waraga update

I again spoke to a spokesman from HDR early this afternoon regarding the Waraga well. He confirmed to me that at the time of reporting on Tuesday (1500 m), the well was just above the target zone and expected to reach TD probably by late Thursday or early Friday. He expected an announcement would not be made until early next week as they will not announce anything regarding hydrocarbon shows until wire logs have been run and evaluated. He would not comment regarding whether there were any hydrocarbon shows to date (as expected), but did say they were happy with the progress and operation of the well to date.

I also spoke to him regarding the contract dispute and as previously posted, the feedback they are getting from Woodside indicates they are still confident the dispute will be amicably settled with the Mauritaina Govt in 3 to 4 weeks as no one wants to go to arbitration.

He also stated that all is going well on the Ching production front and the production flow is incrementally being increased as previously announced.

I also discussed the current share price disappointment and he agreed that HDR management understands that the dispute has put a lid on the share price at the moment but said they are confident that as production flow and revenue is seen to be coming in and a eventual settlement on the dispute is announced to the market then things should quickly pick up. He also said you couldn't rule out a commercial discovery from the Angola program but said it was too early to tell until Waraga gets to TD and both wells are fully evaluated. I asked him what he thought of the chances Waraga has commercial oil and he stated that anything was possible, but the drill bit will do the talking.

I felt reasonably happy with the response I received from HDR and am still hopeful that Waraga may prove to be a winner although we will all have to wait until late this week or early next week to find out. My thought is there will be plenty of hydrocarbon shows in the target zone with the risk being if it is movable and of a commercial quantity. I believe that once Woodside announces they are pumping at the 75000 barrels per day target and the dispute has been settled then this removes alot of the risk which appears to be hanging this stock back. This in turn will see a total re-rating of the stock of $2+. Of course if Waraga comes in definatively then it will of course be substantially higher. This stock calls for more patience and guts to keep buying for the inevitable move upwards and onwards.