This was from citigroup today. i think a dollar would be a bit on the high side if the takeover didnt come
Hardman Resources Ltd (HDR.AX - A$2.04) Rating: Sell (3), High Risk (H) ▼ Upside from cash/scrip combo not enough to cover risks • The Shrinking Chinguetti Reserve — ROC Oil released a prospectus that details a substantial reduction to Chinguetti reserves. • Operator Has Yet to Vindicate Downgrade — RISC, a technical expert, has concluded that the Chinguetti reserves have declined 61% from 123MMbbls to 46MMbbls, which exceeds the 50% reserve reduction flagged in August. • Tullow’s Value Proposition — In Uganda the drilling success rate has been 100% and another well is set to spud soon (HDR 50%, TLW 50%). • MAC Event Unlikely — Net assets have not declined by greater than $50m as Chinguetti was in the books at cost. • Risk/Reward Unbalanced? — Hold on for Tullow scrip/cash mix and potential upside is some 2.45% at current prices. We don’t consider this enough to cover holding costs, market risks and the possibility that the SOA does not proceed. • A Higher Bid Unlikely — Chinguetti is problematic and Uganda appears to hold the key. As a JV partner, Tullow is best positioned to price this in our view. • Recommendation Downgrade — We have changed our recommendation from a Hold/High Risk (2H) rating to a Sell/High Risk (3H) rating. We maintain our target price at the offer price of $2.02/share
HDR Price at posting:
0.0¢ Sentiment: Sell Disclosure: Not Held
