External Risks

Exposure to changes in the macro environment can impact our business.

Risk Description of risk Control Responsibility Change
(2015 on 2014)
Legal compliance regulatory or litigation
  • The Group conducts business in jurisdictions with inherent risks relating to fraud, bribery and corruption.
  • Litigation against the Group could materially impact its business.
  • Reputational damage – withdrawal of support by shareholders, governments, lenders and partners.
  • Investigation could lead to significant business disruption.
  • Loss of assets, PSCs and projects.
  • The Group accords the highest importance to corporate governance matters and upholding the highest ethical standards.
  • The Group employs suitably experienced and qualified staff and, when required, external advisors to ensure full compliance.
  • Legal risk assessment and due diligence is undertaken as appropriate.
  • Robust Code of Conduct and Anti-Corruption policies and standards.
 General Counsel
Capital Constraints and adverse market sentiment towards the E&P sector
  • Depressed sector.
  • Significant competition for development funds.
  • Market questioning the value equation for upstream, seeing high finding costs and only rare examples of companies monetising their discoveries, promptly and for a profitable price.
  • Impact on project value and modelling.
  • Maintain cash balance to sustain business through reduction in LNG capex.
  • Aim to internally fund core exploration and appraisal activities from the addition of production assets and monetisation of resources to generate cash flow.
  • Diversify the sources of funding and apply prudent levels of debt to development and production activities.
  • Ensure that commercial terms on new acreage reflect the changing landscape and involve minimal financial commitments with options to exit early.
  • Refocus Ophir’s upstream model and how to create value as follows:
    • assets will only continue to be held and progressed if they can demonstrably create substantial value for shareholders. Capital is being selectively directed at those assets which offer the highest risk-weighted returns.
    • we have reorganised to maximise the impact of our technical professionals and to minimise our support activities.
Chief Financial Officer
Political
  • The Group operates in jurisdictions that are subject to significant political, economic, legal, regulatory and social uncertainties.
  • Dependence on permits and consents granted by the authorities where we operate can lead to delays and increased costs in obtaining necessary permits.
  • Uncertainties in the interpretation and application of laws and regulations in the jurisdictions in which we operate.
  • Ophir regularly monitors and seeks to understand changes taking place in political and regulatory environments and the potential for unforeseen events.
  • The Group works to the highest industry standards with regulators, closely monitoring compliance with the Group’s licence and PSC obligations.
  • Spread our portfolio/regional exposure.
  • Maintain positive relationships with governments and key stakeholders in host countries.
  • All material information is released to the market on a timely basis and in accordance with all applicable regulations.
Director Security and Surface Risk
Stakeholder sentiment
  • Actual or perceived failure to address social and environmental issues or corporate responsibility matters may adversely affect the Group.
  • Ophir is committed to a shared value approach to ensure sustainable development with its stakeholders.
  • The Group conducts its operations in an ethical, responsible, apolitical and transparent manner.
  • Ophir places a strong emphasis on maintaining excellent relationships with the local communities and host country governments.
  • There is ongoing monitoring of public sentiment towards the Group and its operations.
Director Security and Surface Risk
Global economic volatility
  • Numerous and complex changes in macro environment around global affairs and international economics, e.g. China’s slowdown and deceleration in the growth of global trade, are contributing to uncertainty and higher market volatility.
  • Regularly review how external risks impact the Group’s strategy and remain agile to change.
  • Act counter-cyclically to take advantage of the opportunities developing from the industry downturn
Director Portfolio and Strategy
Low commodity price
  • Continued supply and demand concerns.
  • ‘Lower for Longer’.
  • Continue to review the Group’s cost structure and make sure it reflects the new oil price environment.
  • Economics of development plans re-worked to reflect low oil price environment.
  • Selectively exploit the low service costs that have resulted from the drop in the oil price.
Chief Financial Officer