Highlands Natural Resources Regulatory News (HNR)

29 Jul 2005 07:02

Hardman Resources Limited29 July 2005 STOCK EXCHANGE / MEDIA RELEASE RELEASE DATE: 29 July 2005 AUSTRALIAN CONTACT: Simon Potter Hardman Resources Ltd +61 8 9261 7600 LONDON CONTACT: Patrick Handley Brunswick Group +44 207 404 5959 RE: JUNE 2005 QUARTERLY REPORT PAGES: 12 Please find attached June 2005 Quarterly Activities and Cash Flow Report forHardman Resources Ltd. SIMON POTTERMANAGING DIRECTOR HARDMAN RESOURCES LTD ABN 98 009 210 235 REPORT TO SHAREHOLDERS FOR THE QUARTER ENDED 30 JUNE 2005 This report summarises the activities of Hardman Resources Ltd and itscontrolled entities ("Hardman" or "the Company") during the quarter ended 30June 2005. ACTIVITY HIGHLIGHTS •Chinguetti Field Development: The project made significant progress during the 2nd quarter. Total project progress at end-June was 82% with subsurface drilling operations essentially complete. The three northern fault block wells were drilled uneventfully and sand control completions were installed on all bar one well in the field. At quarter's end, preparations were ongoing for installation of the upper completions. Conversion of the FPSO Berge Helene is progressing well, with progress of 86% reported at end of June. As previously announced in our third quarter activities statement, we are encountering upward pressure to our projected Chinguetti Budget of US$625 million, which could be in the order of 10% higher due to changes in the scope of drilling operations. Hardman's cash reserves and existing financial arrangements are readily sufficient to cover any identified cost increase. The project is still on schedule for first oil during 1st Quarter of 2006. •Chinguetti Financing: Hardman is pleased to advise the completion of its US$100 million subscription facility, lead arranged by the Australian and New Zealand Banking Group and the near conclusion of the syndication process. •Tiof and Tevet Field Appraisal: Work is ongoing on the Tiof and Tevet oil discoveries to progress further evaluation. Strategies for both these fields are being actively worked, including the possibility of further appraisal wells. •Mauritania Exploration: Seismic data: Block 6 (3096 Sq Km), Block 7 (1536 Sq km) Block 8 (1500 sq km) 3D seismic survey data were processed during the quarter, with delivery of the data scheduled for June to August 2005. The Blocks 4 and 5 - (2100 sq km) and Block 3 - (3700 sq km) surveys - which had been delivered in the previous quarter, continued to be worked up, in order to select the 2005 campaign drilling locations. In addition reprocessing of over 5000 sq km of existing data was undertaken, to aid in the understanding of the region. Electromagnetic surveys acquired during 2005 have also been processed and interpreted, in order to determine the effectiveness of this method to Mauritania. At the beginning of June the Stena Tay Semi-sub rig sailed to the Canary Islands for a scheduled refit. The vessel has arrived back in Mauritania and has commenced drilling a water injector well in connection with the Chinguetti development prior to commencing the first phase of the 2005 exploration campaign. The Venturers have thus far approved the PSC A and B wells; Sotto, Colin/Colin Deep and Espadon. A Block 1 well and further PSC A and B wells are planned for the second phase of exploration drilling. •Falklands: During the quarter the 4,847 kilometres 2D seismic data acquisition programme over the joint venture licence areas was completed. The initial interpretation of the preliminary processed data from the survey has proved encouraging. Also during the quarter the Falkland Islands' authorities granted a two year extension to the licences held in joint venture with Falkland Oil & Gas Limited ("FOGL"). As a result of this extension, Phase I of the licences now runs until July 2007 and Phase II will run (subject to a drilling commitment) from July 2007 until July 2010. During Phase 1 FOGL and Hardman will be required to acquire and interpret an additional 4,000 kilometres of 2D and 2,000 square kilometres of 3D seismic, and to enter Phase II in July 2007, FOGL and Hardman will be required to commit to the drilling of two wells. CORPORATE ACTIVITY Chinguetti Financing: Hardman announced on 27 January 2005 that it had enteredinto an agreement with the Australia and New Zealand Banking Group Limited("ANZ") that established a US$100 million borrowing base project loan facility.The funds are available to cover approximately 80% of Hardman's share of thedevelopment costs of the