Repeat post ... still looking for comments:I've had a good look...

Repeat post ... still looking for comments:

I've had a good look now at today's WPL presentation, the HDR AGM presentation and August 2005 Information Brochure and the recent Euroz valuation. A few things stand out as interesting:

(1) Chinguetti will have taken 2 years from declaration of commerciality in early 2004 to first oil in early 2006. The Euroz report says that Tiof oil will "take HDR to another level from calender year 2008" and they are assuming 2008 start-up, and HDR has Tiof starting in early 2008. That means that we should get a declaration of commerciality (soonish) and FID by early 2006.

(2) Euroz is valuing Sotto (and this year's other wells) at around $12.25/barrel found to HDR assuming a long-term oil price of just US$32/barrel. Even on that basis their unrisked upside potential of the first 3 wells this year is $1.43-$2.19. Come on HDR let's see some oil hedged in the next few months (when I think it will peak) at say US$70+. That would do some serious good to the valuation!

(3) Euroz gives a conservative (their word) value for Banda and Pelican gas of $0.19 per share. HDR has Banad gas alone at 2 TCF or 80 mboe to HDR ... more than HDR's share of Tiof (which Euroz values at $1.02 per share). The upside of a gas development is quite apparent! I believe that HDR will be very significantly rerated on a JV gas development. And they are IMHO actively looking for more gas this year and Banda development is being talked about.... and they have BG on the team looking to replace its reserves.

(4) WPL's report shows their "Lifting Costs" = all costs of production (not including capital expenditure and interest) of A$6.51 for oil. Let's say A$10 for offshore Mauritania. HDR's share of capital expenditure on Chinguetti is around A$170 I think .. so for their 27mbbl that's a cost of A$6 per barrel. That's A$16 per barrel costs ...so .... even at US$50 per barrel (= A$68) we get a profit per barrel of A$52 and after 50% tax to the Mauritanian government that's a profit per barrel of A$26... let's say A$25. This is significantly above Euroz's finding value of A$12.25 per barrel (double actually!!).

I guess I do these back of the envelope calculations periodically (when new info comes along) just to convince myself that on any measure HDR has a strong growth profile and it is undervalued.

Comments welcome ... these are just my thoughts.

H