Hardman Resources: Chairman AGM Q&A Session 24/11/05 21:48:00...

Hardman Resources: Chairman AGM Q&A Session 24/11/05 21:48:00

Edited Press Release

LONDON (Dow Jones)--Hardman Resources Chairman Alan Burns at the annual
general meeting held Thursday had a question and answer session that follows:
Q When Chinguetti comes on stream in 2006, will there be dividends paid to
shareholders?
A We do not expect to pay dividends in the foreseeable future. We aim to
provide our shareholders with capital growth rather than income, in line with
most E & P companies.
Q Will there be any further capital raisings or dilution of Hardman shares?
A There are no current plans for raising additional equity; any future
requirements will depend on the capital requirements of the business and the
investment opportunities available to us in the future.
QIs the Company intending to hedge any of its future oil from Chinguetti?
A We do expect to arrange some hedging of oil price realisations.
Indeed, it is a requirement of our Chinguetti project finance facility that we
have some hedging in place as utilisation of the facility increases. Generally
we will not seek to remove oil price exposure from equity investors, subject to
appropriate hedging to underpin our investment programme and the availability of
the debt facility. We will report the hedging arrangements we enter into, in
order to keep shareholders informed.
Q The flow of information from the 2005 drilling campaign seems to be very
minimal. Does the Company intend to keep this up in the future?
A We constantly keep our disclosure practices under review. The recent
quarterly report for the period ended 30 September 2005 gave very full
information about the exploration programme. There are, of course, some
constraints within our joint venture agreements over what we can disclose. We
will continue to provide shareholders with information about the drilling
programme including the prospects to be drilled as they are agreed.
Q Why has the Company decided to drill Guyane alone?
A We have not determined to drill this alone. We are actively looking at
farmouts but we have to choose when it is the best time to do so. We are
currently acquiring seismic data over the Guyane acreage to define the best
prospect to drill. We are planning the operation as if we would drill the
prospect alone.
Q Short term incentive payments are a farce. Why should an officer be paid a
bonus for doing what they are already remunerated for?
A We believe that short term incentive payments based on achieving measurable
performance targets are an integral part of the total annual reward package and
are recognised industry practice
Q Can the Company and Mr Potter keep the shareholders more informed than
recently when only large institutional holders are advised of inner workings of
the Company?
A The premise of this question is incorrect. The presentations we provide to
institutional shareholders are made available on the Company's website
concurrently with those presentations. We treat all shareholders equally in
terms to access to new information.
Q Are we subservient to Woodside?
A No. We make our own decisions. In the joint venture arrangements the
operator and the company with the largest equity stake obviously has a
considerable influence on outcomes but all joint venturers have a vote.
Q I have heard nothing on the court case with Woodside. Is the Company obliged
to keep shareholders informed?
A There have been no material developments in the dispute since the
proceedings commenced. Pleadings have been filed by the parties. There is some
prospect that the disputed issues will be mediated between all parties before
the dispute goes to trial. If the dispute is not resoved by mediation then it
is unlikely the matter would go to trial before late 2006.
Q Why was Ted Ellyard paid $1,050,000?
A Mr Ellyard was paid in accordance with his contract when he retired due to
ill health as verified by his medical advisors
Q What are the bonus payment criteria for the new CEO with regard to share
market performance?
A There are various elements of the CEO's remuneration package, the value of
which are linked to share market performance. These are set out on pages 45 and
46 of the Annual Report.
Q Why is Mr Burns now shown as an independent director and last year he was
not?
A In March 2003 the ASX Corporate Governance Council issued its ten Principles
of Good Corporate Governance and Best Practice Recommendations. The ASX Listing
Rules were amended at that time to require companies to provide a statement in
their annual report disclosing the extent to which they followed these best
practice recommendations in the reporting period. In the Hardman 2004 annual
report Mr Burns was described as being non-independent. This arose out of a
mistaken belief that a tenure of ten years or more as a director automatically
made him non-independent. In the course of preparation of the 2005 annual
report, Hardman's General Counsel queried the status of the Chairman as a
non-independent director. The issue was raised at an Audit Committee meeting and
it was agreed that the matter be referred to the company's auditors,
PricewaterhouseCoopers for their opinion. PricewaterhouseCoopers considered the
matter including the detailed definition of independence set out in the best
practice guidelines. Consequently, they concluded that Mr Burns was independent
and so advised the Audit Committee who in turn advised the Hardman Board.
Q Are there any plans to increase the size of
the Board?
A: Yes. Our objective is to recruit at least two new independent non
executive directors within the next six months. We are looking to appoint
individuals who have experience serving on a public company board and who have a
background in or at least a working knowledge of the upstream sector of the oil
industry. This search is being actively pursued.
Q There is a large increase in employee related expenses, why?
A Employee related expenses increased from $2 million in 2003/4 to $10 million
in 2004/5, mainly due to a number of non-recurring charges. These include
retirement benefits of $2million, termination payments of $1.5 million and a one
off bonus of $2.5million amongst all staff in respect of the company's
exceptional result in 2004. The remainder of the increase reflected somewhat
higher staff numbers commensurate with the enlarged operating capacity of the
company and its existing and planned growth.
Q Has the Woodside litigation impacted on the joint venture relationship?
A1 No
Q Does Hardman have any M & A intentions?
A We are always looking for value adding business opportunities within the
international oil and gas sector. We should remember that Hardman was one of the
founders of Dana and emerged profitably from that transaction. Also Hardman
purchased a sizable stake in Arc Energy quite some years ago and sold that at a
profit. With our enlarged capacity we constantly look at bigger deals
Q Why are Mr Scott Spencer and Mr Alan Burns entitled to retirement benefits?
A1 When service agreements were first entered Bob Carroll into between
the Company and each of Messrs Burns, Ellyard and Spencer, provision was made
for the payment of retirement benefits where retirement was effected after a
relevant period of qualifying service. When those service agreements were
extended with effect from Jan. 1, 2004 the retirement benefit provisions were
carried forward. Since then the Board has adopted a policy whereby retirement
benefits will not be paid to future non-executive directors. Mr Raven and I do
not have any retirement benefits available to us under the terms of our
appointments.
Q Do we have any weather risks in Mauritania such as hurricanes or
cyclones?
A No, If you look at the slides, Mauritania is outside the hurricane or
tropical cyclone belt. There are also few thunderstorms or waterspouts and no
icebergs.