exploration potential, page-2

Mondo

HDR has heaps of exploration potential in Mauritania (let alone other areas) but as yet the market is giving this no value. The JV has been 100% successful drilling the Miocene sands, sand channels and salt dome structures - this is almost unprecedented as far as I can make out. There are 30-40 more salt domes and or associated structures in the WPL/HDR/ROC (blocks 3-6, and they have recently identified a heap more in block 2). And in the Dana/HDR/ROC blocks have extensive hydrocardons (eg Pelican's 370m column) or similar structures. Conservatively there is likley to be a total of several billion barrels in blocks 2-6 (the WPL takeover defence document in 2001 identified unrisked reserves of 6 billion barrels of which maybe 40% were Cretaceous which so far has proved unproductive, and the remainder Tertiary/Miocene and hence likley to be productive). WPL's African manager Ian Jackson has said there will be several billion barrels. Once again conservatively that means at 35% HDR will eventually have perhaps reserves of >700mbbl (which would value HDR at well over $5). So the upside is very significant but when we will see this reflected in the sp is another question - my guess is not until several more big discoveries are made, production is underway and or a takeover offer is made.

Yes Guyane looks very promising as does Uganda and oil has been discovered all around HDR's blocks in Gabon where they intend to drill later this year.

Several posters have today reviewed valuations for HDR and I agree with them that we need some more good news to get it above its current trading range. There is definitely some serious accumulation going on at less than $1.20, because once funding is finalised and WPL releases reserves estimates/upgrades (both expected this month) I think it will move towards broker valuations of above $1.40.

Its a waiting game with HDR and greta patience is required but I see it as a much better investment than most others in the current market - because it is so clearly still undervalued.

Cheers

H