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Ophir working to finalise Fortuna

The frontier oil and gas driller has rejigged its business model to take account of reduced assumptions on the oil price
September 15, 2017

Shares in Ophir Energy (OPHR) were unmoved despite a surge in half-year revenue as the frontier oil and gas driller benefited from a rise in underlying commodity prices. The price of Brent crude averaged $52.72 (£39.34) during the period, against $41.21 in the same period in 2016.

IC TIP: Hold at 75.25p

Whether this represents the first leg of a sustained retracement is unlikely, a point borne out by a recently completed in-house review, which highlighted a ‘lower for longer’ commodity cycle. Accordingly, Ophir is focused on optimising its existing productive resources, while reducing overheads and concentrating exploration activities on a smaller number of plays with the best prospects. Management has also prioritised the finalisation of project funding for the Fortuna liquefied natural gas (LNG) development in Equatorial Guinea, which is expected to eventually produce 2.2m metric tonnes of gas a year.

Assets are spread across Equatorial Guinea, Tanzania, Thailand and Indonesia. Performance was constricted by a slower-than-expected ramp-up at Indonesia’s Kerendan gas field, although an infill drilling programme is expected to deliver improved volumes at Bualuang oil field in the Gulf of Thailand through the second half. In total, daily production averaged 11,300 barrels of oil equivalent (Mboepd), but Ophir reiterated full-year guidance of 12 Mboepd for 2017.

OPHIR ENERGY (OPHR)   
ORD PRICE:75.25pMARKET VALUE:£531m
TOUCH:75.25-75.5p12-MONTH HIGH:103pLOW: 67p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:211¢NET CASH:$130m
Half-year toTurnover   Pre-taxEarnings perDividend
30 Jun ($m) profit ($m)share (¢) per share (¢)
201652.1-69.6-6.9nil
201788.3-45.6-12.0nil
% change+69---
Ex-div:-   
Payment:-   
£1=$1.34