Trading Update

Ophir provides a trading update for the year ended 31 December 2017 ahead of the publication of audited financial results on 7 March 2018

Nick Cooper, Chief Executive of Ophir, said:

“Ophir has reached financial stability. We ended 2017 in a strong financial position with increased gross liquidity and considerable discretionary capital available for investment. A proportion of this is earmarked for the Fortuna project but we still retain capacity to invest elsewhere in our portfolio to generate significant cash flow growth.

“Our core Asia business is delivering solid, profitable growth. Our 1bn boe of discovered resources offer asymmetric upside and our under-levered balance sheet provides the means to deliver.”

 2017 Performance (numbers are estimates and remain subject to the year-end audit)

  • Daily production from the Bualuang and Kerendan field was broadly in line with the guidance provided in mid-2017 and averaged 11,700 boepd (guidance: 12,000 boepd).
  • Net cash from production (before working capital adjustments) was in line with guidance at $89 million (guidance: $85 million). On a unit basis this equated to $21 per boe.
  • Opex was $12 per boe reflecting the low breakeven characteristic of our Asian production base.
  • Capital and investment expenditure (before working capital adjustments) was below guidance at $104 million (guidance: $160 million). This was predominantly due to the deferral of the start of investment into the Fortuna FLNG project to 2018.
  • Capital expenditure was allocated as follows: production and development 47%, pre-development 15% and exploration and appraisal 38%. The majority of the pre-development was in respect of Fortuna. The majority of the production and development spend was comprised of spending on Bualuang infill drilling and Phase IV ($31 million) and Kerendan 3D seismic programme ($13 million).
  • Total liquidity at year-end was $427 million, some $67 million higher than the previous year:
    • The Group completed a refinancing of its reserve based lending facility during 2017. Following the year-end redetermination $204 million is currently available under the facility and remains undrawn.
    • Gross debt at year-end therefore solely comprised the $107 million Nordic bond.
    • The Group closed the year with net cash of $117 million
    • The full year 2017 liquidity ratio (gross debt: EBITDAX) was 0 with year-end gearing of 7% (gross debt / gross debt + equity).

 

2018 Guidance/Outlook (numbers are forward looking estimates)

  • Average daily production is expected to be level in 2018 at approximately 11,500 boepd with all of the production assets expected to produce at similar rates to that in 2017. The estimate takes into account the continuing unpredictability of offtake nominations from Sinphuhorm.
  • In late 2017, the Group hedged approximately 27% of its 2018 production. The Group purchased, with a zero cost structure, a Brent swap at an average $59.68/bbl and a call at an average price of $68.08/bbl, both for 3,200 bpd.
  • Underlying cash flow from production (including Sinphuhorm and before working capital adjustments) is forecast to be approximately $90 million at an average Brent oil price of $57 per bbl. On a unit basis this equates to $21 per boe.
  • Opex per barrel expected to be $14 per boe, marginally up on 2017 due to planned workover wells on the Bualuang field and some maintenance work at the Kerendan field.
  • Capital expenditure (before working capital adjustments) is expected to be approximately $150 million. Around 70% of this is expected to be spent on production and development with major areas of expenditure being Bualuang Phase IV ($30 million) and Fortuna ($65 million).
  • Gross liquidity is currently forecast at $320 million:
    • The Group expects to end 2018 with a marginally positive net cash position.
    • The Group is currently considering options to refinance its outstanding $107m Nordic bond. A decision on the refinance will likely be taken following FID of Fortuna.
    • The full year 2018 liquidly ratio (gross debt:EBITDAX) is forecast at 5 with year-end 2018 gearing forecast to marginally increase to 9% (gross debt / gross debt + equity).
  • Ophir is in discussions to farm-out certain exploration assets ahead of further exploration drilling, in line with our strategy of having our exploration portfolio self-fund to the extent possible.
  • Funding discussions regarding the Fortuna FLNG project are continuing.

 

Reconciliation of 2017 estimate versus guidance (numbers are estimates and remain subject to the year-end audit)

Previous Guidance Fortuna Investment Accrual Reversal Other Adjustments Revised Estimate
$’MM $’MM $’MM $’MM $’MM
Cash flow from production (before working capital) 85 4 89
Administration costs (10) (1) (11)
Capital expenditure (before working capital) (160) 38 21* (3) (104)
Net finance costs (19) 6 (13)
Working capital and other adjustments 29 (21)* (12) (4)
Net cash movement (75) 38 (6) (43)

 

Net cash C/forward

 

85

 

38

 

 

(6)

 

117

Debt and undrawn available debt 305 5 310
Gross liquidity 390 38 (1) 427

 

*This is a non-cash item and reflects the release of an accrual that was previously carried for a contingent tax exposure

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).