japan courts mauritania for its oil, page-16

re: announcement mauritania for its oil - angers Hi H/Conix,

I reckon HDR should be locking in the current price on a percentage of production (which they have to do if they are to use the ANZ financing. Production starts in February but I estimate that first revenue from sale of oil will be in March.

The fact that we have remain unhedged is a function of fortune rather than management. The problem they face is that without prior production/lifting history, no one is willing to commit to a forward buy without applying a fairly hefty discount to the spot price. After Chinguetti has come online for about 3 months and has demonstrated stable production rate (after a couple of liftings off BH), that is when we're most likely to see Hardman commit to some form of hedging. In the mean time, if oil keeps heading higher, there is nothing stopping them from taking out a couple of puts, if the price is right of course.

By the way, like you said, first lifting is scheduled for around end of March. So that will be our very first "kaching", so to speak :)

It's been a long wait, but all about to pay off I think! We have to remember, too, that on the Uganda front, I believe Hardman has the option to drill a 3rd well. Therefore, if this is exercised, we may see Mputa fully appraised, or Waraga if it is successful, or another prospect drilled. Still early days yet, but I'm very excited about Uganda.

Cheers,
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