hardman trifecta means ugandas the go

Jamie Freed
August 30, 2006


Simon Potter .. three wells all struck oil.
Photo: Erin Jonasson

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AdvertisementALTHOUGH Hardman Resources insists its share of the troubled Mauritanian oil joint venture remains a "core asset", the company has indicated it will spend an increasing amount of its exploration dollars in Uganda.

Hardman reported a first-half profit of $22.9 million yesterday, up from a half-year loss of $6.1 million last year.

"A year ago we had no production. We had oil in just one country. We'd never operated an international exploration program before," Hardman managing director Simon Potter said. "We are announcing a strong profit, a robust balance sheet and the fact we are fully funded for all our obligations in the coming years."

Hardman last week said the amount of recoverable reserves at its Chinguetti project, operated by Woodside Petroleum, would probably be halved when a revised estimate was released.

The Chinguetti field was expected to produce about 60,000 to 70,000 barrels of oil a day but has instead stabilised at rates of about 35,000 barrels a day.

"It is clear there are no quick solutions, that considerable additional capital expenditure and technological application will be needed, and that a downward adjustment to the recoverable reserves of the field is inevitable," Mr Potter said.

In light of the decreased production, and therefore cash flow, from Chinguetti, Hardman has cut its annual exploration budget by $US15 million to $US65 million.

The company said it would spend more money in its tenements in Uganda than previously expected because it had hit oil in all three wells drilled there so far.

"Uganda is a priority," chief financial officer Peter Thomas said, adding that Mauritania remained attractive because oil prices had more than doubled since the original investment in Chinguetti was approved.

Hardman would like to prove up more than 350 million barrels of reserves to give it the ability to export its oil production but thinks that even with as little as 30 million barrels it might be able to commercialise the oil by selling it locally.

Apart from Mauritania, Hardman is the operator of nearly all of its joint ventures. Mr Potter said Hardman preferred to be in that position in order to control a project's pace and destiny.

Hardman shares closed 0.5c lower at $1.445 yesterday.

http://www.smh.com.au/news/business/hardman-trifecta-means-ugandas-the-go/2006/08/29/1156816897980.html