HDY.L Regulatory News (HDY)

25 May 2007 07:02

Hardy Oil & Gas plc25 May 2007 For Immediate Release 25 May 2007 Hardy Oil and Gas plc ("Hardy" or the "Company") Placing of up to 4,964,540 New Ordinary Shares Hardy (AIM : HDY), the oil and gas exploration and production company withinterests in India and Nigeria, today announces that the Company is raising upto GBP21.0m (before expenses) by way of a placing of up to 4,964,540 newordinary shares of $0.01 each ("Ordinary Shares") at a price of 423p per share(the "Placing"). The Placing proceeds will be used to help fund the working capital requirementsof the Company, further details of which are set out below. Background Hardy floated on the AIM market of the London Stock Exchange in June 2005,raising GBP15m at a price per share of 144p. In February 2006 Hardy issued anadditional 5.2m ordinary shares at a price of 283p raising GBP14.7m. Recent developments • CY-OS/2: Further to Hardy's announced discovery on the CY-OS/2 licence, on 8 January 2007, an appraisal programme on CY-OS/2 has been submitted for DGH approval • GS-01: On 15 May 2007 the Company announced another gas discovery on the RIL operated GS-01 licence located on the west coast of India • PY-3: Initial agreement reached on securing the PY-3 floating production facility to 2009, subject to DGH approval • D3: The D3 joint venture approved a budget for one exploration well following the completion of the current 3D seismic acquisition programme • Corporate: Advanced talks in securing US$10m debt facility with an India based bank Reasons for the Placing The next 24 months will be an active and exciting time for the Company. With theannounced CY-OS/2 Fan A-1 discovery, Hardy now plans to proceed with the furtherappraisal of the CY-OS/2 licence. The Phase III development programme for PY-3is expected to increase production, and ultimate recovery from the field, by theend of 2008. The drilling programme in GS-01 was accelerated with the drilling of a secondexploration well on 5 March 2007. With the announced GS-01-B1 discovery furtherdrilling and 3D seismic is expected. With the extensive 3-D seismic programme in the D3 block now underway(completion is anticipated by the beginning of the 3rd quarter of 2007) theCompany's non-operated exploration programme, over the next 24 months, isexpected to include the drilling of 3 to 5 exploration wells on the GS-01, D9,and D3 licences. The Directors believe that the net proceeds of the Placing will enable theCompany to fund its projected exploration and appraisal programmes in India anddevelopment operations in Nigeria. Details of the Placing The Company has today entered into a placing agreement with Arden Partners plc("Arden"), under which Arden has agreed to use its reasonable endeavours toprocure placees for up to 4,964,540 new Ordinary Shares ("Placing Shares") at aprice of 423p per share ("Placing Price"). The Placing Price represents adiscount of 5.16 per cent to the official closing market price of 446p of anexisting Ordinary Share on 24 May 2007, being the latest practicable date priorto the release of this announcement. Assuming the maximum number of PlacingShares are issued pursuant to the Placing, such shares will represent 7.98 percent of the Company's enlarged issued share capital. The Placing Shares are being offered to certain institutional and otherinvestors subject to the terms and conditions set out in the placing letterswhich have been sent out by Arden to placees this morning. The placing is notbeing underwritten. A further announcement will be made by the Company in duecourse confirming the level of participation in the Placing. Two of the Directors, Paul Mortimer and Pradip Shah (and/or persons connected tothem), are participating in the Placing in respect of 29,774 and 55,000 PlacingShares respectively. Accordingly upon completion of the Placing, Mr Mortimerwill be interested in an aggregate of 870,051 Ordinary Shares and Mr Shah willbe interested in an aggregate of 664,435 Ordinary Shares representing 1.40% and1.07% of the Company's enlarged issued share capital respectively (assuming themaximum number of Placing Shares are issued). Settlement and dealings Application will be made to the London Stock Exchange for the Placing Shares tobe admitted to trading on AIM ("Admission"). It is expected that Admission willoccur, and dealings in the Placing Shares will begin, at 8.00 