(HDR.AX, HMNRF) BUSINESS AND INVESTING > THE SPECULATOR
SPECULATOR: WELL GROUNDED
August 21, 2002
The joint venture between Woodside and Hardman Resources on large oil targets off the Atlantic coast of the west African republic of Mauritania should yield more results in early September, with the first new well for 2002 now going down to test the extent of last year's discovery. Readers may recall that Hardman in the late 1990s amassed a vast block of unexplored tenements extending over 74,000 sq km along 540km of the Mauritanian coast. That's an area as big as the entire North West Shelf oil and gas province off the West Australian coast. Australia's Woodside farmed into several blocks in the central area and in May last year, after extensive seismic work, sunk the Chinguetti 1 discovery well. Hardman managing director, geologist Ted Ellyard, has since projected a "most likely" recoverable reserve from the discovery of more than 100 million barrels.
Now a second well, Chinguetti 4-2 (block 4; well 2) is going down, having spudded on July 30 with a projected completion 33 days later if all goes to plan. The well is 2.5km north of the discovery in a water depth of 815m above an untested fault block of the Chinguetti structure. Planned total depth below the rig rotary table is 2835m. Last week, the joint venture reported casing had been set to 1727m and four cores cut from 2385m to 2428m. Hardman retains a 21.6% equity in the project.
Following last year's wildcat discovery, Woodside was so impressed it took an 11% placement in Hardman at $1.10 a share in July 2001, boosting the junior's bank by $36.3m to ensure Hardman can meet its commitments to the Mauritania project over the next two years. Hardman's shares have since traded at a considerable discount to the price Woodside was willing to pay and last week stood around 75¢.
Once the present well has been completed, the drill-ship Deepwater Discovery will sink another two to three wells in the current program. The discovery well and the present second well are within what is described as "area B" of block 4. Dependent on the outcome of the current well, it's planned to drill a third well in the Chinguetti field to fully delineate oil volumes and production scope.
Then a third well will definitely be drilled on the untapped "block A", sited 21km east of the discovery known as the Banda prospect, with potential reserves estimated at 290 million barrels of recoverable oil. Hardman holds a 24.3% equity including 2.7% free carried following a farm-out of a 6% interest in the block to Fusion Oil and Gas before the first discovery last year. (Interestingly, Fusion commissioned an independent study of seismic data from consultants Scott Pickford, which concluded the possible volume of oil in place in the Banda prospect to be between 535 million and 990 million barrels.)
A fourth primary target with a definite drilling commitment is further along the coast on block 6, area C. The well planned for the Thon prospect will be drilled by Woodside with Hardman having a 12.25% free carried interest plus a 24.25% participating interest (or a total of 36.5%). The target is estimated to have potential reserves of 86 million barrels of recoverable oil in a Cretaceous sand channel system. Any success in this huge prospect must boost both Hardman and Woodside. Hardman estimated earlier this year that its net cost for the current year's Mauritania program (including 8300km of 3D seismic mapping) would be $40m.
Meanwhile, another of our oil hopes, Pancontinental Oil and Gas, is looking forward to some encouraging results from its 6.6% equity in the difficult Huinga 1B well on the Taranaki basin of New Zealand's North Island. Gas was flared at the surface of the hole but oil failed to flow after the hole became plugged with sediment debris. The hole has now been cased with plans beginning last week (August 16) to fracture test several expected production strata. First results could emerge in a fortnight with the shares somewhat firmer at more than 5¢ in anticipation of good news.
Our junior telco Advantage Telecommunications continues its rapid traffic growth in wholesaling telephony between Europe and China. Last week, AdvanTel predicted its first-quarter revenue for 2002-2003 would meet $US3m ($5.57m), compared with revenue of $US1.35m booked in the latest June quarter. Traffic is predicted at 50 million minutes in the current quarter, up from 17.9 million minutes. Punters are keenly awaiting news within the month on AdvanTel's success in funding its planned $77m cash and script takeover of the pre-paid British phone card company FNT. We also took a tidy profit on goldminer Kingsgate Consolidated.
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