The deal also includes an option over 100% equity in WA-316P, located northeast of the Talbot Field, for a further cost of $10,000.

AC/R1 encompasses the Talbot Field discovered in 1989 by Santos with the Talbot-2 appraisal well drilled in 1990. Hardman's initial estimate of recoverable reserves ranges from 4 to 6 million barrels, which is deemed uneconomic for a "stand alone" development.

The adjoining AC/P26 permit was granted in 1998 and is covered by extensive 2D and 3D seismic data. Several leads have been identified in the permit although a decision to drill is not required until May 2004.

"For the past six months Hardman has been looking for an opportunity to expand the Australian production base beyond our producing assets at the Woodada Gas Field and Jingemia Oil Field in the Northern Perth Basin," said Hardman's managing director Ted Ellyard.

"This Timor Sea acquisition provides Hardman with upside potential in the event of a commerciality decision for the Talbot Field, which could be driven by the discovery of additional reserves in AC/P26. We intend to take a fresh technical look at this area in preparation for drilling a well next year on one of the prospects close to the Talbot Field"

The WA-316P permit has a well drilling obligation to be satisfied by December 2004, although the option held by Hardman will enable it to undertake detailed technical studies of the area before being required to commit to drilling.