chinguetti first oil seen 1q 2006

Friday April 29, 4:48 PM
Hardman Resources: Chinguetti First Oil Seen 1Q 2006
Edited Press Release

LONDON (Dow Jones)--Hardman Resources Ltd, in a March quarterly report issued Friday, announced that the Chinguetti Field Development project in Mauritania remains well on track for first oil in the first quarter 2006.


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The company siad that total project progress is 66% and progress on the FPSO Berge Helene has reached 75% after the successful completion of dry dock activities and the installation of key process modules.

It said that during the quarter and in the subsequent period to the date of this report nine of the ten new development wells were drilled. Sand control completions have been installed on four wells and the completion program for the rest of the wells is continuing.

The company said that overall drilling results have been positive, meeting or exceeding expectations for both reservoir quality and hydrocarbon column with a likely increase in proved reserves. Five sidetracks were drilled for various reasons and all encountered significantly improved reservoir but the additional drilling effort has placed upward pressure on the project budget of US$625 million.

Final project cost is expected to increase but remain within a 10% range of uncertainty for projects like this. Hardman's existing financial arrangements were planned on, and have the capacity to cover, this increased level of project cost. The additional drilling will not have an impact on the overall schedule to first oil. This is more dependent on the arrival of the FPSO and given the significant level of progress confidence is increasing that the production startup will occur earlier in Q1 2006, the company said.

The compay said that the Tiof-6 well in Mauritania was drilled and tested during the quarter. The well encountered oil over a gross interval of 123 metres in several good quality sands of varying thickness and during a flow test in February 2005 achieved a maximum flow rate of approximately 12,400 barrels of oil plus 11 million standard cubic feet of gas per day with a stable rate of 9,150 barrels of oil per day during the 72 hour main flow period.

It is currently estimated Tiof has in excess of 1 billion barrels of oil in place and the current focus is the assessment of development options to realise recoverable reserves.

At the Timor Sea - AC/P25 in Australia, the company said that interpretation of the Rufus 2D revealed only high risk prospects and the decision was made to relinquish the permit prior to entering the well commitment year. At AC/P26 the Marloo-1 well was drilled during April 2005 using the Ocean Bounty semi-submersible rig. The well was plugged and abandoned under budget for A$3.5 million after the target reservoirs proved to be devoid of hydrocarbons. At AC/RL1, Hardman took the opportunity of the low mobilisation cost of the Ocean Bounty to permanently plug and abandon the Talbot-1 and Talbot-2 wells in accordance with responsible environmental management. The operations were completed safely for a cost of A$1.75 million.

In the Falklands, the joint venture comprising Hardman (22.5%) and the newly listed U.K. company, Falklands Oil & Gas plc began shooting a 2D seismic survey comprising approximately 4,000 line kilometres over the defined leads and prospects during the last quarter. The data acquisition is expected to be completed early in the next quarter.

In Guyane (French Guiana) discussions with potential farmin partners to fund the drilling of the first exploration well in the permit continued. In Gabon the Company completed the sale to Ascent Resources plc of its interests in offshore Gabon. In Uganda A 205 kilometre 2D seismic survey of an onshore area in the PSC and an extension of some of those lines into Lake Albert was successfully acquired. This survey was acquired to evaluate a large nearshore prospect and the adjacent onshore area.

Cash on hand at the end of the quarter totalled A$198.4 million. This has reduced by A$49.1 million from the December 2004 balance. Cash outflows due to exploration and development continued to represent the most significant reduction with a total of A$48.4 million spent. During the quarter the Company spent A$11.9 million on exploration expenditure and A$36.5 million on the Chinguetti development project.

Offsetting a portion of those costs was A$1.3 million received in the quarter as a result of the exercise of employee share options and A$1.8 million from interest on short term investments the Company said that it has with various financial institutions.

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