french tie up adds value to hardman

Barry Fitzgerald
November 22, 2006

HARDMAN Resources continues to create additional value but not to the extent that Tullow Oil's friendly $1.47 billion takeover bid for the group is threatened.

The latest value-add is a farm-out agreement with Gaz de France under which the French giant gets a 20 per cent interest in Hardman's frontier oil exploration play off the coast of French Guiana in South America.

Hardman picked up the French Guiana acreage in 2001 and has identified more than 20 prospects and leads, including the Matamata prospect with its 1 billion-barrel potential.

Hardman shares firmed 1¢ to $2.06 yesterday.

Under the terms of the Gaz de France agreement, the French group will conduct and fund geophysical studies in the acreage to "further reduce risks of selected exploration prospects". Gaz de France will be able to exit the joint venture after completing the further geophysical studies or it could increase its interest to 30 per cent, shortly after completion of the first exploration well.

An independent expert's report by KPMG Corporate recently valued Hardman shares at $1.02 to $1.48, well below Tullow's friendly $2.02-a-share offer. The expert said the prospect of an alternative offer emerging could not be discounted but it was doubtful an alternative could be more attractive than the Tullow offer.