As a pure exploration company with no oil or gas production to speak of, these first-half figures from Ophir Energy (OPHR) are somewhat irrelevant. But Ophir did manage a $339m (£203m) after-tax profit after selling a 20 per cent stake in some undeveloped Tanzanian gas assets to Pavilion Energy.
Unfortunately, that hasn't helped the company's share price much. It has fallen over a third since our buy tip last year (325p, 5 Sep 2013) as Ophir drilled three unsuccessful exploration wells in a row offshore Gabon. True, the company did make another gas discovery offshore Tanzania, but a lot of gas has already been found nearby and an oil discovery would have been much more valuable. Ophir's board believes the shares now trade at less than the company's core value and consequently approved a $100m share buy-back programme that will start in a few days.
Looking ahead to the second half, Ophir will drill important wells in Tanzania (targeting 379m barrels of oil-equivalent, or boe) and Equatorial Guinea (targeting 155m boe). But the exploration budget will drop by a half in 2015 to about $300m, reflecting the need for early-stage groundwork prior to more substantial drilling in 2016.
OPHIR ENERGY (OPHR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 206p | MARKET VALUE: | £1.2bn | |
| TOUCH: | 206-207p | 12-MONTH HIGH: | 394p | LOW: 192p |
| DIVIDEND YIELD: | nil | PE RATIO: | 22 | |
| NET ASSET VALUE: | 341¢ | NET CASH: | $1.5bn | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 0.01 | -19.4 | -3.8 | nil |
| 2014 | nil | 589 | 57.3 | nil |
| % change | - | - | - | - |
£1=$1.69 | ||||