Chinguetti oilfield. The syndication process is nearing completion with a number of highly respectedinternational project finance groups Appointment of Joint Broker: On 15 June 2005 Hardman announced that it hadappointed JP Morgan Cazenove Limited as its joint broker in the United Kingdomalongside its existing broker, Oriel Securities Limited. Establishment of London Office: The Company established a London office duringthe quarter. It will be manned by a small senior team. FINANCE REPORT Cash on hand at the end of the quarter totalled A$146.4 million. This hasreduced by A$52 million from the March 2005 balance. Cash outflows due toexploration and development continued to represent the most significantreduction with a total of A$50.1 million spent. During the quarter the Companyspent A$11.3 million on exploration expenditure and A$38.8 million on theChinguetti development project. Offsetting a portion of those costs was A$1.7 million from interest on shortterm investments the Company has with various financial institutions. REVIEW OF OPERATIONS MAURITANIA - WEST AFRICA •Chinguetti Development: The project made significant progress during the 2nd quarter. Total project progress at end-June was 82% with subsurface drilling operations essentially complete. The three northern fault block wells were drilled uneventfully and sand control completions were installed on all bar one well in the field. At quarter's end, preparations were ongoing for installation of the upper completions. Conversion of the FPSO Berge Helene is progressing well, with progress of 86% reported at end of June. During the quarter the Keppel shipyard also celebrated 1.5 million man hours worked on the Chinguetti project without a lost workday. The Chinguetti Gas disposal well at Banda was drilled, cored and suspended, prior to gas flow testing scheduled for August. As previously announced in our third quarter activities statement, we are encountering upward pressure to our projected Chinguetti Budget of US$625 million, which could be in the order of 10% higher due to changes in the scope of drilling operations. Hardman's cash reserves and existing financial arrangements are readily sufficient to cover any identified cost increase. The project is still on schedule for first oil during 1st Quarter of 2006. •Tiof and Tevet Field Appraisal: Work is ongoing on the Tiof and Tevet oil discoveries to progress further evaluation. Strategies for both these fields are being actively worked, including the possibility of further appraisal wells. The Banda-2 - Chinguetti gas disposal well is providing useful information on the nature of this field for the purposes of pursuing a Mauritania gas development strategy. •Exploration: Seismic data: Block 6 (3096 Sq Km), Block 7 (1536 Sq km) Block 8 (1500 sq km) 3D seismic survey data were processed during the quarter, with delivery of the data scheduled for June to August 2005. The Blocks 4 and 5 - (2100 sq km) and Block 3 - (3700 sq km) surveys - which had been delivered in the previous quarter, continued to be worked up, in order to select the 2005 campaign drilling locations. In addition reprocessing of over 5000 sq km of existing data was undertaken, to aid in the understanding of the region. Electromagnetic surveys acquired during 2005 have also been processed and interpreted, in order to determine the effectiveness of this method to Mauritania. At the beginning of June the Stena Tay Semi-sub rig sailed to the Canary Islands for a scheduled refit. The vessel has arrived back in Mauritania and has commenced drilling a water injector well in connection with the Chinguetti development prior to commencing the first phase of the 2005 exploration campaign. The Venturers have thus far approved the PSC A and B wells; Sotto, Colin/Colin Deep and Espadon. A Block 1 well and further PSC A and B wells are planned for the second phase of exploration drilling. UGANDA - EAST AFRICA Hardman is operator and holds a 50% interest in Block 2 which is located in thenorthwest of the country. The licence covers the northern part of Lake Albertand the surrounding onshore area. During the March quarter the Company successfully completed the acquisition of a205 kilometres 2D seismic survey of the onshore area and an extension of some ofthose lines into the lake. Processing and interpretation of the data has beenundertaken during the June quarter. GUYANE (FRENCH) - SOUTH AMERICA Hardman was awarded an Exclusive Exploration Licence ("EEL") offshore Guyane inJune 2001 and holds a 97.5% interest. The EEL is approximately 65,000 km