Hardy Oil & Gas sells US operations

Hardy Oil & Gas has sold its US operations for $179m (pounds 118m), with most of the business going to a company backed by Enron Corporation, the giant US energy group.

The move is part of a streamlining of the group initiated by John Walmsley, the former finance director of Enterprise Oil, who became managing director at the end of 1994. Last year Hardy got rid of its Canadian assets and an interest in the Forties field in the North Sea. It has announced plans to withdraw from the Netherlands, Libya, Algeria and Namibia.

Acquiror, a new company financed by Enron Capital and Trade Resources, is effectively paying $171m for Hardy Oil & Gas USA. The sale will include proven reserves of 21.7m barrels of oil equivalent, plus a further 6.8m barrels of probably reserves. Separately, a further 2.6m barrels is to be sold by Hardy USA to a third party for $8m.

The sale price is equivalent to $7.37 per proved barrel of oil equivalent or $5.76 when probable reserves are taken into account. Hardy said the disposal would lead to a write off of pounds 7.7m, but would eliminate borrowings, while the group would retain exposure to operations in the Gulf of Mexico through options to participate in certain exploitation opportunities.

Douglas Baker, chairman, described the sales as "a major step forward in the strategic refocusing we began last year". Mr Baker said the group was in talks on several deals aimed at expanding its current portfolio of oil and gas fields.

Cash raised from yesterday's sale would help to develop those fields, but also strengthen the group's hand in talks to expand elsewhere, Mr Baker said.

"The objective of the firm has always been to grow, so we would certainly be looking to bring in new assets over time.

"You would start to see the green shoots of that (policy) over the next six months," he added.

Baker declined to name any specific areas where the group was seeking deals.