HDY.L Regulatory News (HDY)

13 Feb 2008 07:01

Hardy Oil & Gas plc13 February 2008 For immediate release 13 February 2008 Hardy Oil and Gas plc ("Hardy" or "the Company") Activity Update Hardy Oil and Gas plc (AIM: HDY), the oil and gas exploration and productioncompany with assets in India and Nigeria, announces the discovery ofhydrocarbons in the KGV-D3-A1 well on the Company's D3 exploration licence, thespudding of a second exploration well on D3, an update on the expectedcommencement of the D9 block drilling programme, and the reduction of theCompany's shareholding in HOEC. D3 Block The D3 licence, in which the Company holds a 10% participating interest and isoperated by Reliance, is located in the Krishna Godavari basin on the East Coastof India and covers an area of approximately 3,288km2. The exploratory well KGV-D3-A1 commenced drilling on 28 December 2007 in waterdepths of 715m with the semi-submersible rig "C Kirk Rhein". The well wasdrilled to a depth of 1,937m MDRT and encountered natural gas within theinterval 1,513m to 1,597m MDRT with a gross sand thickness of 84m. One interval was selected for cased hole DST covering 1,565m to 1,585m MDRT andproduced natural gas at a rate of 38.1 MMSCFD through a 120/64" choke. Although early indications are encouraging, the potential extent andcommerciality of the above discovery ("Dhirubhai 39") are yet to be established.Analysis of the well results is ongoing. The D3 joint venture has moved the rig "C Kirk Rhein" to a second location andhas spudded the well KGV-D3-B1 to evaluate Pleistocene and Late to Mid Miocenesandstone reservoirs. The well is expected to reach a TD of 2,740m. D9 Block The D9 licence, in which the Company holds a 10% participating interest andwhich is also operated by Reliance, is located in the Krishna Godavari basin onthe East Coast of India and covers an area of approximately 11,605km2. The oil and gas industry continues to experience significant shortage ofspecialty exploration and development equipment. This has been particularlyapparent for offshore drilling ships capable of operating in water depths ofgreater than 2,000 m. As a result of this shortage Hardy's D9 deepwaterexploration licence has previously experienced delays in the drilling of thelicence's minimum work programme. After careful consideration of the current equipment shortage and the priorityof the operator to complete offsetting commercial developments, the Company isof the view that drilling on the D9 licence is unlikely to commence until thelatter part of 2008 at the earliest. However, as experienced with the D3licence, windows of availability do occur and Hardy will endeavour to ensurethat our stakeholders are notified of developments on a timely basis. HOEC As at 30 November 2007, Hardy held 6,657,694 shares or approximately 8.5 percent of the issued share capital of HOEC which is listed on both the NationalStock Exchange of India and the Bombay Stock exchange. In early January 2008,Hardy participated in a rights offering resulting in an acquisition of 4,438,462additional shares and a cash outlay of approximately $13.2 million. In December2007 and January 2008, Hardy sold 4,981,411 shares of HOEC realising proceeds ofapproximately $20.6 million. As a result, Hardy's cash resources have beenaugmented by approximately $7.4 million to date. Hardy currently owns 6,114,745shares of HOEC representing approximately 4.7 per cent of the entire issuedshare capital of HOEC. Commenting on the above developments, Sastry Karra, Chief Executive of Hardysaid: "We are delighted with another positive result from our exploration drillingactivity. We are encouraged by the initial results of the first well on the D3block and the overall prospectivity of this extensive exploration licence. Thereduction of our stake in HOEC has augmented our cash resources that willcontribute to funding our exciting work programme for 2008." For further information please contact: Hardy Oil and Gas plc 020 7471 9850Sastry Karra (Chief Executive)Yogeshwar Sharma (Chief Operating Officer)Dinesh Dattani (Finance Director) Arden Partners plc 020 7398 1600Richard Day / Tom Fyson Buchanan Communications 020 7466 5000Mark Edwards / Ben Willey Notes: This update has been approved for issue by Yogeshwar Sharma, Chief OperatingOfficer of Hardy. Mr. Sharma is a Licenced Professional Engineer in AlbertaCanada and a Member of the Society of Petroleum Engineers. Glossary: D3 India offshore exploration licence KG-DWN-2003/1 D9 India offshore exploration licence KG-DWN-2001/1 DST drill stem test HOEC Hindustan Oil Exploration Company Limited km2 square kilometres m metres MMSCFD million standard cubic feet per day MDRT measured depth from rotary table Reliance Reliance Industries Limited TD Total depth $ United States dollars This information is provided by RNS The company news service from the London Stock Exchange