inarea, and includes the majority of the French sovereign territory of offshoreGuyane. It extends from the twelve mile territorial waters limit to the 3,000metre water depth contour. The EEL consists of up to three five-year periods,the first of which concludes at the end of May 2006. A well commitment is due bythe end of the first period. Detailed mapping of the 7,700 km of seismic data recorded by early 2003 revealeda number of hydrocarbon leads across the permit, including the large, robuststructure known as the Matamata Prospect. A number of leads similar to the Mauritanian Miocene channel systems were alsoidentified on the sparse grid of regional seismic data recorded for the firsttime over a thick basin at the eastern continental slope. Tenders were calledduring the quarter for a new round of 2D and subsequent 3D seismic dataacquisition to image the more promising leads in this area, commencing October2005. In parallel, drilling planning commenced to enable the well commitment to be metbefore the end of the period. FALKLANDS - SOUTH ATLANTIC Hardman Resources holds a 22.5% interest in seven offshore production licencescovering approximately 33,700 square kilometres to the south and east of theFalkland Islands in a joint venture with Falklands Oil & Gas Limited (FOGL), acompany listed on AIM. During the quarter FOGL, the operator of the FalklandIsland joint venture, advised that it had completed the current 4,847 kilometres2D seismic data acquisition programme over the joint venture licence areas. Theinitial interpretation of the preliminary processed data from the survey hasproved encouraging. These initial results show a much larger and more diverse prospect inventorythan originally anticipated and have identified numerous new leads, withindications that some could potentially be commercially significant in size. Afull evaluation of these leads, supplemented by further investigations, will benecessary before technically sound and economically viable drillable prospectscan be defined. Given the positive results of the survey and signs of potential hydrocarbons,the joint venture is considering plans to increase the scope of its explorationprogramme in order to develop a number of drillable prospects by mid-2006. Fulldetails of the exploration programme are still to be finalised by the jointventure but, given the increased number of identified leads, Hardman expects thescope of the exploration programme to increase significantly. The operator istargeting drilling of the first well in 2007. Also during the quarter the Falkland Islands' authorities granted a two yearextension to the licences held in joint venture with FOGL. As a result of thisextension, Phase I of the licences now runs until July 2007 and Phase II willrun (subject to a drilling commitment) from July 2007 until July 2010. DuringPhase 1 FOGL and Hardman will be required to acquire and interpret an additional4,000 kilometres of 2D and 2,000 square kilometres of 3D seismic, and to enterPhase II in July 2007, FOGL and Hardman will be required to commit to thedrilling of two wells. The extension will allow more time to investigate and assess the increasednumber of identified leads from the approximately 4,000 line kilometre seismicsurvey completed in the first quarter. Preliminary review of the early processedsections has also lead to the identification of several additional leads whichcould warrant further work. A new 4,000 kilometre 2D seismic survey has already commenced and the jointventure expects to conduct the 3D seismic survey later this year and into 2006. NEW ZEALAND Hardman has withdrawn from the project and is waiting for confirmation that allrelated documentation has been approved by Crown Minerals. AUSTRALIA Hardman has interests in the Timor Sea area, situated in Commonwealth watersoffshore northern Western Australia. Timor Sea Permits: AC/P25: (Hardman 95%) Hardman has applied to relinquish AC/P25 in good standingwith the Joint Authority prior to entering the well commitment year. AC/P26: (Hardman 98.75%) Hardman has applied to relinquish AC/P26 in goodstanding with the Joint Authority following the drilling of the Marloo-1 well inApril 2005 which proved devoid of hydrocarbons. AC/RL1: (Hardman 100%) Hardman continued discussions with the Joint Authority(Northern Territory and Federal Government) regarding renewal of the RetentionLease but intends to divest of this asset due to its poor fit with corporatestrategy. HARDMAN RESOURCES LTD SIMON POTTERMANAGING DIRECTOR 29 July 2005 Note: In accordance with Australian Stock Exchange