bizzarre trading day ????, page-8

re: sydney's smh today ???? Hi all,

A bit of media in the SMH.

Thanks to dicko54 from TMF

Cheers,
xmagx

Hardman Resources Limited
By Geoffrey Hill
July 20, 2005

Price movement Oil exploration companies share prices are starting to run ahead of oil prices. Part of the reason is the growing expectation that global oil prices could move higher. Pushing up company prices is the effect of exploration potential. As the oil price moves higher, the economics of success outweigh the risk exploration carries.

Hardman Resources is approaching its October record high of $2.36. Shareholders have been on a wild ride, as the price dropped almost a dollar afterwards to $1.48. The price has gone up more than 25 per cent in the past two months as the company has embarked on a new exploration program.

Profile Hardman Resources listed two months before the 1987 crash. Since listing, it struggled domestically before venturing overseas. It is now a successful international oil and gas exploration and production company with no Australian production. It is exploring in the Mauritania basin off West Africa. It has a 19 per cent holding in the Chinguetti oil field, which is set to begin production early next year and is expected to produce 75,000 barrels of oil a day.

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AdvertisementCurrent details Hardman has started a joint venture with Woodside Petroleum and Roc Oil, which will drill six to eight wells in the Mauritania basin over the next six months. All the wells have potential for large deposits. Past drilling by the venture has achieved a credible discovery rate of 40 per cent. Besides oil, the exploration has also discovered a significant amount of gas.

Hardman is expected to report a full-year loss of about $20 million, from writing off expenditure on exploration. However, when production at Chinguetti starts this loss will be reversed, with forecasts for a profit of $26 million, and $55 million in 2007.

Sector Woodside Petroleum is the operator of all the wells, with the three companies involved in the joint venture contributing costs. Woodside owns 10 per cent of Hardman, but this does not imply that a takeover is being considered. Rather, it has been a defensive measure to ensure that no Woodside competitor secured a significant stake in the Mauritania blocks.

Worth buying? This must be considered as a speculative investment, especially after the company's share price has rallied recently. The rising price of oil and the high costs of drilling wells will keep the share price fairly volatile. However, the Mauritania Basin is likely to become a significant new source of oil production. There is the potential for more increases in Hardman Resources' share price, so accumulate on price dips. A speculative buy.