we need a new md - and we need him/her now!!, page-8

re: hdr valuation It is interesting reading the many views of what the real "value" of HDR is? There are those who support it religiously, others who wish to bag it at every opportunity and many people in-between who see it has a significant component of "real" (no longer speculative) value.


I believe it has value above the current share price for the following reasons:

1. HDR at this stage has one real jewel. That is Mauritania. Gayane and Fauklands etc are unknown areas.

2. Producible oil in the ground has a value of $US5-10/bbl. How many bbl are currently estimated in the Tiof, Chinq, Tevet, etc..

3. Real purchase and engineering contracts have been awarded with design and fabrication for the initial development. There is a real project with many people working in engineering houses, steelworks, etc designing and fabricating equipmment for Chinq. For example

SUBSEA 7 WILL DEVELOP SUBSEA
PORTION OF CHINGUETTI FIELD (08/02/04)
Subsea 7 has won a major contract award for development of the Chinguetti field which is the first oil and gas development offshore Mauritania, West Africa. The EPIC (Engineering, Procurement, Installation and Commissioning) contract for Woodside Mauritania Pty Ltd is valued in the region of $140 million.

Subsea 7’s work will include the transport and installation of three subsea manifolds, and flexible production flowlines and risers. The Chinguetti field is located in water depths between 350 and 850 metres. The contract is based on utilizing Subsea 7’s multi purpose support vessel Toisa Perseus and a heavy lift vessel for transportation of the flexible flowlines and risers. The offshore works are scheduled to take place in the installation season 2005.

There are other contracts for the FPSO, etc.. These are not drilling or exploration contracts.

4. TIOF is currently not an approved project. When this project is confirmed and the major contracts awarded, this will mean the consortium have made commitments for apprx $1,500 million. From reading a recent Woodside presentation I thought the commitment to TIOF could occur this year. The commercialisation of TIOF I would expect to have a positive impact on the valuation of the company.

5. In Australian waters, a find such as Tevet and Banda would have oil companies very excited and planning fast track developments. Here we have been ho-hum about Tevet.

6. Even on the recent drilling experience of 1 successful well out of 3. That is still good by general exploration experience and how many other identified potential traps have been identified.

7. Political instability has been identified as a cause for concern. Angola, Nigeria, Algeria and most of Africa is unstable. This has not stopped most of the oil majors reaping vast profits. Even when there has been regime change this has not had a long term impact of the oil production or the confiscation, etc of the oil companies assets.

just a few thoughts.