Limited listing requirements,the geological information supplied in this report has been based on informationprovided by geologists who have had in excess of five years experience in theirfield of activity. FOR FURTHER INFORMATION PLEASE CONTACT HARDMAN RESOURCES LTD Level 1, 50 Kings Park Road West Perth Western Australia 6005 TELEPHONE FACSIMILE +61 (0) 8 9261 7600 EMAIL +61 (0) 8 9321 2375 WEB SITE office@hdr.com.au www.hdr.com.au Rule 5.3 Appendix 5B Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001. Name of entityHARDMAN RESOURCES LTD ABN Quarter ended ("current quarter")------------------- ------------------98 009 210 235 30 JUNE 2005------------------- ------------------ Consolidated statement of cash flows ------------ ------------Cash flows related to operating activities Current Year to quarter date $A'000 (12 months) $A'000 ------------ ------------ 1.1 Receipts from product sales and related 2 156 debtors 1.2 Payments for (a) exploration and evaluation (11,288) (49,755) (b) development (38,858) (113,145) (c) production - 101 (d) administration (4,600) (17,814) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature 1,736 8,953 received 1.5 Interest and other costs of finance paid - - 1.6 Income taxes paid - (13,459) 1.7 Other (provide details if material) - - ------------ ------------ Net Operating Cash Flows (53,008) (184,963) ----- ----------------------- ------------ ------------ Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects - - (b) equity investments - - (c) other fixed assets (127) (1,204) 1.9 Proceeds from sale of: (a) prospects - 6,056 (b) equity investments - - (c) other fixed assets - 41.10 Loans to other entities - -1.11 Loans repaid by other entities - -1.12 Other (provide details if material) (210) (427) ------------ ------------ Net investing cash flows (337) 4,429 ----- ----------------------- ------------ ------------1.13 Total operating and investing cash flows (53,345) (180,534) (carried forward) ----- ----------------------- ------------ ------------ ----- ----------------------- ------------ ------------1.13 Total operating and investing cash flows (53,345) (180,534) (brought forward) ----- ----------------------- ------------ ------------ Cash flows related to financing activities1.14 Proceeds from issues of shares, options, etc. 60 11,155 (Net)1.15 Proceeds from sale of forfeited shares - -1.16 Proceeds from borrowings - -1.17 Repayment of borrowings - -1.18 Dividends paid - -1.19 Other (provide details if material) - - ------------ ------------ Net financing cash flows 60 11,155 ----- ----------------------- ------------ ------------ Net increase (decrease) in cash held (53,285) (169,379)1.20 Cash at beginning of quarter/year to date 198,438 328,6951.21 Exchange rate adjustments to item 1.20 1,291 (12,872) ------------ ------------1.22 Cash at end of quarter 146,444 146,444 ----- ----------------------- ------------ ------------ Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the relatedentities ------------- Current quarter $A'000 ------------- 1.23 Aggregate amount of payments to the parties included in 399 item 1.2 -------------1.24 Aggregate amount of loans to the parties included in item ------- 1.10 ------------- --------------------------------1.25 Explanation necessary for an understanding of the transactions ------------------------------------------- Payments in item 1.23 are consulting and related costs (excluding GST) paid during the quarter to directors of the entity and their associates. ------------------------------------------- Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows -------------------------------------------- Nil -------------------------------------------- 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest -------------------------------------------- Nil -------------------------------------------- Financing facilities available Add notes as necessary for an understanding of the position. ------------- ------------- Amount available Amount used $A'000 $A'000 ------------- -------------3.1 Loan facilities 131,234 - ------------- -------------3.2 Credit standby arrangements - ------ ----------------------- ------------- ------------- During the quarter Hardman finalised with ANZ Investment Bank a US$100 millionFacility to fund up to 80% of Chinguetti oilfield development. The facility isavailable for use at the discretion of Hardman. Estimated cash outflows for next quarter ------------------ $A'000 ------------------4.1 Exploration and evaluation 28,500 ------------------4.2 Development 