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Hardy Oil and Gas Plc Introduction to the Official List Hardy Oil and Gas plc Introduction to the Official List Official the to Introduction plc Gas and Oil Hardy Hardy Oil and Gas plc Hardy Oil and Gas plc Hardy Oil and Gas plc Lincoln House 137-143 Hammersmith Road London W14 0QL Introduction to the Official List Tel: +44 (0) 20 7471 9850 Fax: +44 (0) 20 7471 9851 Sponsor and Broker www.hardyoil.com Hardy OilArden Partners plc and Gas plc This document comprises a prospectus relating to Hardy Oil and Gas plc prepared in accordance with the Prospectus Rules of the UK Listing Authority made under section 73A of the Financial Services and Markets Act 2000. Application has been made to the UK Listing Authority and to the London Stock Exchange respectively for admission of all of the Ordinary Shares to: (i) the Official List; and (ii) the London Stock Exchange’s market for listed securities. No application has been made or is currently intended to be made for the Ordinary Shares to be admitted to listing or dealt with on any other exchange. It is expected that Admission will become effective and that dealings on the London Stock Exchange in the Ordinary Shares will commence on 20 February 2008 (International Security Identification Number: GB00B09MB366). Upon Admission, the admission of the Company’s Ordinary Shares to trading on AIM will be cancelled. This document has not been, and does not need to be, approved by the Isle of Man Financial Supervision Commission, or any governmental or regulatory authority in or of the Isle of Man. The Ordinary Shares have not been, and will not be, registered under the US Securities Act or under the securities laws of any state, district or other jurisdiction of the United States, or of Canada, Japan or Australia, or any other jurisdiction and no regulatory clearances in respect of the Ordinary Shares have been, or will be, applied for in any jurisdiction other than the UK. Prospective investors should read the entire document and, in particular, the risk factors set out in the section entitled ‘‘Risk Factors’’ when considering an investment in the Company. (Incorporated and registered in the Isle of Man with registered no. 87462C) INTRODUCTION TO THE OFFICIAL LIST Sponsor and Broker ARDEN PARTNERS PLC Arden Partners Plc, which is authorised and regulated in the United Kingdom by the FSA, is acting only for Hardy Oil and Gas plc and no-one else in connection with Admission and will not regard any other person as its client or be responsible to any person other than Hardy Oil and Gas plc for providing the protections afforded to its clients or for advising any other person on the contents of this document. Investors should rely only on the information in this document. No person has been authorised to give any information or make any representations other than those contained in this document and, if given or made, such information or representations must not be relied on as having been authorised by the Company. Without prejudice to any obligation of the Company to publish a supplementary prospectus pursuant to section 87G of FSMA or paragraph 3.4 of the Prospectus Rules, the publication of this document does not, under any circumstances, create any implication that there has been no change in the affairs of the Group since, or that the information contained herein is correct at any time subsequent to, the date of this document. The contents of this document are not to be construed as legal, business or tax advice. Each prospective investor should consult his, her or its own solicitor, independent financial adviser or tax adviser for legal, financial or tax advice. CONTENTS Page SUMMARY ....................................................................... 3 RISK FACTORS ................................................................... 7 DIRECTORS, SECRETARY AND ADVISERS ........................................ 16 PART 1 — INTRODUCTION TO HARDY OIL AND GAS PLC ........................... 18 PART 2 — MANAGEMENT ......................................................... 39 PART 3 — COMPETENT PERSON’S REPORT ....................................... 42 PART 4 — OPERATING AND FINANCIAL REVIEW ................................... 119 PART 5 — FINANCIAL INFORMATION .............................................. 126 SECTION A — FINANCIAL INFORMATION ON HARDY (IFRS — PERIOD ENDED 126 30 SEPTEMBER 2007) ............................................. SECTION B — FINANCIAL INFORMATION ON HARDY (IFRS — 2005 AND 2006) ...... 148 SECTION C — FINANCIAL INFORMATION ON HARDY (UK GAAP — 2004 AND 2005) . 179 SECTION D — CAPITALISATION AND INDEBTEDNESS STATEMENT................ 198 PART 6 — ADDITIONAL INFORMATION ............................................ 199 PART 7 — DEFINITIONS AND GLOSSARY .......................................... 