13 May 2010 07:00
13 May 2010
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 predominantly in India, today issues its Interim Management Statement for the period from 1 January 2010 to the date of this announcement.
* All financial amounts are stated in US dollars unless otherwise noted.
Operational Highlights
·; PY-3: Re-commenced production on 24 January 2010 at a rate of 3,336 stbd. Gross daily production in the first quarter of 2010 averaged 2,529 stbd (Q1 2009 2,932 stbd) (net: 455 stbd, Q1 2009: 528 stbd). Average gross daily production for the month of April 2010 was 3,395 stbd.
·; D3: Commenced drilling of the KGV-D3-W1 exploration well which is currently in progress.
·; GS-01: A proposal for declaration of commerciality of the GS-01 Dhirubhai 33 natural gas discovery is being submitted to DGH.
·; CY-OS/2: As previously announced, over the past year the, Company has had ongoing discussions with the Ministry of Petroleum and Natural Gas of the Government of India with regard to an extension of the CY-OS/2 exploration block without success. In the belief that the CY-OS/2 joint venture has the right to this extension, which is supported by external legal and technical opinions, the Company is now initiating a formal dispute resolution process in accordance with the PSC.
Financial Highlights
·; Net sales oil of 30,712 stb of oil were realised for the three months ended 31 March 2010 (Q1 2009: 77,274 stb); the average price realised was $78.93 per stb (Q1 2009: $44.31 per stb).
·; Capital expenditure amounted to $0.7 million principally on exploration activities.
·; Cash and short term investments at 31 March 2010 amounted to $24.4 million; the Company has no long term debt.
Corporate
·; Published a CPR and Independent Assessment providing an update to the Company's reserves and resources estimates.
·; As previously announced, Sastry Karra relinquished his position as Chief Executive and continues on the Board as a non-executive Director. Yogeshwar Sharma assumed the role of Chief Executive Officer effective 1 April 2010.
Outlook
·; PY-3: Gross daily production from PY-3 estimated to average 3,000 stbd (net: 540 stbd) in 2010.
·; D3: Drill two additional exploration wells and one appraisal well in 2010.
·; D9: Drill one exploration well before the end of 2010.
Yogeshwar Sharma, Chief Executive Officer of Hardy, commented:
"We are pleased with the resumption of production from the PY-3 field and the continuation of the exploration drilling programme on our D3 block. We also expect to re-commence drilling on the D9 block before the end of 2010."
For further information please contact:
|
|
|
| Hardy Oil and Gas plc | 020 7471 9850 |
| Yogeshwar Sharma, Chief Executive Officer |
|
| Dinesh Dattani, Finance Director |
|
|
|
|
| Arden Partners plc | 020 7614 5917 |
| Richard Day |
|
| Matthew Armitt |
|
|
|
|
| Buchanan Communications | 020 7466 5000 |
| Mark Edwards Ben Romney Chris McMahon |
|
FINANCIAL POSITION
During the three months ended 31 March 2010, Hardy sold 30,712 stb of oil (Q1 2009: 77,274 stb). The average realised price in this period was $78.93 per stb (Q1 2009: $44.31 per stb).
Total capital expenditure incurred during the three months ended 31 March 2010 amounted to $0.7 million principally on exploration activities.
As at 31 March 2010, the Company had cash and short term investments of $24.4 million and no long-term debt.
Hardy is well positioned to see itself through its key exploration activities in 2010.
REVIEW OF OPERATIONS
India (Non-operated)
D3 (10%)
On 6 April 2010, the Company announced the commencement of drilling of the exploration well KDV-D3-W1 on the D3 block. The KGV-D3-W1 exploration well is being drilled with the Transocean rig, Deepwater Expedition, in water depth of approximately 1,653 m. The target depth is 3,514 m MDRT to explore the hydrocarbon potential of Plio-Miocene sands.
The KDV-D3-W1 well is the fifth exploration well on the block. The Company has previously announced three consecutive gas discoveries on the D3 block (Dhirubhai 39, 41 and 44).
Processing of the 3D seismic data gathered over the eastern portion of the block ("Toe Thrust Area") continued through the period. Further geological, geophysical, and engineering studies are ongoing in the appraisal of the gas discoveries Dhirubhai 39 and 41.
D9 (10%)
The D9 joint venture is presently integrating petrographic and biostratigraphic data obtained from core samples collected from the KG-D9-A1 well into its geological model prior to drilling of the next exploration well.
Assam (AS-ONN-2000/1) (10%)
Initial interpretation of the acquired 390 lkm of 2D seismic has been completed. The Assam joint venture has also completed an environmental impact assessment and surface geochemical sample analysis is underway.
