The Perth-based company told the ASX yesterday it would sell as many as 65.9 million new shares at 98p each – a 2% discount to the stock’s last closing price in London.
With the $A708 million Chinguetti oil project in Mauritania now in production, Hardman is looking towards developing a second revenue stream. It has exploration ventures in Uganda, French Guiana, Tanzania and Suriname, while its Mauritanian joint venture is considering developing the Tiof field, which may initially cost as much as $700 million.
The company said it was also planning to bid for acreage in the upcoming Trinidad licensing round.
“Hardman’s Mauritania assets offer investors current production, a pipeline of new projects and exploration potential in an emerging oil province,” Hardman chief executive Simon Potter said.
“New financial resources will permit us to follow up our Uganda discoveries aggressively, acquire new acreage and actively explore across our existing portfolio over the coming 18 months, while still maintaining a strong balance sheet.
“Furthermore, the placing will enhance our UK investor base, and offer shareholders greater liquidity. It builds on a successful history for Hardman in London, where its shares have been listed on AIM since 2002.”
In Uganda, the company plans to appraise the recent play-opening discoveries, Mputa-1 and Waraga-1, to assess their size and commercial significance.
The program will include drilling the Mputa-2 appraisal well and flow tests for two wells, starting in the first half of this year, and further onshore exploration wells – at least two being planned for later in the year and further drilling anticipated in 2007.
Looking ahead, Hardman said it had started planning to drill large offshore prospects beneath Lake Albert in north-west Uganda and would also likely acquire additional 2D and 3D seismic data to extend coverage over the onshore oil trend.
During the remainder of this year and in 2007, the company plans to spend at least $US20 million ($A26.5 million) in Uganda, with additional amounts, including early development spend, depending on further drilling success.
In Guyane, Hardman says recently acquired seismic data has revealed significant deepwater potential for prospects potentially containing several hundred million barrels of oil, in addition to the large structural prospect Matamata.
While Hardman intends to farm-out part of its equity in Guyane, $10 million of the share placing will fund testing the prospectivity of different play types by drilling at least two wells. Drilling is now most likely to commence in 2007, subject to rig availability.
The company has also signed up two new ventures in Tanzania, northern Africa, and Suriname.
The Ruvuma Basin area onshore Tanzania will require funding of $8 million, including seismic acquisition and drilling two wells, with drilling expected to commence in the second half of next year.
Most recently, Hardman has announced it has signed a heads of agreement for entry into Suriname, with a 40% stake in the onshore Coronie and Uitkijk concessions. This represents a lower risk, lower-cost exploration opportunity as the blocks are close to existing producing fields and infrastructure, the company said.
Hardman expects to invest $9 million in Suriname over the next 18 months, subject to completion of detailed contract negotiations, with potential for rapid follow-on development expenditure upon success.
The Tanzania and Suriname ventures are subject to certain government approvals.
The placing will also see $25 million allocated to specific new venture proposals, including further Atlantic Margin exploration new ventures at an advanced stage of negotiation.
Hardman also proposes to bid for acreage in the upcoming Trinidad licensing round.
“This acreage would have a good fit with our developing focus area offshore northern South America and we believe we are well placed, given the local knowledge of our Trinidad office,” Potter said.
