That’s the view of Macquarie analyst Kate Sloan who on Monday upgraded the Asia and East Africa focused gas firm to ‘outperform’ with an 85p price target suggesting some 19% upside to the current price of 71.75p.
“The shares are now back at a level that looks reasonably attractive, and we recommend a trade into the upcoming final investment decision [for the Fortuna project], expected 4Q17,” Sloan said in a note.
Macquarie’s upgrade follows a period of share price weakness – down about 20% over the past three months – as Ophir lowered its production guidance (to 12,000 boepd versus 12,500 to 13,500 boepd) and after the Fortuna FID was delayed into the second half of 2017.
Sloan highlighted that the production miss was caused by slower-than-expected ramp-up of the Kerenden field and temporarily reduced offtake from the Sinphuhorn project.
The analyst said the issues don’t give any longer term concern for investors.
“On the former, plateau guidance of 19.2 mmcfd remains, and should be steadily delivered through 2H17,” Sloan said.
“At Sinphuhorm, offtake was lower than expected due to temporary switching into hydro (it is the wet season) and some cheap spot LNG imports.
“Ophir believes Sinphuhorm production will be back in line with prior expectations in 2H17, but we note the potential for recurrence of both of these issues.”
Meanwhile, looking at the Fortuna project, offshore Tanzania, Sloan notes that two outstanding work streams (namely offtake arrangements and closing debt financing) for the FID represent catalysts for Ophir’s valuation.