Ophir Energy (OPHR) decided to supplement last September's half-year results with news of a near doubling of the resource estimate for its Mzia discovery offshore Tanzania. Now the group's 2012 full-year results have been overshadowed by news that the East Africa-focused explorer intends to raise over £550m in a placing and two-for-five rights issue. In fact, Ophir has already raised £91m from the placing, and details of the 275p rights issue are winging their way to shareholders.
Ophir flagged a minimum capital shortfall of $400m (£265m) at the tail-end of 2012, but the funds raised have been earmarked for additional exploration/appraisal drilling, as opposed to development work. At least 10 wells will be drilled through 2013, targeting around 1.3bn barrels of oil equivalent, which would entail a theoretical outlay of $754m based on 2012's finding cost of $0.58 a barrel.
The frontier explorer's valuation has been weighed down in recent months by anxieties over near-term funding, and fears that it might have been forced to accede to farm-in agreements on unfavourable terms. Matters weren't helped at the start of this year, when BG Group - Ophir's senior partner in Tanzania - decided to forego an option to extend the Deepsea Metro I rig beyond June; a move then viewed as detrimental to Ophir's exploration plans in the region. The search for a replacement rig is under way.
