM presentation of 21 /11 /2013.

Here the PRL 4 and PRL 21 2C reserve comes in at 1.7 TCF , of which HZN share is 471 BCF. Using information from both presentations is appears that the 2C reserve figure for PNG condensate is roughly 15 million barrels, so roughly 55 Million BOE can be attributed to the 471 BCF giving a rough conversion of 8.5 BCF to 1 million barrels of oil.

If this is so, then the PNG gas will have to sell at 100/8.5
or about $11.7 per MCF to have a financial equivalent to oil. Obviously my calculations will be somewhat inaccurate but even if the HZN gas is sold at $8mcf then ROC and its holders are being Gipped IMO


In other words IMO the HZN reserves relative to ROC are overstated in regards to the value of the gas. The ratio for the transaction is too generous to HZN on every metric apart from the market cap....ask yourself who need who more?....HZN need ROC a hell of alot more than ROC need HZN

I doubt that the merger will be stopped...I just hope for ROC holders sakes that the wise heads that put this deal together are correct, and all will be rozey in the end, but with over 1.5 billion shares on issue post merger, these guys will have to perform miracles if we ever see a ROC ( or whatever name the company will have ) share price above $1.2

Cheers

Dan