Let me have a crack Roc has cash - HZN has debt Rocs reserves are all developed and producing Large chunk of HZN shares are undeveloped Rocs assets not complex - Maari field difficult Roc had great franking credits that patient roc shareholders hoped to get one day - 58% of these we now go to HZN shareholders . Furthermore these would have increased at a rapid rate this year Roc acquired a great JV which is now given away 58% to Hzn shareholders Roc had good conservative management - at least I thought they were good , hZn boys overpromise and under deliver Roc had a good spread of risk of it's producing assets , and the sovereign risk across jurisdictions - it's asset risk increases with Beibu and why this matters is because this revenue will now be spread across more project and becomes more important . Beibu's decline rate was high last quarter - what if it underperforms - roc shareholders cop a double whammy Roc had a largely carried exploration of Bohai - these would have an implied value of 20m - roc losses this, but HZN end up with more if the asset and get it for free and drill it with Rocs cash
If Roc wanted to achieve a higher market cap they should have focused developing their assets - they for the first time achieved a tipping point of fast cash accumulation , high production and high activity
So the deal is crappy for ROC shareholders
ROC Price at posting:
49.5¢ Sentiment: None Disclosure: Held
