HDR hardman resources limited

premier thinks it's going ahead

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    Premier has reached agreement with Fusion Oil & Gas to purchase a number of West African interests including the Chinguetti and Banda oil discoveries offshore Mauritania.

    In Mauritania, Premier will acquire Fusion's 6% interest in PSC B (containing the Chinguetti discovery) and 3% interest in PSC A (containing the Banda discovery) for a cash consideration of $10 million and an overriding royalty. The overriding royalty is payable out of production revenues from all developments on these PSC's and is a production related payment on a sliding scale varying with oil prices. For Chinguetti, the value of the royalty is estimated at $5 million (net present value at 10% p.a.), or $8 million (undiscounted), at a constant real oil price of $20 per barrel. In addition, Premier will, on approval of a development plan, pay a $2 million bonus to Fusion for each new discovery resulting in a 50 mmbbl development on PSC B (excluding the existing discovery at Chinguetti) and a $1 million bonus for each new discovery resulting in a 50 mmbbl development on PSC A (excluding the existing discovery at Banda).

    The Chinguetti discovery is expected to receive development consent in the next 12 months and production of the estimated 120 mmbbls of oil reserves (Premier share 7.2 mmbbls) is planned to commence in 2005/6. A multi-well drilling program covering both PSC A and PSC B is expected to begin by late 2003. There are many other attractive exploration prospects to be pursued in both PSC's.

    In Gabon, Premier will acquire an 18% interest in the Iris Marin and Themis Marin offshore PSC's in return for funding its own costs and a further 18% of costs on Fusion's behalf through to the completion of the second well on each PSC. These shallow water PSC's have multiple Gamba formation pre-salt targets of approximately 20-40 mmbbls and are on trend with Premier's existing Dussafu (formerly Phenix) block.

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