GS-01 (10%)
The GS-01 joint venture is submitting a proposal for declaration of commerciality for the Dhirubhai 33 natural gas discovery to DGH. Following acceptance of the commerciality proposal by the management committee, a development plan will be prepared and submitted to DGH.
India (Operated)
PY-3 (18%)
The PY-3 field re-commenced production on 24 January 2010 at an initial daily rate of 3,336 stbd. For the first three months of 2010 the average daily production on a participating interest basis was 455 stbd (Q1 2009: 528 stbd). Gross production for April 2010 was 3,395 stbd.
Hardy continued to work closely with its partners to confirm a final development plan to enhance production and develop a future operating strategy for the PY-3 field. The joint venture is currently considering the drilling of two further lateral production wells and the appropriate offshore production facilities.
CY-OS/2 (75%)
The Company holds a 75% participating interest in its offshore block CY-OS/2 on the south east coast of India wherein a gas discovery was announced on 8 January 2007. The exploration period for the block ended on 23 March 2007 and the MOPNG was requested to extend the block for appraisal and declaration of commerciality for its gas discovery until 7 January 2012 in accordance with the provisions of the CY-OS/2 production sharing contract.
As previously announced, over the past year, the Company has had ongoing discussions with MOPNG with regard to an extension of the CY-OS/2 exploration block. In the belief that the CY-OS/2 joint venture has the right to this extension, which is supported by external legal and technical opinions, the Company is now initiating a formal dispute resolution process in accordance with the PSC.
MANAGEMENT CHANGE
As previously announced, Sastry Karra relinquished his position as Chief Executive and now maintains an ongoing involvement with the Company as a Non-Executive Director. Yogeshwar Sharma, former Chief Operating Officer, has succeeded Sastry Karra as Chief Executive Officer. Mr Sharma co-founded Hardy with Mr Karra and has over 35 years of experience and expertise in the oil and gas business.
We would like to thank Sastry for his tireless work over the past 12 years as Chief Executive. It was Sastry's vision that has placed Hardy in the prospective position it is today. The management is determined to fulfil the potential of that vision.
CPR AND INDEPENDENT ASSESSMENT
As announced on 14 April 2010, a Competent Persons Report (CPR) has been undertaken by Gaffney, Cline & Associates Ltd assessing the Company's Indian assets and an Independent Assessment report undertaken by RPS Energy assessing the Company's Nigerian assets.
The GCA report highlights the significant prospective resource potential of the Company's Krishna Godavari Basin assets.
OUTLOOK
The Company anticipates production on PY-3 to average approximately 3,000 stbd in 2010. In addition, the D3 joint venture plans to drill a further two exploration wells and one appraisal well in 2010. Drilling is also expected to recommence on the D9 block with one exploration well planned before the end of 2010.
GLOSSARY OF TERMS
| $ | United States Dollar |
| 2D | two dimensional |
| Assam block | Exploration licence AS-ONN-2000/1 |
| CPR | Competent Persons Report |
| D3 | Exploration licence KG-DWN-2003/1 |
| D9 | Exploration licence KG-DWN-2001/1 |
| DGH | Directorate General of Hydrocarbons |
| Dhirubhai 33 | gas discovery on GS-01-B1 announced on 15 May 2007 |
| Dhirubhai 39 | gas discovery on KGV-D3-A1 announced on 13 February 2008 |
| Dhirubhai 41 | gas discovery on KGV-D3-B1 announced on 1 April 2008 |
| Dhirubhai 44 | gas discovery on KGV-D3-R1 announced on 22 December 2009 |
| Ganesha | non-associated gas discovery announced on 8 January 2007 |
| GCA | Gaffney Cline & Associates Ltd |
| GS-01 | Exploration licence GS-OSN-2000/1 |
| km | kilometre |
| km2 | square kilometre |
| lkm | line kilometre |
| m | Metre |
| MDRT | measured depth from rotary table |
| MOPNG | Ministry of Petroleum and Natural Gas of the Government of India |
| PSC | production sharing contract |
| PSDM | pre-stacked depth migration |
| PY-3 | licence CY-OS-90/1 |
| Q3 | the third quarter of the calendar year |
| RPS | RPS Energy of the RPS Group |
| stb | stock tank barrel |
| stbd | stock tank barrel per day |
| TCF | trillion cubic feet |
NOTES TO THE EDITORS
Hardy Oil and Gas plc is an upstream international oil and gas company whose assets are principally in India. Its portfolio includes a blend of exploration, appraisal, development, and production 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, and 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 Indian assets are held through the wholly owned subsidiary Hardy Exploration & Production (India) Inc, located in Chennai, India. The Company's Nigerian assets are held through wholly owned subsidiary Hardy Oil Nigeria Limited, 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.