OPHR.L Regulatory News (OPHR)

15 January 2019

Ophir Energy plc

("Ophir", the "Group" or the "Company")

Operations and Trading Update

Ophir provides the following update on its trading and operations for the twelve month period ending 31 December 2018.

Alan Booth, Interim CEO of Ophir, commented:

"With the successful integration of the Santos South East Asian assets, Ophir has significantly strengthened its production and development portfolio. We are now well positioned to generate significant free cash flow going forward. Our underlying business and balance sheet remain robust.

"As we announced on 5 January, the Block R licence in Equatorial Guinea has not been extended. We are in negotiations to rationalise parts of our frontier exploration portfolio with the potential to not only bring in cash, but also importantly reduce our future exploration capital commitments and further improve our liquidity position. We remain mindful of the potential value of our gas assets in Tanzania, notwithstanding the uncertainty over timing for their development.

"As outlined in our strategy statement on 13 September, we are building a company with increasing cash generation, and declining risk capital expenditure. Our future investment decisions will continue to focus on maximising returns to shareholders."

Summary of 2018 Financials

The below table provides a summary of the estimated financial information in this release on both a pro-forma and IFRS basis based on the company's unaudited preliminary financial results:

1. Full year 2018 pro forma basis assuming accounting for the Santos acquisition from the effective date of 1 January 2018.

2. Full year 2018 IFRS basis with acquisition accounting for the transaction from the closing date of [6 September 2018], and as will be reported in the company's consolidated 2018 financial statements.

3. Net cash settlement in 2018 for acquisition of Madura, Sampang and Block 12W was $149 million. The final accounting for the acquisition will recognise the measurement of the acquisition date fair values of the identifiable assets and liabilities. This will likely include non-cash adjustments for deferred tax, decommissioning, etc. as a consequence of the transaction.

4. Gross liquidity is calculated after repayment of the Bridge Facility of $103 million on 3 January 2019

2018 Financial Highlights: 

(all 2018 figures, unless otherwise stated, are on a pro-forma basis accounting for the Santos acquisition from the effective date of 1 January 2018)

· Capital expenditure (including pre-licence expenditures) estimated at $122 million, below previous guidance of $145 million.

· Opex estimated at $12 per boe highlighting the low cost and cash generative nature of our expanded production base.

· Year-end net debt estimate reduced to $35 million (from $65 million previously) as a result of lower capital expenditure.

· Cash and cash equivalents estimated at $323 million with gross liquidity available (cash and undrawn debt facilities and after assuming repayment of the Bridge Facility on 3 January 2019) estimated at $390 million. The 2018 leverage ratio (gross debt/cash flow from operations before working capital adjustments) is estimated at 1.5 and 2018 year-end gearing ratio (gross debt divided by gross debt plus equity) is estimated at 32%. On a net debt basis, the leverage ratio is estimated at 0.2 and the gearing ratio at 5%. The company's balance sheet therefore remains strong at year-end 2018.

2018 Corporate & Operational Highlights:

· Acquisition of interests in the Madura and Sampang PSCs (Indonesia) and Block 12W (Vietnam) from Santos for $205 million materially increased production and cash flow. These assets have performed better than expected with the assets returning cash flow of approximately $110 million in full year 2018, representing approximately half the initial purchase price.

· Daily production averaged 29,700 boepd, 8% ahead of guidance with Madura, Sampang and Block 12W contributing 18,000 boepd.

· De-risked the next phase of growth in the Sampang and Madura PSCs through the FID of the Meliwis development and the Paus Biru exploration success. These developments will not only bring new fields in the licences on stream but also extend the economic life of the existing fields.

· Continued to makes progress towards rationalising the wider frontier exploration portfolio. A series of commercial agreements are under negotiation which, if successful, will reduce forecast exploration spend significantly in 2019 as well as reduce the future exploration commitment spend from its current level.

· Commenced the relocation of the corporate functions from London to Southeast Asia with the plan to complete the move by September 2019, yielding further significant costs savings during the coming year. The company's 2018 financial statements are likely to include provisions of approximately $10 million forrestructuring and relocation costs.

· Completed refinancing and expansion of Reserve Based Lending Facility (RBL). The RBL was increased by $100 million to $350 million with the maturity also extended by 18 months to 31 December 2025. The borrowing base amount under the RBL was closed-out with Lenders at 31 December 2018 at $322 million. The expanded RBL was drawn by a further $100 million to $250 million on 2 January 2019 to fully repay the outstanding amount of $103 million against the $130 million 18 months Bridge Facility.

2019 Outlook and Guidance (assuming an average Brent price of $61 per bbl)

· Daily production for 2019 is forecast in line with previous guidance at 25,000 boepd.

· The company has two oil price hedges in place for 2019: for the period to 6 September 2019, the company sold a Brent swap at approximately $70 per barrel and purchased a Brent call at approximately $78 per barrel for 2,000 bpd; and for the full calendar year 2019, the company sold a Brent swap at approximately $56 per barrel and purchased a Brent call at approximately $66 per barrel for 2,000 bpd.

· Opex per bbl is expected to be $16 per boe, an increase on the previous year due to workover drilling on the Kerendan field and ESP replacements for three wells on the Bualuang field.

· Capital expenditure is expected to be approximately $150 million assuming various farm-outs are closed successfully. The majority of the spending for 2019 (approximately $110 million) is development and production expenditure focused on growing our production and cash flow, including both Bualuang and Madura (Meliwis development). The balance of spend is provided for exploration, predominantly exploration commitments as the company manages its exit from its deep water portfolio. The company is seeking to reduce those commitments further where possible.

· Year end net debt is forecast at $70 million, below our previous guidance of $105 million.

· Cash and cash equivalents, and gross liquidity, at year end 2019 are forecast at $230 million. This assumes the company reduces its total debt exposure by 2019 year-end to $300 million giving rise to a 2019 leverage ratio (gross debt/cash flow from operations before working capital adjustments) of 1.5 and 2019 year-end gearing ratio (gross debt divided by gross debt plus equity) of 30%. On a net debt basis, the leverage ratio is forecast at 0.5 and the gearing ratio at 10%, demonstrating conservative leverage.

For further enquiries, please contact:

Ophir Energy plc + 44 (0) 20 7811 2400

Geoff Callow, Head of IR and Corporate Communications

Brunswick (PR Adviser to Ophir) +44 (0)20 7404 5959

Patrick Handley

Wendel Verbeek

About Ophir:

Ophir Energy is an independent Upstream oil and gas exploration and production company focused on Africa and Asia. It is listed on the London Stock Exchange (LEI: 213800LAZOZTKPAV258).