HDR hardman resources limited

hdr another write up

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    from todays west ausralian, the pokie is about to pay, cheers

    Hardman jumps on debt-fund talk

    By Michael Weir

    HARDMAN Resources shares jumped nearly 4 per cent yesterday on speculation the company would be able to fully debt fund its share of a $1 billion Mauritanian oil development.

    The Perth-based company closed 2¢ higher at a five-month closing high of 59¢ after hitting a peak of 61¢ during the day on higher than usual trading.

    Hardman directors Ted Ellyard and Scott Spencer are believed to be in London negotiating with financiers and expectations have increased the company would easily be able to lock-in a financing deal for the Chinguetti project.

    Analysts said previous expectations that Hardman, which owns 21.6 per cent of Chinguetti, would have to go to the market to fund part of its share of the development costs had put the shares under pressure.

    Confirmation of the financing plan, especially if it was 100 per cent debt, could possibly lead to a further share price rerating, they said.

    The Chinguetti partners, headed by operator and 35 per cent-owner Woodside Petroleum, are due to meet early next month to push ahead on a 10-well development plan.

    Various Mauritanian Government approvals would then be sought during the next 12 months and the project would be given a final development sign-off next year.

    Chinguetti contains between 100 million and 125 million barrels of oil and first production, at a daily rate of 75,000 barrels, is due in late 2005.

    The other partners in Chinguetti include Sydney-based Roc Oil (2.4 per cent), Italian energy giant Agip (35 per cent) and the UK-listed Fusion Oil (6 per cent).

    Hardman has already appointed the London office of ANZ Investment Bank to advise on project financing, and is also expected to approach the World Bank's International Finance Corporation, which specialises in funding projects in developing countries.

    Hartleys analyst Kevin Tomlinson said getting IFC involved in financing would be a major coup that would be warmly accepted by the market.

    He said Hardman was trading at a significant discount to its 80¢ valuation.

    Euroz Securities analyst Ollie Foster said expectations Hardman would secure 100 per cent debt financing were not surprising because Chinguetti was a "five-star project".

    "The market was worried that Hardman would have to go back to the market and maybe even farm down its equity in Chinguetti," Mr Foster said.

    "Now it looks like it won't have to and 15,000bpd (production) to Hardman will be a sensational result."

    Valuation comparisons with other mid-tier producers, such as Tap Oil, indicated a lot of upside potential in Hardman shares, he said.

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