hdr cash position, page-22

hmph

"I based my $80 million FY07 revenue from Ching - not on reserves, but at 35,000 bpd at $US$60 per barrell. That is a handy cash flow that is not neglibable.".....

The problem with this is that production has already declined by another 14% to approx 30kbopd. The next stops are 25K, 20K.....you get the picture.

Hardman only has one producing asset - and this single revenue stream is unreliable to say the least. For this I suggest this BB blames Woodside rather than SP/Hardman. The rest of Mauritania may also turn out to be a basket case - who knows?

Leaving aside Uganda, the rest of Hardmans assets are a rag bag of cash consuming assets scattered across the globe - none of which contribute any cashflow.

The only thing that Hardman has of any value is Uganda and the fact that Tullow are prepared to pay so highly for it tells you all you need to know.

Tullows cashflow is currently >£500m p/a and their production forecast for 2007 is to average 80kbopd[86kbopd with HDR]. So they have the capacity to weather more bad news from Chinguetti/Mauritania - where the situation will continue to deteriorate.

Uganda will eventually be massive >200kbopd - but it's going to be extremely expensive to develop. Way too much for a tiddler like Hardman and probably for a £2.5bn UK midcap like Tullow. But at least they have the cashflow to support their drilling plans going forward. When they have eventually proved up the resource[in say 4/5 yrs time] I imagine Tullow will farm out the production/development risk to the Chinese for a useful ammount of cash. Aidan Heavey is a very astute guy.