19 May 2008 14:12
| For Immediate Release | 19 May 2008 |
Hardy Oil and Gas plc
("Hardy" or "the Company")
Interim Management Statement
Hardy Oil and Gas plc (LSE: HDY), the oil and gas exploration and production company with assets in India and Nigeria, today issued its first Interim Management Statement for the period from 1st January 2008 to date.
Key Highlights
The Company announced two gas discoveries on exploration wells KGV-D3-A1 and B1 (Dhirubhai 39 and 41) on the KG-DWN-2003/1 (D3) block in the Krishna Godavari basin in India.
On 27 April 2008 Hardy commenced drilling the first of a three exploration well programme for 2008 on the GS-OSN-2000/1 (GS-01) block on the west coast of India.
Gross average daily production for the three months ended 31 March 2008 from the PY-3 field was 2,830 stbd as compared with 5,178 stbd for the same period in 2007. The Company's share of production, on a participating interest basis, amounted to 512 stbd compared with 932 stbd for the comparative period in 2007.
Sales oil of 92,633 stb was realised for the three months ended 31 March 2008 (Q1 2007: 87,850 stb); the average priced realised was $94.18 per stb (Q1 2007: $58.01 per stb).
Total capital expenditures amounted to $10.2 million principally on the drilling of two wells on the D3 block and acquisition of 3D seismic data on the GS-01 block.
From 1 January 2008 to date, the Company sold 4.25 million ordinary shares of Hindustan Oil Exploration Company Limited for an aggregate cash consideration of $16.2 million (average: INR 156 per share); proceeds has augmented the Company's working capital.
Cash balance at 31 March 2008 was $32.8 million; the Company has no long term debt.
Ordinary shares of the Company commenced trading on the Main Market of the London Stock Exchange on 20 February 2008 and entered the FTSE 250 index on 26 March 2008.
Sastry Karra Chief Executive commented:
"Hardy has enjoyed a tremendous start to 2008 with two gas discoveries on the Company's D3 block, and we have recently commenced drilling of the first of a planned three exploration well program on our GS-01 block. The remainder of 2008 will be active with further drilling expected on the GS-01 and D9 exploration blocks and PY-3 production block."
FINANCIAL POSITION
Hardy remains in a strong financial position. The Company had cash resources of $32.8 million as at 31 March 2008 with no debt. In addition, cash proceeds of $8.1 million were realised on sale of HOEC shares in early May 2008.
During the three months ended 31 March 2008 Hardy sold 92,633 stb of oil (Q1 2007: 87,850 stb). The average realised price in was $94.18 per stb (Q1 2007: $58.01 per stb). Sales during April 2008 amounted to 18,951 stb of oil at an average price of $114.99 per stb.
Total capital expenditure incurred during the three months ended 31 March 2008 amounted to $10.2 million of which $7.1 million was spent on drilling two exploration wells on the D3 block.
The Company continued to realise its investment in HOEC with the sale of 4.25 million shares for gross proceeds of $16.2 million during 2008 to date. The Company presently holds 3.84 million shares in HOEC.
REVIEW OF OPERATIONS
India
PY-3
Gross field production for the quarter ending 31 March 2008 was 0.26 MMstb of oil (Q1 2007: 0.47 MMstb). The decline in production results from the shut in of one producing well in August 2007 due to excessive water and as a result of natural decline in field production. The PY-3 also experienced a nine day shut in during February 2008 for routine maintenance. Gross average daily production rate of the field for the month of April 2008 was 2,989 stbd. Hardy anticipates gross daily production for the year to average 2,700 stbd. The daily average production on a participating interest basis was 512 stbd (Q1 2007: 932 stbd).
The PY-3 joint venture has agreed to expand the Phase III development programme by incorporating the drilling of an additional lateral well via the re-entry of the producing PY-3-PD4 well.
CY-OS/2
The Company completed the reprocessing of the 3D seismic data covering the Ganesha gas discovery. The Company is currently considering farming-out a portion of its interest in the block and discussions with potential interested parties are ongoing.
GS-01
The exploration well GS01-S1 commenced drilling on 27 April 2008. The well is targeted to drill to 3,975 m TVDRT to explore the hydrocarbon prospectivity of Miocene and Oligocene carbonate deposits. The well is located 170 km offshore from the west coast of India in the Saurashtra basin. This is the first of a planned three well drilling programme for 2008.
A 3D seismic data acquisition programme was completed in March 2008 covering 1,165 km2. Processing and interpretation is expected to be fast-tracked by the operator Reliance.
D9
The Board anticipates the first exploration well on the D9 block to commence drilling in the fourth quarter of 2008.
