Ophir Energy Focusing On Fortuna Project As Annual Loss Widens

LONDON (Alliance News) - Ophir Energy PLC said on Wednesday its annual loss widened in 2017, a year in which it failed to secure funding for the Fortuna floating liquefied natural gas project "as hoped".

Oil and gas producer Ophir reported an increase in revenue in 2017 to USD188.5 million from USD107.2 million, pushing gross profit up to USD41.0 million from USD11.7 million.

The operating loss for 2017 was USD53.8 million compared with USD28.5 million the prior year, with the pretax loss widening to USD64.4 million from USD50.1 million.

General and administrative costs decreased to USD11.3 million in 2017 from USD13.4 million as the company implemented staff and costs reductions, predominantly in its London office.

Ophir's net assets at the end of 2017 stood at USD1.5 billion compared to USD1.6 billion one year earlier.

Ophir is "disappointed" the Fortuna project did not reach a final investment decision in 2017, but it will continue to work to secure the funding in 2018.

"2017 saw Ophir take important steps to adapt and right-size the business, meet key operational targets and replenish our exploration portfolio," said Chief Executive Officer Nick Cooper.

"In 2017 we have grown reserves by 13%, increased net funds flow from production by 46%, reduced gross G&A by a further 17%, increased liquidity by USD57.0 million and by year end we had delivered net asset value growth of 6.4%."

Production during 2017 averaged 11,700 barrels of oil equivalent per day, which Ophir said generated net funds flow from production of USD90.0 million, compared with USD62.0 million the prior year.

Production at the Bualuang oil field in Thailand averaged 8,300 barrels of oil per day in 2017. An infill-drilling programme on the field commenced in May, offsetting the predicted natural well decline.

The Kerendan gas field in Indonesia started production in the first half of 2016, but "took longer than forecast" to ramp up to the full contracted volumes in 2017. Kerendan averaged 15.1 million standard cubic feet per day across the year, and at the year end was producing the full daily contract quantity of 19.2 million standard cubic feet. Production could, it said, reach 80 million standard cubic feet by the end of 2022.

Cooper commented: "Our 2018 priorities are threefold: to deliver the Fortuna project final investment decision; to further monetise our significant contingent resources; and to grow production and cash flow.

Ophir operates a long life, low cost production base and has a strong balance sheet. We sanctioned a fourth phase of development on our Bualuang oil field which will grow production in 2018-19, agreed an increased gas price on our Kerendan field and are in negotiation to double production from this asset by 2020."

He added: "The group is well-positioned to take advantage of the opportunities that this down cycle has presented by growing our cash flows and capturing excellent options in proven hydrocarbon systems, as shown by our recent block awards in Equatorial Guinea and Mexico."

Ophir Energy shares were down 2.4% at 52.80 pence per share on Wednesday.