Under the agreement, Hardman has sold the majority of its Perth Basin interests to ARC including its 10.376% interest in EP 413, including the Jingemia oil field, a 75% interest in L4/L5/PL6 including the Woodada gas field and its 100% interest in the Logue drilling rig.

The deal is worth $7,644,000 to Hardman plus potential future payments up to a total of $1,500,000 if production from the Woodada Gasfield exceeds certain levels.

Hardman's remaining 12% equity in EP 413 (Jingemia) has also been made subject to a put and call option arrangement such that Hardman can require ARC to purchase the interest and ARC may require Hardman to sell the interest to ARC for an agreed amount. Under the terms of this agreement, ARC will acquire the interest no later June 2005.

The move also adds to the increasing weight ARC has in the onshore Perth Basin where it currently holds interests in seven other permits including L11/EP 320, which holds the Beharra Springs gas field, and L1/L2 which contains the Eremia and Hovea fields.

"This acquisition completes the current phase of ARC's carefully considered strategy of consolidating its strategic position in the Perth Basin. With this purchase, ARC now has interests in all of the producing fields in the North Perth Basin and operates the majority of them," said ARC's managing director Eric Streitberg.

"The acquisition will be funded from a combination of cash on hand and draw down of our $10 million working capital facility and is forecast to be cash flow and EPS positive subsequent to the development of the Jingemia oil field which is currently underway," said Streitberg.

Hardman's managing director Ted Ellyard said the company made the decision to divest the assets in order to concentrate its resources on the larger scale higher profitability of its international portfolio, particularly Mauritania, and the potential reserves of the Timor Sea.

"Hardman is pleased to have achieved this rationalisation of its Australian assets, which will enable the company to focus its efforts on those areas where maximum value can be added. Since it acquired the original interests in the Perth Basin in mid-200, the company has had a high success rate in discovering large oil and gas reserves in offshore Mauritania.

"The recent sale of an interest in Mauritania to British Gas shows clearly how the value of this area can rapidly appreciate. Hardman needs to be able to direct its technical and commercial resources to managing and further enhancing this asset," said Ellyard.

"In addition, the Timor Sea has recently come to the fore as an area which Hardman believes has the potential to host larger petroleum reserves than the Perth Basin, and is therefore considered more suited to Hardman's exploration style and capabilities. This Perth Basin sale will free up manpower and increase cash reserves to improve Hardman's ability to take advantage of opportunities in its Timor Sea acreage."