Nick Cooper, Chief Executive Officer, commented:
“2017 saw Ophir take important steps to adapt and right-size the business, meet key operational targets and replenish our exploration portfolio. Nevertheless, we are disappointed to have not yet achieved the Fortuna project FID despite having made significant progress on the project. The rebalancing of our portfolio and our capex prioritisation away from its prior primary exploration focus has seen Ophir approach sustainability. 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 $57 million and by year end we had delivered NAV growth of 6.4%.
“Our 2018 priorities are threefold: to deliver the Fortuna project FID; 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. 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.”
- Revenue increased 76% to $189 million (2016: $107 million)
- Unit operating costs (excluding Sinphuhorm) decreased 4% to $12.79 per boe (2016: $13.38 per boe)
- Net funds flow from production increased 46% to $90 million1 (2016: $62 million), equivalent to $21.30 per boe (2016: $10.53 per boe)
- Right-sized the business with further reductions of G&A by reducing headcount at the London Head Office along with reductions of expatriate employees. G&A costs reduced by 60% over a three-year period.
- Net cash at year-end of $117 million (2016: $160 million)
- Completed refinance of our $250 million reserve based lending facility ending the year with gross liquidity of $427 million2 (2016: $371 million).
1 A reconciliation of net funds flow from production is presented within the table in the Financial Review section
2 As defined in table within financial review section
Resource Monetisation Activities (Pre-development, Development and Producing assets)
- The completion of project financing on the Fortuna project has taken longer than expected, but all other milestones were achieved in 2017 with: the signing of the Umbrella Agreement; the nomination of a preferred supplier for the LNG offtake; and the award of upstream and midstream construction contracts. We will provide further updates in due course.
- The Bualuang Phase IV development FID was approved and will commence in 2H 2018 with an infill drilling programme, followed by the installation of a 12 slot platform in 1H 2019. Rapid payback on $138 million investment.
- Our 2P Reserves increased by 13% to 49.4 mmboe; principally driven by the conversion of 9.9mmboe at Bualuang from 2C to 2P following decision on the Phase IV development.
- In February 2018, an agreement in principle was reached with PLN to increase the gas price on the Kerendan gas sales from the current price of $5.08/mmbtu to $5.65/mmbtu. The recently acquired 3D seismic on the asset have also enabled the start of negotiations with PLN for a second GSA to potentially double production from the asset by 2020.
- Production averaged 11,700 boepd. Production in 2018 is expected to average 11,500 boepd with infill drilling taking place on Bualuang in 2H 2018. In 2019-20, we expect material production growth from our next phases of development on Bualuang and Kerendan.
- Exploration portfolio has been refocused to deliver exploration around existing infrastructure to complement recently acquired acreage in Mexico and Equatorial Guinea.
- Seven deep water licences were relinquished in Africa and Asia in 2017.
|Units||FY 2017||FY 2016|
|Realised oil price||$/bo||51.86||37.85|
|Realised gas price||$/Mscf||5.30||N/A|
|Capital Expenditure (including pre-licence expenditure and less disposals, and investments)||$’millions||101.1||155.6|
|Net funds flow from production||$’millions||90.1||61.7|
|Closing undrawn debt facilities||$’millions||203.5||10.3|
|Closing gross liquidity (including undrawn debt facilities)||$’millions||427.3||370.7|
A presentation for investors and analysts will be held at 9.30am this morning. A webcast of the event will be available on the company’s website: www.ophir-energy.com/investors.
Press release is available to download