Investors wanting an honest summary of the oil industry's decade of failings should read Ophir Energy 's (OPHR) 2015 results. In them, chief executive Nick Cooper laments the sector's "poor record of value creation" and pulls no punches in critiquing his own company, which was "drawn into high-risk commitment wells and chased look-alike plays with more haste than our geoscientists would have wanted".
Candour and self-awareness are admirable qualities, but so much for history. Ophir is currently switching its exploration portfolio to low cost, high grade assets only. That pivot now means capital expenditure will not exceed $200m (£140m) this year, and is fully-funded until 2020. Getting to that point required exploration write-offs of $149m in 2015, which alongside other impairments resulted in a pre-tax operating loss of $376m. Ophir now believes its producing assets will break even if a barrel of crude drops to just $15, though Mr Cooper remains cautious of a swift return to optimism.
Prior to these results, JPMorgan forecast a net loss of $24m for 2016, giving a 3¢ loss per share, against losses of $216m and 30¢ in 2015.
OPHIR ENERGY (OPHR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 88.3p | MARKET VALUE: | £623m | |
| TOUCH: | 88-88.5p | 12-MONTH HIGH: | 171p | LOW: 71p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 234¢ | NET CASH: | $355m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 14.7 | -19.1 | -7.0 | nil |
| 2012 | 1.0 | -40.9 | -10.2 | nil |
| 2013 | 0.01 | -280 | -45.0 | nil |
| 2014 | 0 | 288 | 9.4 | nil |
| 2015 | 161 | -369 | -47.1 | nil |
| % change | - | - | - | - |
Ex-div:na Payment:na £1 = $1.42 | ||||
