see wpl webcast - confidence building, page-11

questions/answers
3 questions I put to Dean Richardson to which he replied

1. Why was a gas agreement with the Mauritanian Govt not in place prior to exploration and why is it taking so long to get one?
2. Why hasn't Hardman forward sold some of it's oil when prices were at their peak?
3. Why don't the JV partners announce Tiof as commercial to the extent that it knows what it can and will extract at this stage (even if it is only 100MBO) with the statement that further drilling will determine how much more will be proved up.

Answers:

1. With any oil or gas development final terms and the detail take time to negotiate. The Company view is that it is to our advantage to negotiate terms before commercial accumulations have been proved to offer best chance for balanced terms between partners and Government. Within the partners there are varying levels of acreage held and the particular desire for terms could vary between partners in the central held blocks and the outlying blocks. Discussions with Government have been continuing for some time, and Hardman has held active discussions with the current Government officials and are aligned on similar terms for all potential producing gas accumulations. With the change of Government in August discussions continue both directly and through the operators of the Joint Venture, however the change in Government has delayed finalization and signoff.

2. Regarding forward sales, given that Chinguetti is the first producing well from Mauritania, issues on quality and deliverability so far out from completion would have seen a significant discount (if at all pre-sellable) in comparison to current spot prices. Without established deliverable history pre-sale of the commodity is exceptionally difficult. Internally we have closely monitored the movement in oil over the past year, within our project loan facility we will look to established initial hedging programmes once the facility has been utilized. As for forward selling or in fact predicting the peak in oil prices that is fraught with inherent risk. Suffice to say the Company will look to protect the core asset but would like to participate in any further upward movement in oil price.

3. Depending on the development option for Tiof, it is impossible to correlate what it can and will extract as this will vary significantly depending on which development option is initiated. From Hardman’s perspective we are confident based on our own work and experience that a commercial development of Tiof will be determined. There is a range of recoverable reserves at this stage; our belief is that we need dynamic data (production test) to reach a view of the recovery factor and hence ultimate recovery. Currently the Company expects a phased development will be the outcome. A phased development will minimize risk, allow us to understand the reservoir and still get early cash flow.