D3
KGV-D3-A1: On 13 February 2008, the Company announced the first discovery named Dhirubhai 39 on this licence. The well was drilled to a depth of 1,937 m MDRT and encountered natural gas between 1,513 m and 1,597 m MDRT with a gross sand thickness of 84 m. One interval was selected for cased hole DST covering 1,565 m to 1,585 m MDRT and produced natural gas at a rate of 38.1 MMscfd through a 120/64 " choke.
KGV-D3-B1: On 1 April 2008, the Company announced a second discovery Dhirubhai 41 on the D3 block. The well encountered good quality reservoirs in the Pleistocene and Miocene formations. MDT tests were conducted over several intervals (1,814 to 2,101 m MDRT and 2,119 to 2,463 m MDRT) and confirmed the presence of hydrocarbons.
The evaluation and incorporation of the data recovered from the discoveries is ongoing. The acquisition of a further 1,000 km2 of 3D seismic data is anticipated to commence by the fourth quarter of 2008 and further drilling is expected on this block in 2009.
Assam
On 2 April 2008 Hardy announced the award of a 10% participating interest in the petroleum exploration licence AS-ONN-2000/1. This is the Group's first onshore block and fourth licence in partnership with Reliance.
Approved 2008/09 work programme involves the reprocessing of existing 124 line km (lkm) of 2D seismic data. Field operations are expected to commence in the fourth quarter of 2008 with the acquisition of approximately 350 lkm of 2D seismic data.
Nigeria
Oza
On 3 April 2008 the Company announced that it had agreed to farmout half of its 40% working interest in the Oza block to Emerald Energy Resources Limited. Under the terms of the farmout agreement Emerald has assumed responsibility for the funding of the initial work programme of the Oza field.
For further information please contact:
| Hardy Oil and Gas plc | 020 7471 9850 |
| Sastry Karra, Chief Executive | |
| Yogeshwar Sharma, Chief Operating Officer | |
| Dinesh Dattani, Finance Director | |
| Arden Partners plc | 020 7398 1632 |
| Richard Day | |
| Buchanan Communications | 020 7466 5000 |
| Mark Edwards Ben Willey |
GLOSSARY OF TERMS
| $ | United States Dollar |
| Assam block | licence AS-ONN-2000/1 |
| D3 | licence KG-DWN-2003/1 |
| D9 | licence KG-DWN-2001/1 |
| DST | drill stem test |
| Emerald | Emerald Energy Resources Limited |
| GS-01 | licence GS-OSN-2000/1 |
| HOEC | Hindustan Oil Exploration Company Limited |
| INR | Indian Rupee |
| km2 | square kilometre |
| Lkm | line kilometre |
| m | metre |
| MDT | modular formation dynamics tester |
| MDRT | measured depth from the rotary table |
| MMscfd | million standard cubic feet per day |
| MMstb | million stock tank barrels |
| Phase III | the PY-3 development plan comprising the drilling of two further wells, one intended for production and one for water injection |
| PY-3 | licence CY-OS-90/1 |
| Reliance Stb stbd | Reliance Industries Limited stock tank barrel stock tank barrel per day |
| TVDRT | total vertical depth measured from the rotary table |
NOTES TO THE EDITORS
Hardy Oil and Gas plc is an upstream international oil and gas company whose assets are principally in India and to a lesser extent in Nigeria. Its portfolio includes a blend of production, development, appraisal and exploration assets. Hardy's goal is to evaluate and exploit its asset base with a view to creating significant value for its shareholders.
Hardy Oil and Gas plc has existing production from an offshore field in India's Cauvery basin. Hardy also has interests in four offshore exploration blocks in India's Saurashtra, Cauvery, Krishna Godavari basins, one onshore exploration block in the Assam basin and two development licences in Nigeria.
Hardy is incorporated under the laws of the Isle of Man and headquartered in London, UK. Ordinary shares of Hardy were admitted to the Official List and the London Stock Exchange's market for listed securities effective 20 February 2008 under the symbol HDY.
The Company's blocks in India are owned by its wholly owned subsidiary Hardy Exploration & Production (India) Inc whose offices are located in Chennai, India. The Nigeria operations are owned by the Company's wholly owned subsidiary Hardy Oil Nigeria Limited whose offices are located in Lagos, Nigeria.
For further information please refer to our website at www.hardyoil.com.
DISCLAIMER
This "Interim Management Statement" contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business. Whilst the Company believes the expectations reflected herein to be reasonable in light of the information available to it at this time, the actual outcome may be materially different owing to factors beyond the Company's control or within the Company's control where, for example, the Company decides on a change of plan or strategy.