Horizon Oil has been downgraded in the most recent PortfolioDirect investment report despite progress on permitting the Stanley wet gas field

John Robertson

PortfolioDirect

Horizon Oil has been downgraded in the most recent PortfolioDirect investment report despite progress on permitting the Stanley wet gas field. The proposed merger with Roc Oil is the primary reason for the rating change. The rating process places a heavy reliance on future positive value momentum. The previously anticipated upward move in the Horizon valuation appears likely to fall short of the offsetting downward move in the Roc Oil valuation leaving the combination without the necessary positive value uplift required by the rating criteria. There is also an opportunity cost risk. After reaching near term peak production during 2014, the merged company faces a lengthy hiatus as it waits for its longer term growth plans to materialise in higher earnings and a stronger value profile.


John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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