222 2 SUMMARY The following summary information does not purport to be complete and should be read as an introduction to the more detailed information appearing elsewhere in this document. Any decision by a prospective investor to invest in Ordinary Shares should be based on consideration of the document as a whole and not solely on this summarised information. Following the implementation of the relevant provisions of the Prospectus Directive in each member state of the European Economic Area, civil liability will attach to the persons who are responsible for this summary, including any translation thereof, in such member state but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this document. Where a claim relating to the information contained in this document is brought before a court in a member state of the European Economic Area, the claimant may, under the national legislation of that member state where the claim is brought, be required to bear the costs of translating this document before the legal proceedings are initiated. Overview Hardy Oil and Gas plc is an international oil and gas exploration and production company primarily focused on India and with some development interests in Nigeria. The Group has assembled an attractive portfolio of exploration, development and production assets. Company history The Company was originally incorporated under the name Jehan Energy Limited in 1997 by the founders, Messrs Sastry Karra and Yogeshwar Sharma, with the purpose of developing an oil and gas exploration and production business in India that built on the expertise and relationships of the management team. Management also aimed to exploit the substantial increase in demand for energy in India which followed liberalisation measures initiated by the Government of India in 1991, principally privatisation and the opening up of the economy to foreign companies, and the subsequent increase in economic activity. Through asset acquisition, reserve optimisation and the development of strong working relationships, the Group has assembled a strategic position in the oil and gas basins on the east coast of India, and off the Saurashtra west coast near the Bombay High field. The Company has also acquired development assets in the Niger Delta of Nigeria, a proven oil province. In September 1999 the Company acquired HEPI from a subsidiary of British-Borneo Oil & Gas plc. In 2001, the Company purchased an 8.5 per cent. shareholding in HOEC. The Company was subsequently renamed Hardy Oil and Gas Limited in 2001 and converted to a public limited company on 31 May 2005. On 7 June 2005, the Ordinary Shares were admitted to trading on the AIM market of the London Stock Exchange at a price per Ordinary Share of 144p. On 5 August 2005 the Company announced that, through the India NELP-V round, it had been awarded the KG-DWN-2003/1 deepwater exploration licence (‘‘D3’’). HEPI had jointly bid for this licence with Reliance. On 21 March 2006 the Company announced the acquisition of two licences in the Niger Delta of Nigeria, Oza and Atala. The Company acquired the interests via separate farm-in agreements entitling the company to a 40 per cent. working interest of the Oza field and a 20 per cent. working interest of the Atala field, subject to various terms and conditions. On 8 January 2007 the Company announced a discovery in the Fan A-1 well, located in the Hardy operated CY-OS/2 licence. On 15 May 2007 the Company announced the discovery of hydrocarbons in the Reliance operated B-1 well located on the Company’s GS-01 licence. Further drilling on this licence is expected in 2008. On 10 August 2007 the Company announced the agreed appraisal programme of drilling three additional wells in the CY-OS/2 licence. On 31 December 2007 the Company announced that a well test was successfully carried out on well no. 4 in the Oza field in Nigeria, with flow rates averaging approximately 600 stbd of oil and average GOR of 5,466 scf/stb. 3 On 13 February 2008, the Company announced a gas discovery (Dhirubhai 39) in the Reliance operated KGV-D3-A1 well located on the Company’s D3 licence. The Company also announced the spudding of a second well (KGV-D3-B1) to evaluate Pleistocene and Late to Mid Miocene sandstone reservoirs. The well is expected to reach a TD of 2,740 m. SUMMARY OF INTERESTS GCA, an independent petroleum engineering consultancy, was commissioned to prepare estimates of the proved, probable, and possible oil, condensate, and sales gas reserves and the contingent and prospective resources contained within the Group’s assets. The Group has Proved Reserves (net) and Probable Reserves (net) of 2.69 MMbbl and best estimate net Contingent Resources of 80.9 Bcf of gas and 21.0 MMbbl of oil. Further,
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