HARDMAN RESOURCES (HDR)
At long last, some of the really big market players like
Citigroup are starting to take an interest in HDR which
should mean the end of that quite absurd period when the company’s share price was what the daytraders wanted to make it, and everybody now knows just how far out they were in their valuation. The entry of the big market players was entirely predictable when it became apparent there was no way that Chinguetti’s development wouldn’t go ahead as that must mean a major fund raising for HDR, and these financial giants would be greatly attracted by the juicy fees this will generate. The bulletin is hoping HDR will do everything it possibly can to keep any equity component of the fund raising to an absolute minimum as there is no question that whoever does the underwriting
will insist on an issue price well below fair value to make
the issue more attractive. That wouldn’t be so bad if only existing shareholders were involved, but it can almost be taken for granted that selected outsiders will be included through placements. The bulletin reckons a fair issue price would be somewhere in the $1.50 - $2.00 range, far preferably at the higher end but, of course, it knows that just won’t happen. Then, again, there may be no need for a fund raising at all, with both Shell and Exxon-Mobil reputedly having a close look at the company or, at least they were, before HDR announced it had decided to sell portion of its Mauritanian interest to British Gas to lessen its coming heavy financial commitments. While the market
seems to be in two minds about this, the bulletin reckons it was a brilliant deal for the company. The bulletin would much prefer to see HDR carry on as an independent Australian company, but only if it can raise the equity funds it needs on terms which reflect not only the actual worth of its Mauritanian leases, but also their huge potential to uncover far more oil and gas reserves than are booked at present. That Estimated High of $2.00 will be achieved only if the issue price of the next equity raising reflects this. While obviously a lot of people have done their sums on the BG deal and concluded HDR sold itself short based on the company’s market capitalisation at the time, what they didn’t take into account was all the money BG would have to spend to convert 2P, 3P, and even 4P reserves on which that market capitalisation was based, into 1P (proved) reserves, and extract them.
Cheers Leo
HDR
hardman resources limited
