5 Nov 2009 07:00
Immediate Release 5 November 2009
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 July 2009 to date.
* All financial amounts are stated in US dollars unless otherwise noted.
Operational Highlights
PY-3: Executed a one year contract extension to the PY-3 production facilities.
PY-3: As a result of delays in the commencement of required repairs, nominal production was recorded for the third quarter of 2009 (Q3 2008: 516 stbd).
D9: The first exploratory well KGD9-A1 in the deepwater block KG-DWN-2001/1 (D9) was plugged and abandoned. The data obtained from this exploration well will be integrated with the existing geological model to improve the understanding of the geology and petroleum system within the block before drilling subsequent wells.
D3: On 2 November 2009, commenced drilling of the exploration well KGV-D3-R1 on the D3 block to explore the hydrocarbon potential of Miocene sands.
Financial Highlights
Sales oil of 28,165 stb was realised for the three months ended 30 September 2009 (Q3 2008: 53,1821 stb); the average price realised was $71.75 per stb (Q3 2008: $112.67 per stb).
Total capital expenditures amounted to $1.63 million principally on drilling of one exploration well.
Cash and short term investments at 30 September 2009 amounted to $29 million; the Company has no long term debt.
Outlook
PY-3: Production is expected to re-commence by the end of 2009.
D3: Drill a further three exploration wells in 2010.
D9: Drill a further three exploration wells in 2010.
Sastry Karra, Chief Executive of Hardy, commented:
"The drilling campaign on the Company's D9 exploration block has commenced and the results of the first well will assist in optimising further drilling locations on the block. We are please to have commenced drilling of the KGV-D3-R1 well on the Company's D3 exploration block, which leads us into an active exploration drilling campaign planned for 2010 on both D3 and D9 blocks in the Krishna Godavari Basin of India."
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 | |
| Matthew Armitt | |
| Buchanan Communications | 020 7466 5000 |
| Mark Edwards Ben Willey |
FINANCIAL POSITION
During the three months ended 30 September 2009, Hardy sold 28,165 stb of oil (Q3 2008: 53,181 stb). The average realised price in this period was $71.75 per stb (Q3 2008: $112.67 per stb).
Total capital expenditures incurred during the three months ended 30 September 2009 amounted to $1.63 million, principally on the drilling of an exploration well on the D9 exploration block.
Hardy remains in a strong financial position with sufficient funding for the foreseeable future.
As at 30 September 2009, the Company had cash and short term investments of $29 million with no debt.
REVIEW OF OPERATIONS
India (Non-operated)
D9 (10%)
As announced on 21 October 2009, the first exploratory well KGD9-A1 in the deepwater block KG-DWN-2001/1 (D9) was plugged and abandoned. The data obtained from this exploration will be integrated with the existing geological model to improve the understanding of the geology and petroleum system within the block before drilling subsequent wells.
D3 (10%)
On 2 November 2009, the Company announced the commencement of drilling of the exploration well KDV-D3-R1 on the D3 block. The exploratory well KGV-D3-R1 commenced drilling with the Transocean rig, Deepwater Expedition, in water depth of approximately 1,964 m. The target depth of the KGV-D3-R1 well is 4,710 m MDRT to explore the hydrocarbon potential of Miocene sands.
The targeted prospects have been identified based on newly acquired PSDM data, which was not available at the time of publication of a Technical Evaluation Report undertaken by GCAin May 2009. The Company estimates the prospective resources of the Miocene prospects, targeted by the KDV-D3-R1 well, to be in the order of 1 TCF.
The D3 joint venture plans to drill a further three exploration wells in 2010.
Further geological, geophysical, and engineering studies are ongoing in the appraisal of the gas discoveries Dhirubhai 39 and 41.
Assam (AS-ONN-2000/1) (10%)
The processing and interpretation of 390 line km of 2D seismic, acquired in the first half of 2009, is ongoing. Further field operations will be determined once interpretation of the 2D seismic data and other geological studies are completed. The majority of the minimum work programme for Phase I of the exploration licence has been completed.
GS-01 (10%)
The GS-01 joint venture continued various geological and geophysical studies in relation to the appraisal of the Dhirubhai 33 gas discovery. A decision on the drilling of an appraisal well is expected to be taken by the end of 2009.
India (Operated)
PY-3
As announced on 20 July 2009, the PY-3 field has been shut-in since 5 July 2009 resulting in nominal production for the three months ended 30 September 2009. The daily average production on a participating interest basis was 28 stbd (Q3 2008: 516 stbd).
The field has remained shut-in awaiting repair of the mooring system used by the offshore storage vessel. The contractor is planning to carry out the repairs as soon as possible to recommence production. Delays may occur due to adverse weather conditions. As a result of the unplanned shut-in of the field, the average gross daily production, for 2009, has been revised downwards to 1,500 stbd. The Company anticipates resuming production at the end of the year at a rate of approximately 3,000 stbd
Hardy has revised its geological and reservoir simulation models to incorporate new data gathered from the PD-4RL well. The revised models will be used to plan future in-fill drilling.
CY-OS/2
The joint venture has applied for an extension of the appraisal period to January 2012, as per the PSC, to the Ministry of Petroleum and Natural Gas, Government of India. The Company is awaiting a response, with respect to the extension, from the Ministry of Petroleum and Natural Gas.
Nigeria
Oza
A front end engineering study is in the advanced stages of completion. Various regulatory and community approvals and a pipeline route survey are currently ongoing. It is anticipated that pipeline construction and installation will commence in the first half of 2010.
GLOSSARY OF TERMS
| $ | United States Dollar |
| 2D | two dimensional |
| Assam block | Exploration licence AS-ONN-2000/1 |
| D3 | Exploration licence KG-DWN-2003/1 |
| D9 | Exploration licence KG-DWN-2001/1 |
| 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 |
| Ganesha | non-associated gas discovery announced on 8 January 2007 |
| GS-01 | Exploration licence GS-OSN-2000/1 |
| km | kilometre |
| km2 | square kilometre |
| lkm | line kilometre |
| m | metre |
| MDRT | measured depth from rotary table |
| PSC | production sharing contract |
| PSDM | pre-stacked depth migration |
| PY-3 | licence CY-OS-90/1 |
| Q3 | the third quarter of the calendar year |
| Technical Evaluation Report | technical evaluation report titled "The Contingent Resources and Prospective Resources of Block D3 and Block D9, Krishna Godavari Basin, Offshore India" dated 26 May 2009 by Gaffney, Cline & associates Ltd |
| 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.