question for geos, page-6

reply from geos Westmoon,

I have used their recently released presentation as a basis for this reply. I have yet to see any research reports on production / costs / etc for Chinguetti. If anyone has one I would be interested to see the data. Anyway whatever cashflow HDR produces with be going straight back into the ground with additional exporation drilling / new production costs for at least the next 5 or so years.

So far two Miocene channels appear highly prospective (Tiof - Dorat and Chinguetti-Banda) with 100% success (so far). These have a high priority / high probability of success and may be the ones drill this year.

The cross-section on page 15 provides some indication of what the targets within the channel could hold;

Chinguetti-Banda Channel
Lead 10 (Tevet) 73MBO
Western Plum 150MBO
Lead 13a 191MBO
+ Lead 62 and 60 for which MBO's are not quoted.
Total 414MBO

Tiof - Dorat Channel
Lead 3 (Dorat) 230MBO
Lead 14 (Merou) 300MBO
+ possibly Lead 18 and 19 for which the MBO's not quoted
Total 530MBO

There are an additional large number of prospects shown outside the channels, but probably have a much higher risk. No data is provided anyway.

The significance of Pelican is not the current size of the field, but that it opens up the Cretaceous as a target, although possibly more gas-rich rather than oil. Pelican is older and geologically distinct from Chinguetti, Tiof and Banda.

After Courbine I thought the Cretaceous was written off. But HDR also mention drilling an exploration well in Block 2 aimed at "Miocene or Cretaceous?" (page 14).

I have not seen any data on probabilities of success of each of the targets (nor would I expect to). Based on their experience so far, the quality of the 3 seismic data and that they can detect hydrocarbons indications on seismic, I would say that their probabilities of success are high. Woodside may have voted for Mauritania when it sold one of its other fields last week so as to provide funds that could be used to fast track other discoveries. Oil prices are high and getting into production soon is a big benefit. The appraisal wells for Tiof and Banda probably have this as an objective. As is the raising of additional funds to fund the 2005 work program.

Matamata is a BIG unknown. Probability of success is hard to gauge. I certainly wish them luck on that one.

Finally people seem to have forgotten that HDR had a market cap of only $10million 5 years ago Vs $800 or $900million now. They have managed to retain a large part of their investment without having to dilute back to a few percent as what normally would happen to a small oil explorer in a similar situation.

Geos