Paterson Ord comment today:Stock: Hardman Resources Ltd ($0.81)>...

Paterson Ord comment today:

Stock: Hardman Resources Ltd ($0.81)
> Current Valuation/Price Target: $0.95
> Recommendations: Speculative Buy
>
> Event: First test results from Chinguetti 4-2
>
> Details:
> * The Chinguetti 4-2 appraisal well in offshore Mauritania (WPL 35.0%,
> HDR 21.6%, ROC 2.4%) has flowed oil at up to 1,560b/d through a 30/64"
> choke during the first production test.
> * The operator commented that sand inflow restricted the flowrate and
> that with appropriate completion techniques, the well should be capable of
> significantly higher rates.
> * As second test is now underway in a higher sand interval.
>
> Impact:
> * The market's knee-jerk reaction because the headline number was not
> a much larger flowrate is an over-reaction. This of course presents
> traders with a good opportunity to accumulate stock prior to further
> testing and another 2-3 wells in the current drilling campaign.
> * Sand influx is a widely-encountered problem that can be overcome
> with technology. It is usually indicative of good rather than poor
> reservoir. So commercial flowrates in the order of anywhere between
> 2,000b/d and 10,00b/d are still achievable.
> * The objectives of the test (to produce oil and collect pressure
> data) have been successfully met.
> * We maintain that the HDR share price still has much headroom to rise
> on the back of further drilling success. Next up we would guess that the
> second contingent Chinguetti appraisal well (on the east lobe of the
> structure) will be drilled followed by the Banda exploration well further
> away to the east.


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