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Hardy Relinquish Exploration Licence in India

Source: www.gulfoilandgas.com 12/24/2014, Location: Asia

Hardy Oil and Gas plc, the oil and gas exploration and production company focused in India announces that on 23 December 2014 the Company consented to the relinquishment of the KG-DWN-2003/1 (D3) exploration licence.

On 23 December 2014, the D3 Management Committee considered a proposal from Reliance Industries Limited, the operator of the D3 block, in which the Company holds a 10 per cent interest, for the relinquishment of the block. The proposal set out that as per the Government of India (GOI) Notification O-22013/27/2012-ONG-D-V dated 10 November 2014, access restrictions have been imposed by the GOI and the Operator recommended the relinquishment of the block with immediate effect under clause 3.1 (a), and (e) and 3.2, of the referenced Government Policy.

The Operator conveyed that the previously announced access restrictions imposed by the Ministry of Defence (MOD) rule out any further exploration/development activities in the impact zone area and inhibited the Contractor from undertaking any further work and investment in the unrestricted area of the Block due to the anticipated increase in cost and risk. This untenable position was further compounded by the uncertainty of long-term natural gas pricing in India following the GOI policy announced earlier in the year which imposed pricing at a significant discount to our expectation of regional market pricing.

The relinquishment of the block will release Hardy from any further work programme liability including any further financial liability related to unfinished Minimum Work Programme penalties. However, $22,033,290 of the Company's Intangible Assets, which are attributable to the D3 block, will be subject to write down in the current financial year.

The Company's primary objectives remain to secure key stakeholder approvals for the PY-3 field and continue activity that will take Hardy closer to realising production from its portfolio of assets. The release of liabilities associated with the D3 Block means that the Company is now in a stronger working capital position from which to fund its planned work activity on other assets and we look forward to updating the market further in due course.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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