notes from sydney meeting

All

I was a bit despondent after yesterday’s market-wide rout and have only now completed a summary of the take home messages from yesterday’s Sydney meeting. It was good to catch up with the HC crowd at the meeting!

Simon did an excellent job again and showed great control and openness in the face of the many questions about his strategy and the share price etc.

Uganda

Definitely a minimum of 30mbbl in each of Mputa and Waraga and developable by trucking out initially. Waraga is set up and could produce very soon. Initial processing plus trucking costs would be around US$10 per barrel so the economics are very good. He's very keen on Uganda and the government is facilitative.

Mputa-2 will partly answer whether it’s one big field but won't be conclusive. It will assess the deeper sands and once it’s tested and Waraga is tested (my interpretation) we will have a good idea what we have. Waraga will be tested before the second week in June. If its not one field it is very likely to be a series of fields along the fault line i.e. they are confident of the other prospects. The larger accumulations are likely to be under the lake.

Waxy oil is common in this type of reservoir and in the area generally and is not regarded as an impediment.


New ventures and number of ventures

There are two new ventures close to finalization plus Trinidad. He doesn’t believe they are getting too stretched and he thinks all the new ventures are complimentary in terms of risk, cost and time to production. A number have a short period to production eg Suriname and Trinidad (which is a definite in that they are bidding for leases). Trinidad (I think), Suriname and Tanzania are on land and therefore cheaper to drill and develop as well as quicker. Tanzania is being fast-tracked in terms of exploration in that they are aiming to drill next year but commitment is 2009.

In Suriname the wells will only take 2 weeks and cost $2-4m and can be tied back to existing facilities to facilitate quick production. He sees that on success these drilling events will become self-funding from the cash flow from the first few wells.

He said they have a good relationship with the Suriname state oil company (Staatsolie) and wanted to build on that relationship. Avoca asked about whether HDR would be bidding for the offshore leases that adjoin the northern Guyane border and SP indicate this was likely.

Guyane

They have had a number of bids and its moving fast and they will be going there in mid-June to finalise the farmout deal. There will be two wells .. one in the Eastern Basin (they average 500mbll recoverable) for which the seismic is very exciting and Matamata in that order.

My impression was that the most likely farminee would be Staatsolie or another company operating nearby like Repsol. He mentioned that this would enable the two well program to be fitted into a broader program that the farminee may have in the region (i.e they supply the rig).

So this sounds promising.

Falklands

He said its very much lowest priority because of the difficulties of the area and getting a major to drill there. Someone asked if it was up for sale and SP said at a good price.

Mauritania

Chinguetti was explained well. He thought this sort of stuff up was common in new areas but it’s obviously a disappointment!!!! He wasn’t forthcoming on who was to blame or whether they should have kept their previous rig but he said the JV partners would be pressuring WPL to fix Ching first in the program. WE didn’t push him on whether he had confidence in the WPL geologists (sorry but it didn’t seem appropriate). He thought another fix for Ching would be to fast-track Ching Phase II and do an extra well (so 5 instead of the planned 4 in the workover).

Colin is WPL’s highest ranked prospect that they have wanted to drill for ages. Flamant is close to Mauritania’s deep water port where minerals are exported. He said if Flamant came in the game would change dramatically and a gas deal should happen and the JV partners would be keen to develop a gas project.

Regarding the placement he said he spent some time on the phone reassuring the UK investors who took up the placement. Perhaps he promised them big things in Uganda??? Clarity on the future of Tiof was a key underpinning of the placement.

Tiof concept will be agreed as the only concept by the JV by end of this quarter.

Banda and Tevet are unlikey to see much development this year. Labeidna/ N’Dor is the likely appraisal.


Communications/ Investor Relations

There’s a new person replacing Dean .. started only 3 days ago:

Jill Thomas
[email protected]
0408958647

That’s all! Good luck today with Mputa-2 and the markets generally!

H