Horizon shareholders 'know its value'

HORIZON Oil may well be undervalued following the collapse of its $800 million merger with Roc Oil but the company won’t go cheaply into another merger, according to company CEO and managing director Brent Emmett.
Horizon shareholders 'know its value' Horizon shareholders 'know its value' Horizon shareholders 'know its value' Horizon shareholders 'know its value' Horizon shareholders 'know its value'

Investors and analysts believe Horizon's valuation could rise based on the cash price of $US450 million Fosun is paying for its off-market takeover and related holdings held by both Horizon and Roc in the Beibu fields, offshore China.

The Roc board unanimously recommended the Fosun offer to shareholders, prompting to give notice terminating the merger deed with Horizon.

But while Horizon's plans to create a leading Asian mid-cap exploration and production company may have been temporarily thwarted, the company affirmed the resulting value of the Fosun deal had not been considered into its current share price.

In an interview with PNGIndustryNews.net Emmett said the company was disposed towards a deal but warned unsolicited offers would "not go cheaply".

Emmett said: "For Fosun to have reached the valuation of $475 million hat they put on Roc Oil, we know they had to fully price Roc's roughly 20% interest in their main asset which is Block 22/12 offshore China.

"That was by far the most valuable asset - it makes up over 40% of Roc's value," he added.

"We know Fosun has valued that asset very highly to get to its valuation of the whole company.

"Just looking through that valuation, we have 27% of

that asset in the Beibu fields. That would put a value of between $US250 and $300 million on our interest in Block 22/12.

"I can tell you that there is no way the market is putting that value on Horizon's interest right now - that's not baked into our share price at the moment.

"Yes, I think the price that Fosun has paid and that transaction will draw attention to Horizon Oil being somewhat undervalued.

"I think before the merger discussions both Roc and Horizon Oil were valued at about 60% of their net present value, and now Roc is much more fully valued but Horizon Oil is still in that undervalued situation."

Emmett said the attempted merger with Roc had brought Horizon Oil into the public eye while the independent valuation for shareholders was publicly available to potential predators or partners.

"The market and the industry knows we're disposed towards doing a deal," Emmett said.

"We're transaction oriented. So I don't rule out that we will receive an approach.

"If there is a particular unsolicited approach for the company, it's not going to go cheaply because over 50% of the company is very tightly held.

"The shareholders understand the value of the company."

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