31,200----- ----------------------------- ------------------ Total 59,700----- ----------------------------- ------------------ Reconciliation of cash------------------------- ------------- -------------Reconciliation of cash at the end of the quarter (as Current Previousshown in the consolidated statement of cash flows) quarter quarterto the related items in the accounts is asfollows. $A'000 $A'000 ------------- ------------- 5.1 Cash on hand and at bank 12,586 20,735 ------------- -------------5.2 Deposits at call 133,858 177,703 ------------- -------------5.3 Bank overdraft - - ------------- -------------5.4 Other (provide details) - ------ ---------------------- ------------- ------------- Total: cash at end of quarter (item 1.22) 146,444 198,438----- ---------------------- ------------- ------------- Changes in interests in mining tenements ------------- ---------- -------- -------- Tenement Nature of Interest at Interest reference interest beginning of at end of quarter quarter (note (2)) ------------- ---------- -------- -------- 6.1 Interests in mining - - - - tenements relinquished, reduced or lapsed ------------- ---------- -------- --------6.2 Interests in mining - - - - tenements acquired or ------------- ---------- -------- -------- increased Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rightstogether with prices and dates. Total Number Issue price per Amount paid number quoted security (see up per ---------- ---------- note 3) (cents) security (see note 3) ----------- (cents) ----------- ----------- 7.1 +Preference - - securities (description) ---------- ---------- ----------- ----------- 7.2 Changes during - - quarter (a) Increases - - through issues (b) Decreases through returns ---------- ---------- ----------- ----------- of capital, buy-backs, redemptions 7.3 +Ordinary 656,483,095 656,483,095 - - securities ----- ----------- ---------- ---------- ----------- ----------- 7.4 Changes during 55,000 55,000 $1.10 $1.10 quarter (a) Increases through issues (b) Decreases ----- through returns ---------- ---------- ----------- ----------- of capital, buy-backs ----------- 7.5 +Convertible - - debt securities (description) ---------- ---------- ----------- ----------- 7.6 Changes during quarter (a) Increases through issues (b) Decreases ----- through ---------- ---------- ----------- ----------- securities matured, converted ----------- 7.7 Options 5,100,000 - Exercise price Expiry date (description and conversion factor) $1.10 31/12/06 ---------- ---------- ----------- ----------- 7.8 Issued during - - - - quarter ---------- ---------- ----------- ----------- 7.9 Exercised during 55,000 - $1.10 31/12/06 quarter - ---------- ---------- ----------- -----------7.10 Cancelled during - - - - ----- quarter ---------- ---------- ----------- ----------- -----------7.11 Debentures - - (totals only) ----- ----------- ---------- ----------7.12 Unsecured - - notes (totals only) ---------- ---------- Compliance statement 1 This statement has been prepared under accounting policies which comply withaccounting standards as defined in the Corporations Act or other standardsacceptable to ASX (see note 4). 2 This statement does give a true and fair view of the matters disclosed. Sign here: ............................................................ Date: Company Secretary Print name: RICHARD O'SHANNASSY Notes 1 The quarterly report provides a basis for informing the market how theentity's activities have been financed for the past quarter and the effect onits cash position. An entity wanting to disclose additional information isencouraged to do so, in a note or notes attached to this report. 2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect ofinterests in mining tenements acquired, exercised or lapsed during the reportingperiod. If the entity is involved in a joint venture agreement and there areconditions precedent which will change its percentage interest in a miningtenement, it should disclose the change of percentage interest and conditionsprecedent in the list required for items 6.1 and 6.2. 3 Issued and quoted securities The issue price and amount paid up is notrequired in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 1022: Accounting for ExtractiveIndustries and AASB 1026: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of InternationalAccounting Standards for foreign entities. If the standards used do not addressa topic, the Australian standard on that topic (if any) must be complied with. == == == == == This information is provided by RNS The company news service from the London Stock Exchange