This is from the 4th.Reports Of Attempted Coup In Mauritania...

This is from the 4th.



Reports Of Attempted Coup In Mauritania Rattle Investors Just Days After Hardman Provided A Positive Update On The Chinguetti Development
Deep offshore operations may have their downside - not least the costs - but they also have real benefits. One of those benefits is distance from any instability on the mainland.

This was demonstrated yesterday when reports came in of an attempted coup in Mauritania in northwest Africa. At the time of writing, it was still unclear as to whether the coup had been successful and troops were reported to have seized control of the state media and the main routes in the capital, Nouakchott.

Share prices in London-listed companies with exposure to the country’s emerging oil wealth took a hit on news of the attempted coup. Hardman Resources dropped 9 per cent to 98.75 pence on AIM while Sterling Energy, which provided the Mauritanian government with the finance to back-into the Chinguetti oilfield development, lost 6.25 per cent to 18.75 pence per share. ROC Oil slipped 2.45 per cent to 99.50 pence. However shares in Premier Oil, BG Group and Dana Petroleum, companies not perceived to be so heavily weighted to their Mauritanian investments, gained.

The investor fright was understandable given the uncertainty about the situation on the ground but the oil companies were keen to reassure it was business as usual.

“All the activities are self-contained offshore so they are unaffected and it really is business as usual,” Sterling Energy’s exploration manager Andrew Grosse told oilbarrel.com, adding that the company has insurance for this kind of political risk. Grosse said the company’s representative in Nouakchott was reporting that things were calm in the capital.

“There are troops on the street but no-one yet knows if they are loyal to the president or the coup leaders,” reported Grosse. “It’s difficult to tell who’s in control at the moment.”

Whichever side proves to be in control, the oil revenues from the country’s new oil industry will be very welcome. Mauritania’s waters sit above rocks that are rich with oil and gas and the industry has unearthed a string of major discoveries in recent years with the potential to transform the country.

Chinguetti, which lies 90 km southwest of Nouakchott, is the first of those discoveries to move through the development cycle. The field is due onstream in January at a rate of 75,000 barrels of oil per day. The project is operated by Australia’s Woodside (47.384 per cent) on behalf of partners Hardman Resources (19.008 per cent), Group Project Chinguetti (12 per cent), BG Group (10.234 per cent), Premier Oil (8.123 per cent) and ROC (3.250 per cent).

Hardman recently updated investors on the news from Chinguetti, reporting that the progress is now 82 per cent complete. Subsurface drilling is essentially complete and the conversion of the Berge Helene FPSO (the floating production, storage and offtake vessel used to produce the oil) at the Keppel shipyard was 86 per cent completed. At the field they are busy connecting up the subsea equipment that will connect the well head to the FPSO.

Costs on the projects are creeping up, however. Hardman has flagged up a possible 10 per cent increase on the projected budget of US$625 million due to changes in the scope of drilling operations. The company stressed it had the cash reserves and financial flexibility to handle the increase, which is unlikely to spook investors (it is unfortunately almost par for the course on many major offshore projects).

Work is also underway to appraise the Tiof and Tevet oil discoveries, where further appraisal wells may be in the offing. And fresh exploration is also underway: a 3D seismic survey has been processed over Blocks 6, 7 and 8 while data analysis and reprocessing is underway over Blocks 4 and 5 to firm up drilling locations for later this year. It’s reported that up to 140 potential drill targets have been identified, proving that there’s plenty more scope in Mauritanian waters.

The wells approved so far for the 2005 exploration campaign are the Sotto, Colin/Colin Deep and Espadan wells in PSCs A and B. A well on Block 1 and further wells on PSC A and B are also planned.

Political uncertainty in one country is, of course, a real problem if a company is a one hit wonder. Both Hardman and Sterling have diversified portfolios, however. Hardman, for example, is also active in Uganda in East Africa and French Guyane in South America, where a 2D and 3D seismic shoot is planned over its vast exclusive exploration licence from October.

One of the most interesting projects in Hardman’s portfolio is its 22.5 per cent stake in 33,700 sq km of the waters to the south and east of the Falkland Islands in the south Atlantic. Interpretation of the 2D seismic shot over this acreage has pointed to some very interesting, and much larger than anticipated, structures. Hardman and its partner, fellow AIM member Falklands Oil & Gas Limited, plan to step up their exploration programme in order to develop a number of drillable prospects by mid-2006 with the first well due to sink in 2007.

Sterling also has a diversified portfolio, including solid production from the US Gulf of Mexico, exploration interests in West Africa and an exciting exploration programme off the coast of Madagascar, where it recently scored a real coup by joining forces with industry heavyweight ExxonMobil. ROC, too, can boast a far-flung collection of assets, with interests offshore Australia and China and onshore Angola.