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INTERVIEW: Australia's Hardman Delays Tiof Declaration 26/10/05 10:56:00

By Stephen Bell
Of DOW JONES NEWSWIRES

PERTH (Dow Jones)--Australia's Hardman Resources Ltd. (HDR.AU) said a decision
on the commercial status of its Tiof oil field offshore Mauritania won't be
taken until November - a month later than originally hoped.
Managing director Simon Potter told Dow Jones Newswires that meetings of the
Woodside Petroleum Ltd. (WPL.AU)-led joint venture last week agreed on a work
program for Tiof.
"Work is progressing but it will be into November before we're ready to make
any sort of declaration," Potter said in an interview.
Initially, Perth-based Hardman predicted that the status of Tiof - which may
contain one billion barrels of oil in place - would be decided by October.
But the volume of appraisal work has seen that timetable slip. Potter stopped
short of saying that Tiof will be declared "commercial", which would be a
statement of intent by the joint venture to the Mauritania government ahead of a
final investment decision.
"Work is ongoing, and I can't second-guess what that work is going to say," he
said, with the partners looking at reservoir engineering, topside facilities and
drilling options.
A Woodside spokesman told Dow Jones Newswires that Hardman's comments on Tiof
are "consistent with our views". But he declined to say when, or if, a
commercial decision will be taken.
"Appraisal studies are continuing," he said.
Hardman has a 21.6% stake in Tiof and its fortunes are closely tied to the
speed, size and cost of the proposed development amid current high oil prices.
Some investors believe that a 20% slump in Hardman's share price since late
September is at least partly related to fears that Woodside may delay Tiof
because of higher-than-expected development costs. In early Wednesday trade,
Hardman shares were 2.8% higher at A$2.01 while Woodside has gained 2.1%.
Discovered in late 2003, analysts originally calculated that Tiof could be
three times as big as the nearby Chinguetti field, which contains reserves of
around 120 million barrels of oil.
However, subsequent work determined that Tiof is more geologically complex and
spread over a much larger area than Chinguetti, which is due to begin production
early next year.
Woodside is also struggling to rein in expenses. Last month it revealed that
Chinguetti's cost had risen to US$705 million - with an extra US$45 million set
aside for contingencies - compared with previous estimate of US$625 million.
Analysts expect that Tiof will be more expensive than Chinguetti, raising
concerns that Woodside may delay the project until it can find a cheaper
development method.
Woodside chief executive Don Voelte has compared the geological structure of
Tiof to a "bowl of spaghetti" and said recently that it would be a difficult
project to develop.
-By Stephen Bell, Dow Jones Newswires; 61-8-9245-5120;
[email protected]
-Edited by Ian Pemberton