am on 4 June 2007.The Placing Shares will, when issued, rank pari passu in all respects with theexisting Ordinary Shares in issue, including the right to receive any dividendsand other distributions declared following Admission. Current trading and prospects Hardy's current trading is in line with the Directors' expectations and theyremain confident about the Company's prospects. The proposed exploration anddrilling timetable with accompanying resource estimates for each explorationlicence are as follows: LICENCE CATEGORY ACTIVITY (2007-08) TIMING------------ ----------- -------------------- --------GS-O1 Exploration Drill 1 exploration well* Q2/07CY-OS/2 Appraisal Drill 1-2 appraisal well H2/08D9 Exploration Drill 1 exploration well H2/07D9 Exploration Drill 1-2 exploration well H2/08D3 Exploration 3D seismic programme Q2/07D3 Exploration Drill 1 exploration well Q4/08PY-3 Development 2 development wells Q4/08Nigeria Development Testing & evaluation activities Q4/07 * Well completed in May 07 Oil & Gas Net entitlement Reserves (MMbbl) Licence P.I.1 Proven Probable Possible Note---------- ---------- ---------- --------- ----------- --------PY-3 18.0 2.95 1.05 0.80 4 Contingent Resources (MMBOE10) Licence P.I.1 Prospect Risk2 Gross Net Type Note---------- ------- -------- --------- ------- ------- ------- -------CY-OS/2 52.59 Fan-A 0.32 20.0 10.5 Oil 5Oza 40.0 Field 0.40 6.0 2.4 Oil 6 Prospective Resources (MMBOE10) Licence P.I.1 Prospect Risk3 Gross Net Type Note---------- ------- -------- --------- ------- ------- ------- -------D9 10.0 6 0.33 to 0.258 5,600 560.0 Gas 6D3 10.0 4 0.20 695 69.5 Gas 6GS-01 10.0 >1 0.17 48 4.8 Oil & Gas 7CY-OS/2 52.59 2 0.14 58 30.2 Oil & Gas 6Atala 20.0 1 0.33 6.5 1.3 Oil 5 Note: 1. P.I. - Participating Interest for India licences and working interest forNigeria licences, shown as a percentage 2. Risk for "Contingent Resources" means the estimated chance, orprobability, that the volumes will be commercially extracted. 3. Risk for "Prospective Resources", means the chance or probability ofdiscovering hydrocarbon in sufficient quantity for them to be tested to thesurface. 4. Internal estimate, third party verification pending 5. Internal estimate gas potential not included 6. Internal estimate 7. Pre-discovery estimates from RIL 8. The biogenic Pliocene gas play has been assigned a lower risk due todiscoveries on the offsetting RIL operated D6 block 9. Hardy's participating interest is 75% however the CY-OS/2 is a pre-NELPlicence and ONGC has an option to back-in for 30% should a commercial discoverybe declared. Thus 52.5% has been used to calculate Hardy's net reserves 10. MMBOE: million barrels of oil equivalent. Gas to oil conversion is 8mcf perbarrel of oil (8:1) Corporate Developments The Board remains firmly focused on executing our strategy for the continuedgrowth of shareholder value. Good corporate governance is a key component in theexecution of the Company's strategy and the Company is looking to furtherenhance the Board through the addition of another Director. The Company's progress since flotation is expected to continue as it executesits stated objectives. In line with the Company's progress and continuedshareholder support the Board anticipates that the Company will move to theOfficial List later this year. Commenting on the Placing, Sastry Karra, Chief Executive, said: "We are encouraged by the strong support from our investors. The Placing willenable us to continue to move forward with the appraisal of our discoveries andfurther exploration of our asset portfolio." For further information please contact: Hardy Oil and Gas plc 020 7471 9850Sastry Karra, Chief ExecutiveYogeshwar Sharma, Managing Director Arden Partners plc 020 7398 1632Richard DaySteve Pearce Buchanan Communications 020 7466 5000Mark EdwardsBen Willey Glossary: DGH: Directorate General of Hydrocarbons (India) MMBOE: million barrels of oil equivalent. Gas to oil conversion used is 8mcf perbarrel of oil MMbbl: million barrels of oil Official List: Official List of the UK Listing Authority RIL: Reliance Industries Limited Competent Person: This update has been approved for issue by Yogeshwar Sharma,Managing Director of Hardy. Mr. Sharma is a Licenced Professional Engineer inAlberta Canada and a Member of the Society of Petroleum Engineers. This information is provided by RNS The company news service from the London Stock Exchange