hardman looks at us$300m-us$400m tiof plan-2-

INTERVIEW: Hardman Looks At US$300M-US$400M Tiof Plan-2-


By Matt Chambers
Of DOW JONES NEWSWIRES

MELBOURNE (Dow Jones)--Australian oil company Hardman Resources Ltd. (HDR.AU) said Friday that it expects the Tiof field offshore Mauritania to go ahead in a phased development and that up to US$400 million could be spent on the first stage.

ADVERTISEMENT


The additional development could open a second stream of cash from Mauritanian waters for Hardman after the Chinguetti project this month reached early full production of 75,000 barrels a day, Managing Director Simon Potter told Dow Jones Newswires.

Chinguetti, which is operated by Australia's Woodside Petroleum Ltd. (WPL.AU), is expected to add US$140 million to Hardman's earnings this fiscal year, Potter said.

Hardman's shares surged 20 cents or 8.9% to A$2.20 on the Australian Stock Exchange in late afternoon trade.

"The fact Chinguetti has ramped up to over 75,000 barrels a day so quickly is encouraging news and we're clearly leveraged now to the overall oil price," Potter said of the share price gain. When first oil was produced from the project in February, Hardman said it expected full output in April.

Potter said a meeting on Tiof is scheduled for the second week of April to decide on a phased development plan.

"It makes sense to limit exposure up front and maximize early cash flow from a position then you can step out and develop it further," Potter said.

"We're looking at is US$300 to US$400 million as initial investment," for the first phase, Potter said.

(MORE TO FOLLOW) Dow Jones Newswires

March 23, 2006 23:48 ET

INTERVIEW: Hardman Looks At US$300M-US$400M Tiof Plan-2-

With Hardman's Tiof stake of 22% this would be an investment of up to US$88 million for the company.

Tiof, which is operated and 54%-owned by Woodside, is targeted to come on stream in 2008. Hardman says it may contain up to one billion barrels of oil compared with 123 million barrels from the US$722 million Chinguetti project.

Woodside describes Tiof as having at least 120 million barrels of oil.

Despite its size, Tiof is a complex oil field and a development decision has been delayed by Woodside until the second quarter of 2006.

Woodside chief executive Don Voelte has compared the geological structure of Tiof to a "bowl of spaghetti" and has said it will be a difficult project to develop.

Production from Chinguetti comes 10 years after Hardman began working in Mauritania and marks its transition to producer as well as explorer, removing some risk for investors, Potter said.

Hardman Friday reported a net loss of A$19.1 million in the six months to December, compared with a loss of A$16.1 million a year earlier, mainly because of exploration costs.

While Potter wouldn't give guidance for full-year earnings, analysts are expecting Hardman to achieve a profit of about A$120 million in 2006.

Chief financial officer Peter Thomas said the US$140 million earnings figure for Chinguetti is based on a US$45 a barrel oil price and that exploration costs in 2006 are expected to be about US$60 million.

Crude oil was trading at US$62.13 a barrel late Friday.

Hardman also said Friday that it agreed to acquire Tanzanian exploration interests, after successful results from its first two wells drilled onshore Uganda.

Hardman will earn a 50% share in exploration plots in the Tanzanian portion of the Ruvuma Basin by spending about US$3 million on exploration studies.

Potter said Hardman's African expansion is set to continue and that the company plans to soon announce its entry into another country on the continent. He wouldn't say which country Hardman is looking at.

Hardman has found oil in Uganda at the Mputu and Waraga wells and is about to drill a third appraisal well to see if it has a single, connected field, or separate discoveries, Potter said.

As well as Woodside and Hardman, other Mauritania field owners are Australia's Roc Oil Ltd. (ROC.AU) with 3.7%, U.K.-based BG Group PLC (BRG) owns 11.6% and Sterling Energy PLC (SEY.LN) owns 9.2%.

-By Matt Chambers, Dow Jones Newswires;
61-3-9671-4343; [email protected]
-Edited by Ian Pemberton