HDR hardman resources limited


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    More on Hardman....

    DATE: September 24, 2002

    Fusion Oil & Gas Involved In Second Success Offshore Mauritania.

    After less than two years in the public domain Australian junior Fusion Oil & Gas has become involved in a substantial new oil and gas find offshore Mauritania. Fusion floated on London’s Alternative Investment Market towards the end of 2000 as a pure exploration play. It assembled eight licences in six West African countries. This recently moved up to nine interests in seven countries in this region.
    The first milestone for Fusion as an explorer was, of course, last year when as part of a consortium including other Australian juniors Roc Oil, Woodside and Hardman, the company had success with its Chinguetti-1 well offshore Mauritania. Reserves in place from this discovery could be 100 million barrels of oil, but this was a tentative guesstimate. Further drilling and examination was needed before more dependable estimates of recoverable reserves could be made.
    In a new drilling programme this past summer the group has been building on the initial discovery. Production testing of the Chinguetti -4-2- step out exploration well offshore Mauritania recorded a flow rate of 1,560 barrels of oil per day and 650,000 standard cubic feet of gas before it was constrained by sand production.As a result the appraisal well on the Chinguetti accumulation has been put back. This will now be Chinguetti 4-4 and it will follow the Chinguetti 4-3 exploration well on the Banda prospect which is located approximately 20 kms to the east of the Chinguetti accumulation.
    The partners have just announced that preliminary evaluation of the wireline log data indicates that the Banda well has intersected several oil and gas bearing sandstones in the primary objective with a gross gas column of 110 metres underlain by a 23 metre gross interval of oil bearing sandstones. They will not say what this means in terms of reserves but analysts indicate that because the structure is much larger than Chinguetti there could be 100 million barrels of oil and 2 trillion cubic feet of gas. It’s the first significant gas discovery in Mauritania. Further examination and appraisal drilling will be required to determine the commercial potential at Banda and of the Chinguetti accumulation; suffice it to say these are important finds. Fusion has 3 per cent of the Banda well and Hardman 24.3 per cent. Woodside is the operator.

    West Africa has captured the imagination of the oil world. It is thought with the possible exception of Russia the region contains the largest pool of untapped oil and gas reserves in the world. Some estimates have put deep water oil reserves offshore West Africa at one third of the world’s total. Nigeria alone is thought capable of possessing 100 billion barrels of oil in place.
    Fusion has not only achieved an exploration success but has concluded an important farmout agreement with Amerada Hess. Fusion will be carried through accelerated exploration programmes in other of its West African interests worth in the region of US $22 million to US $34 million net to Fusion’s 20 per cent retained interest in the Gambia, AGC (Croix du Sud) and Cameroon. The AGC is the joint area owned by Senegal and Guinea Bissau. Amerada Hess has enjoyed great exploration success in West Africa. In Equatorial Guinea it has had five exploration discoveries in conjunction with Equatorial Africa.
    In addition to adding value to existing assets in this way the company has also maintained momentum by pursuing new ventures. After several years of discussion it has signed a Technical Cooperation Agreement with the Government of the Sahawari Arab Democratic Republic (SADR)) also known as Western Sahara. Through this agreement Fusion will assemble and interpret data on the offshore area of Western Sahara, immediately north of Mauritania. Upon completion of a detailed prospectivity report Fusion will have the right to license up to three offshore exploration blocks, contingent upon the SADR gaining admission to the United Nations.
    The sovereignty of Western Sahara is currently the subject of a dispute, which is being mediated by the United Nations. The timing and certainty of any such licence awards is therefore indeterminate at the present. However this agreement affords the company the opportunity to deploy its regional skills and expertise in the evaluation of a huge virtually unexplored area, and potentially establish another core deepwater licence area within the emerging Northwest African petroleum province.
    As expected, Fusion is still some way from profits. For the year ended June 30 2002 Fusion announced a loss on ordinary activities before taxation of £920,349 against £3.8 million in the comparable period. With the recent interim results it announced it is placing up to 4.5 million new shares at 45p per share with institutional investors to raise up to £1.9 million (net of working expenses) for working capital. As at June 30 2002 it had £4.5 million in the bank.


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