16 Feb 2009 07:00
| For Immediate Release | 16 February 2009 |
Hardy Oil and Gas plc
("Hardy" or "the Company")
Operations Update
Hardy Oil and Gas plc is pleased to provide an update with respect to its operations in India and Nigeria.
HIGHLIGHTS
Exploration Update
D9: Commencement of exploration drilling is expected in H1 2009
D3: acquisition of an additional 1,180 km2 of 3D seismic data has commenced and is expected to be completed in the first half of 2009
D3: Operating committee has approved an appraisal programme for the Dhirubhai 39 and 41 gas discoveries
CY-OS/2: Appraisal drilling is expected to commence in 2010, subject to the Government of India's approval of an extension to the block
Assam: Acquisition of 450 lkm of 2D seismic has commenced and is expected to be completed in the second quarter of 2009
GS-01: Geophysical studies are ongoing
Development / Production Assets
On 28 October 2008 the Company announced the commencement of operations for the drilling of a lateral well through re-entry of the PD4 well in the PY-3 field. The operations are now complete. Whilst the well tested at a rate of ~700stbd of oil with 30% water cut under nitrogen lift, it was unable to be reactivated as a self flowing well
The well has been completed as a producer with a gas lift valve to allow for future production once gas lift compression facilities are installed on the FPU
Further drilling on PY-3 will be determined after remapping of the field has been completed incorporating the results PD4-RL well. The PY-3 field is currently producing at a rate of approximately 3,000 stbd
For further information please contact:
| Hardy Oil and Gas plc | 020 7471 9850 |
| Yogeshwar Sharma, COO | |
| Dinesh Dattani, Finance Director | |
| Arden Partners plc | 020 7398 1636 |
| Richard Day Matthew Armitt | |
| Buchanan Communications | 020 7466 5000 |
| Mark Edwards Ben Willey |
REVIEW OF OPERATIONS
India
PY-3 (18%)
The PD4 vertical well was re-entered and side-tracked from 2,916 m MD (2,890 m TVDSS) and drilled down to 4,375 m MD (3,525 m TVDSS). The lateral (PR4-RL) well was drilled to increase the field production and the reservoir was prognosed to be encountered at 3,440m TVDSS; however the reservoir came in 25 m lower than the prognosed depth of 3,465 m TVDSS due to thickening of the overlying shale coupled with anomalous velocity variation, which is a common problem in the field. The well drilled a gross reservoir pack of 173 m MD (60 m TVD) within the reservoir section.
With the assistance of nitrogen lift, the well flowed at 700 stbd of oil with 30% water cut, however, the well was unable to be reactivated as a self flowing well. The well has been completed as a producer with a gas lift valve to allow for future production when gas lift compression facilities are installed on the FPU.
Further drilling on PY-3 will be determined after remapping of the field has been completed incorporating the results of the PD4-RL well.
The PY-3 field was shut-in between 26 November and 23 December 2008, due to FSO loading hose, mooring hawser and back-up rope failure during the tropical cyclone Nisha. The PY-3 field is currently producing at a rate of approximately 3,000 stbd.
CY-OS/2 (75%)
The CY-OS/2 joint venture has submitted a request to the Government of India for an extension of the licence to January 2012 to accommodate the appraisal programme and establish commerciality of the block in accordance with the terms of the CY-OS/2 production sharing contract. Subject to receipt of an extension, Hardy expects drilling to commence in 2010.
GS-01 (10%)
The GS-01 joint venture management committee reviewed and adopted an appraisal programme and budget for the GS01-B1 gas and condensate discovery (Dhirubhai - 33). The appraisal area comprises 5,890 km2 and the programme has an effective term through to May 2010. The GS-01 joint venture is conducting further technical studies to enhance our understanding of the block prior to committing to further drilling.
D9 (10%)
The operator has advised that the first exploration well in the D9 block may commence drilling in the first half of 2009, as the deepwater drilling ship "Deepwater Expedition" is currently engaged in development operations on an adjacent block.
D3 (10%)
Exploration: The acquisition of a further 1,180 km2 of 3D seismic data commenced on 13 February 2009 and is expected to be completed in the first half of 2009. Drilling of four additional exploration wells is anticipated to commence in 2010.
Appraisal: On 9 February 2009, the D3 joint venture operating committee reviewed and approved an appraisal programme for the evaluation of the Dhirubhai 39 and 41 gas discoveries. The appraisal area comprises 750 km2 covering a large portion of the northwest corner of the block. The appraisal programme provides for the initial undertaking of various geological, geophysical and development concept studies, following which, two appraisal wells could be drilled prior to February 2011. The proposed appraisal programme will be submitted to the Government of India shortly, for consideration by the joint venture management committee, which comprises representatives from DGH and the Ministry of Petroleum and Natural Gas.
In earlier 2008, Hardy had announced two gas discoveries on the D3 block. The Dhirubhai 39 discovery produced natural gas at a rate of 38.1 MMscfd through a 120/64" choke. MDT tests were conducted over several intervals of the Dhirubhai 41 discovery well confirmed the presence of hydrocarbons.
Assam (10%)
The planned 2D seismic acquisition programme has commenced and is expected to be completed in the second quarter of 2009. The programme is expected to acquire approximately 450 lkm of 2D seismic data.
Nigeria
Oza / Atala (20%)
The Oza joint venture has procured several long lead time items. The FEED study and ROW survey for pipelines are expected to be completed in the first quarter of 2009. Production is expected to commence in the fourth quarter of 2009.
The Atala joint venture continues to take steps to secure a swamp-barge drilling rig necessary to commence the planned re-entry and testing programme for Atala #1 well.
Preliminary Results
It is expected that the Company's preliminary results, for the full year ended 31 December 2008, will be released on 19 March 2009.
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 |
| FEED | front end engineering design |
| FPU | floating production unit |
| FSO | floating storage and offloading vessel |
| GS-01 | licence GS-OSN-2000/1 |
| km2 | square kilometre |
| lkm | line kilometre |
| m | metre |
| MD | measured depth |
| MDT | modular formation dynamics tester |
| MMscfd | million standard cubic feet per day |
| PY-3 | licence CY-OS-90/1 |
| ROW | right of way |
| stbd | stock tank barrel per day |
| stb | stock tank barrel |
| TVD | total vertical depth |
| TVDSS | total vertical depth measured subsea |
NOTES TO THE EDITORS
Hardy Oil and Gas plc is an upstream international oil and gas company whose assets are principally in India and also 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 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 announcement contains certain operational and financial information in relation to 2008 that is subject to final review and has not been audited. Furthermore it contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil & gas exploration and production business. Whilst the Company believes the expectations reflected herein to be reasonable, the actual outcome may be materially different owing to factors either within or beyond the Company's control, and accordingly no reliance may be placed on the figures contained in such forward looking statements.
For further information please refer to our website at www.hardyoil.com