the article is about a year old but is very timley as we...

the article is about a year old but is very timley as we approach september/october when a farmout with a major partner could be announced...

HARDMAN Resources is one of the
Australian upstream petroleum industry’s
great success stories.


Founded in 1996, the Perth-based explorer
was a frontier specialist that opened up new
petroleum provinces in Mauritania, West
Africa and Uganda, East Africa.
By 2006, Hardman’s success was attracting
serious interest from predators and in late
2006 it was taken over by London-listed
Tullow Oil for $A1.47 billion, a 54% premium
to its volume weighted average price of
Hardman shares in the week prior to the
agreement.
Not bad for a company that listed only 10
years previously with a market cap of $A10
million.

Now that Hardman has left the ASX, the
question many investors are asking is: ‘Which
company will be the next Hardman?’ Is there
an ASX-listed junior that can emulate
A Hardman is
good to find

By STEVE ROTHERHAM
Hardman’s overseas frontier success story?
Actually, there are several contenders.
Ambitious oil and gas juniors are targeting
high-impact prospects in exotic corners of
the world.

Eyes on the FAR horizon
First Australian Resources makes no bones
about aspiring to follow in Hardman’s
footsteps.
The Perth-based junior used to be best
known for its low-risk, incremental projects
in Louisiana, United States. But in January
2006 it moved into deepwater acreage off
Senegal on the northwest African margin, not
far south of Hardman’s Mauritanian blocks.
“We’re in the same basin where Hardman
made their initial discovery,” FAR chairman
Michael Evans said.
“We are targeting prospects in deepwater
turbidite sediments that could hold more
than a hundred million barrels, and we expect
to identify other, much bigger, targets in the
500 million barrel range.”

Following Hardman’s success in Mauritania,
the majors and supermajors became
interested in the north-west African margin
and it took nimble footwork for FAR to grab
its slice of Senegal, which spreads 14,981
square kilometres over the shelf, slope, and
basin floor.

When contacts in Houston told FAR that
Hunt Oil was looking to farm-out some
exciting acreage covered by interesting 1980s
Shell 2D seismic, Evans and the team moved
quickly and decisively.
“Being a smaller company we were able to
make a quick decision in a competitive
environment, beating majors to the stake,”
Evans said.
At first FAR considered taking just 10% in
the three blocks, but with the backing of its
financiers it raised the capital to take the
whole 30% on offer.
Since then, other players have moved into
the region, including Brazil’s Petrobras,
arguably the world leader in deepwater
turbidite exploration, which has taken the
permit immediately north of FAR’s blocks.
“We’re rubbing shoulders with the
heavyweights and are really an anomaly in
this region,” Evans said.
“People see names like Hunt, Woodside,
Dana and Petrobras and wonder, ‘What the
hell is FAR doing in there?’ We have such a
small market cap compared to the other
players. The next nearest company by value
would be around $2 billion.”

At first glance, the company may look like
a misfit but Evans and his colleagues are
feeling comfortable. Just as Hardman teamed
up with Woodside and Dana, FAR has landed
a big-hitting partner. US major Hunt Oil
participates in major oil and gas production
operations in North America. It is also
involved in liquefied natural gas projects in
Yemen and Peru, and operates the Peruvian
project.

Broker and analyst Hartleys says in FAR’s
case, the Hardman analogy is more than just
hype.
“With success, FAR has the opportunity to
become a significant company in much the
same way as was achieved by Hardman,”
Hartleys said in a report earlier this year.
“The north-west African margin is relatively
under-explored, but hosts numerous recent,
sizeable discoveries including the Woodsideoperated
Chinguetti and Tiof discoveries in
adjacent Mauritania.
“With unprecedented interest in highimpact
acreage in West Africa, FAR has the
opportunity to deliver significant value from
its Senegal acreage. As a result of its solid
equity position in three offshore blocks [30%,
with Hunt having 60% and the Senegalese
national oil company the remaining 10%],
FAR has the flexibility to farm-out a portion
of its equity to be free-carried through any
offshore drill program should it so choose.”

FAR could choose to farm-out or to raise
more capital for its exploration commitments.
Either way, its task will be made easier once
recently acquired seismic has been
processed.
“We acquired a 3D shoot covering 2086
square kilometres,” Evans said. “It was the
largest survey off that section of the West
African coast.”
“The seismic is intended to validate existing
targets and add new targets. We are looking
to put together some very big targets in
these turbidite fans.
“We expect to finish processing and
mapping late in the fourth quarter and will be
looking for a rig by the end of year.”

FAR also has a clutch of low-risk, lowreward
assets in Louisiana, as well as a stake
in a Roc Oil-operated offshore China oil field.
These provide useful cashflow. But its
Senegalese blocks overshadow all the other
assets the company holds and, with FAR
being a volatile stock that fluctuates in
response to drilling programs, Evans expects
a share price run-up as the junior moves into
the drilling phase
“These are the potential company-makers
that could put us in the big league,” Evans
said.


Hartleys agrees, rating one offshore
Senegal prospect alone, the N3 target, as
being worth $2.12 to $7.37 per share to FAR.