full year report due when??, page-4

I remain convinced that even with soothing words in Friday's report we won't see much sp action until the dispute is settled. They have 5 weeks left to sort it out before it goes to international arbitration.

Hi H,

My views of the SP drivers are:

* First lifting for Chinguetti in early April - until then, oil price means absolutely nothing to Hardmam. Early May should see about 20mn in our bank account, which will be nice :)

* Tiof decision in Q2 - looking at various broker reports in the past few months, most have risked it to about 150-200MBO rec., which is pretty much consistent with my NAV number - even tho I am well aware that many thinks my number is too conservative. Even the confirmation of a phased development will see some comfort premium being factored into the price. If prod rate maintains after 3-6 months, say, then we may see further upside as they slowly prove up the 2P reserve for Tiof

* Dispute - no doubt this is being viewed by the market as a very negative thing even though the fiscal impact on Hardman is well short of a back-breaker. It will help to decrease the political/sovereign risk attached to Mauritania.

* Uganda appraisal - I am of little doubt that if and when they can establish commercial flow rates from Mputa/Waraga (even if it requires the assistance of a pump), the price will appreciate significantly from where it is now. The fiscal term is not as good as those with Mauritanian Govt, but the lower capex associated with the onshore wells shoudl offset that. What to do with the oil? Well, there's the railway system (which Hardman/Tullow can probably afford to upgrade if Mputa/Waraga is declared commercial), there's the pipeline in Kenya, there's the possibility of the mini-refinery, and worst case scenario, there's always the road and good ol' fashion truck!

* Mauritania exploration/appraisal - Watch the SP just before they drill Flamant in Block 8! The others are small either. The likes of Kibaro, Colin and Pelican-East prospect are shallow water large-ish prospects. Positive results from possible appraisals at Labeidna and/or Banda will no doubt help too.

* Guyane wildcat - Regardless of whether a farmin deal is reached before we drill or otherwise, the market will no doubt factor in some success prior to reaching the TD. EVen though Matamata won't be the first well drilled, you can imagine the upgrade of the acreage value if they hit oil in the first-up wildcat (most likely to be in the Eastern Basin).

* New business - this may not be as far off as one think. There aren't many under-explored Atlantic Basin left in the world, but there is a couple on either side of the Atlantic. This could well be the dark horse of the year in giving the SP a boost!

Nothing new I know. Yes, we have underperformed most other oilies, but not for the first time I might add. Before it really took off from c.70c after Tiof-1 result, Hardman had been range bound for quite a few too. If you trust the fundamentals of the company, don't let the daily price movement drag you down mate. Right now, SP is not severely under-valued based on what we know in Uganda. Once further testing is done, and Tiof is further derisked, the share will be rerated accordingly. Whichever way you look at this company, it is a good, well run company with a bright future. Hope to still see you here when it hits $5, then $10 :)

Cheers,
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