Hardy Gets 3-Year Extension for CY-OS/2 Licence (India)

The arbitration process between Hardy Oil & Gas and the Government of India, initiated to determine the expiry date of the licence block CY-OS/2 licence, offshore India, has been completed in favor of the oil company, Hardy announced today in a press release.

The UK-headquartered oil firm has been successful in obtaining the extension of the CY-OS/2 licence, located in the northern part of the Cauvery Basin immediately offshore from Pondicherry.

The Hon’ble tribunal award provides for the CY-OS/2 joint venture to undertake appraisal activities on the CY-OS/2 block, in accordance with the governing production sharing contract, for a further three years from the date on which the block is restored. The Hon’ble tribunal also awarded the joint venture recovery of costs incurred as a result of the arbitration.

CY-OS/2 block – Hardy is the operator of the CY-OS/2 exploration block and holds a 75 per cent participating interest1, through its wholly owned subsidiary Hardy Exploration & Production (India) Inc. The block is located in the northern part of the Cauvery Basin immediately offshore from Pondicherry, India and covers approximately 859 sq km. The licence comprises of two retained areas with the Ganesha-1 natural gas discovery located in the northern area, which comprises an area of approximately 300 sq km.

Ganesha-1 – The natural gas discovery Ganesha-1, announced in January 2007, was drilled to a depth of 4,089 metres, encountering sandstone reservoir in the Campanian. The well flow tested at a peak rate of 10.7 mmscfd. The Company published a competent person report, prepared by Gaffney, Cline & Associates, dated March 2011, which estimates 2C Contingent Resources of approximately 130 BCF.

As a result of the Hon’ble tribunal’s award, Hardy may now recommence work on the appraisal of the natural gas discovery Ganesha-1 and the Company will provide an update on progress and plans in due course.

Ian MacKenzie, Chief Executive Officer of Hardy, commented:

“As operator of the CY-OS/2 block, we are looking forward to recommencing our efforts to appraise the Ganesha-1 natural gas discovery. The award has resolved a key uncertainty and allows us to put in place a business plan for this asset as we have done with the other licences in our India focused portfolio. The award is a positive first step as we build momentum through the implementation of our 2013 campaign.”

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February 4, 2013