Strategy + KPIs

A clear strategy to create exploration-led growth

Vision

Ophir’s vision is to be the leading international oil and gas exploration and production company.

Strategy

Ophir is focused on finding resource and monetising it to create value for shareholders.

Key elements of the strategy:

Value creation through exploration

• Building a series of options for future drilling. Acquiring new acreage in the bottom of the cycle with no drilling commitments. Mature and high grade these plays, drilling only those that offer shareholders material returns on investment.

Active portfolio management

• Transacting at the most appropriate time to create value for shareholders.
• Realising value from existing assets and adding new assets to the portfolio that have ability to generate material returns on capital employed.

Focus on capital allocation and returns

• Target is to derisk the business model through funding core exploration activity from operating cash flow. Apply prudent levels of debt to development and production activity and preserve balance sheet strength and flexibility.
• Only allocate capital to highest return opportunities following rigorous risk reward analysis. We are focused on cash balances and cost management and will seek to manage the risk profile through farm-outs, exits etc.

Key performance indicators

We continue to measure our success on the resource we add, the ability to achieve this at the economic rates and to do it as safely as possible.

2014 three-year average finding cost

Classification

The basis of the finding cost calculation is straightforward. Expenditure on exploration and appraisal activity is divided by contingent resources added in the year. This number increased in 2014 relative to previous years as we were not successful with any of our play opening wells. However, this rate still compares favourably to our international peer group.

Staff turnover

Classification

The rate of turnover relates to employees who have left the Company voluntarily during the year. The figure excludes employees who left as a direct result of redundancy or dismissal on the grounds of poor performance.

Business impact

Turnover rates were slightly lower than in the previous year. Turnover has remained within manageable levels and has not had a negative impact upon technical disciplines. Recruitment levels remained consistent across all areas of the business. Ophir continues to be able to attract high calibre staff.

Outlook

The Company aims to monitor and reduce turnover rates and will continue to provide highly competitive pay and benefits to attract and retain key personnel.

2C Contingent Resources (mmboe)

Ophir’s net 2C contingent resources reduced year on year due to the sale of a 20% interest in the Group’s interest in Blocks 1, 3 and 4 in Tanzania to Pavilion Energy. This transaction saw 461 mmboe of contingent resource sold for $1.288 billion.

The Group added 97 mmboe of contingent resource through the drill-bit in 2014 following successful appraisal drilling in Equatorial Guinea and Tanzania.

The chart shows the Company’s net resources at 31 December 2012, 2013 and 2014, assuming the governments exercise their back-in rights in every case.

Lost Time Incident Frequency rate (LTIF) (incidents/million man-hours work)

The health, safety and welfare of people working for and on behalf of Ophir’s business underpins everything the Company does. Ophir’s health and safety culture is based on individual responsibility and commitment from the very top of the organisation.

Accountability rests with every employee, including management and senior executives, who uphold their obligations through the active management of Ophir’s health and safety agenda.

Performance

We saw a substantial increase in man-hours worked during 2014 as Ophir operated two deepwater rigs. Despite this increase in man-hours there was only one minor Lost Time Incident (LTI). Staying safe requires vigilance, effort and investment at all levels of the organisation and is testament to everyone’s quality and professionalism. The statistics include contractors as well as employees