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Ophir Energy focuses on “marginally ahead” production in wake of CEO departure

Nick Cooper left his position as chief executive in May as Ophir looked to “rebalance its portfolio towards larger production and cash flow base”
oil
Production is expected to rise to 25,000 boepd thanks to an acquisition

Ophir Energy Plc (LON:OPHR) told investors that in the first half it averaged a production rate of 11,400 barrels of oil per day, which it described as  “marginally ahead of expectations”.

It highlighted that it generated US$102mln of revenue in the first six months of the year, while flagging a cash flow from production figure of US$43mln.

In May, the company announced the departure of Nick Cooper from his position as chief executive as part of an ongoing move to “rebalance its portfolio towards larger production and cash flow base”.

READ: Ophir Energy shares drop as CEO steps down

Alan Booth was named as the company’s interim chief executive, and, in today’s trading update he highlighted that he has three key priorities – namely to manage existing production operations, to explore every avenue to create value from our Fortuna FLNG project, and to complete the Santos acquisition and integrate those assets.

The Santos acquisition, a US$205mln deal for stakes in producing fields in Vietnam and Indonesia, was struck earlier in the first half. Once the assets are completed and integrated, Ophir expects they will add some 13,500 boepd of output, taking the overall group production base to a forecast 25,000 boepd.

It is expected, therefore, that the transaction will give Ophir an additional US$90mln of operating cash flow per year, meanwhile, the capital spending attributable to the assets for 2018 (pro forma) is anticipated at US$25mln.

Rebalancing portfolio with acquisitions

“We will continue to rebalance our portfolio towards a stronger production base and higher cash flow generation in order to give ourselves a broader opportunity set no matter how the external environment evolves,” Booth said in the statement.

“The Santos assets grow and diversify our production base and mark an important step towards achieving cash flow sustainability.”

"We are keen to continue to grow production and will remain alert to potential inorganic growth opportunities when they are consistent with our strategy.”

Ophir’s prior strategy had focussed on the Fortuna project, a large gas deposit offshore Equatorial Guinea, which would’ve taken the form of a floating liquified natural gas operation, however, the likely expensive project stalled as it reached the project financing stage.

The company said it continues to believe that Fortuna is a high quality asset, and, it continued talks with potential funding partners but a deal has yet to emerge.

Booth cautioned: “We are, of course, especially conscious that our Fortuna licence expires at the end of this year; however, we remain determined to deliver value both to our shareholders and the government of Equatorial Guinea.”

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