Interim Results for the six months ended 30 June 2014

Ophir Energy plc (“Ophir”, the “Company” or the “Group”) announces its Interim Results for the six months ended 30 June 2014.

Financial

  • Completion of the divestment of a 20% interest in Blocks 1, 3 and 4, Tanzania to Pavilion Energy for S$1.25 billion (pre-tax) with a further US$38 million payable on Final Investment Decision
  • Net profit after tax of US$339.1 million reflecting the gain on sale of the Tanzanian stake to Pavilion Energy
  • Net cash, cash equivalents and short-term investments of US$1,490.8 million at 30 June 2014
  • Board has approved a share buyback programme of up to US$100 million

Drilling and Operations

  • Four exploration wells drilled in the first half of the year: one discovery and three dry holes
  • Drilled the Taachui gas discovery in Block 1, Tanzania which has partially derisked the potential of the East Pande licence where the Tende prospect will be drilled in Q4
  • Three well exploration programme executed offshore Gabon. The wells were commercially unsuccessful, however the costs were substantially mitigated by carries from partners Petrobras and OMV
  • Significant progress with the Floating LNG project in Equatorial Guinea. Three well exploration and appraisal programme underway
  • Continued progress on the Tanzanian LNG project with the formation of an Integrated Project Team with Block 2 partners to co-ordinate the development of the shared onshore LNG facility. Pre-FEED contract awarded
  • Significant new acreage footprints acquired in the Seychelles and Myanmar (subject to completion), the first exploration position for Ophir outside of Africa
  • Total mean discovered resources net to the Company estimated at 830mmboe at the half year

Forward Outlook

During second half of 2014

  • Drilling programme continues in Tanzania and Equatorial Guinea with two drillships: three exploration wells, two appraisal wells and two flow tests expected by the end of November
  • Work on the onshore Tanzanian LNG facility continues led by the Integrated Project Team
  • Midstream partner and gas terms negotiations for the Floating LNG project in Equatorial Guinea being finalised
  • Continue to evaluate further portfolio additions

2015 onwards

  • Further incremental value will be unlocked in Tanzania and Equatorial Guinea with pre-development work continuing on both projects
  • Capital expenditure in 2015 will be approximately half the level of 2014, with the exploration focus shifting to seismic acquisition and interpretation
  • The Company is well funded and remains committed to its exploration led strategy which includes the acquisition of new licences
  • The Board also continues to examine options for maximising shareholder returns. These include the future business model and uses of any surplus funds, which includes the share buyback programme announced today

Commenting today, Nicholas Smith, Chairman, said:

The highlight in the first half of 2014 was the completion of our transaction in Tanzania with Pavilion Energy. This was the culmination of several years of hard work by the Company and is testament to Ophir’s strategy of monetising exploration success in a timely manner. The proceeds from the deal leave the Company well financed through 2015. After assessing our near-term capital needs and, in the opinion of the Board, with our shares trading below the core value of the business, a capital return to shareholders has been approved via a share buyback programme announced today.”

Our Floating LNG project in Equatorial Guinea continues to make good progress and we hope to give further updates later in 2014 as we confirm selection of the Midstream consortium, agree gas terms and complete this year’s drilling campaign. As with our Tanzanian transaction, our intent is to monetise at the point of optimum returns to shareholders. Whilst the recent drilling programme in Gabon was disappointing, we remain committed to offering shareholders exposure to a diverse portfolio of exploration prospects and plays, acknowledging that exploration is a high-risk activity. Ophir’s drilling programme continues at a pace, after drilling four wells in the first half of 2014 we are undertaking a further five wells plus two flow tests in the second half of the year. Our New Ventures activity has secured acreage in Myanmar and the Seychelles and further additions are being progressed.

Nick Cooper, CEO, said:

Ophir’s model of finding and monetising resources through disciplined exploration continues along with progress in the maturation of our 830mmboe of net discovered resource towards monetisation. After a difficult period for Ophir and the independent E&P sector, capital expenditure will be reined back in 2015 as we position Ophir for the next phase of drilling. Exploration will remain central to Ophir’s future business model, but may over time be supported by more mature assets if these are in the best interests of shareholders.”

A call with management will be held at 0830 BST following this announcement. Participants can dial in using the following details.

Dial-in number: +44 (0)1452 555566
Conference ID: 84212442