Ophir Revamp May be Overtaken by Takeover

UK minnow Ophir had already begun to reinvent itself last year before accepting the improved takeover terms offered by Medco Energi of Indonesia early this year.

Ophir shareholders are to vote on it later this month. However over a quarter of the votes think the price is too low, according to media reports, which would leave Ophir unable to accept the $512mn bid.

The  interim CEO Alan Booth said last year saw "material progress" creating a "strong, cash generative production and development base to serve as a platform for further growth and shareholder returns."

Ophir doubled its output and cash flow with the southeast Asian asset portfolio bought from Santos for $205mn, adding 23mn barrels of oil equivalent (boe) in reserves.

Ophir also completed operations on its first exploration well in Mexico, in Block 5, which found oil and gas. The results were broadly in line with the company’s pre-drill expectations. Ophir is close to selling its position there for cash, it said, weighting it further towards the eastern hemisphere. It has also rid itself, albeit expensively – it wrote down $604mn against the asset – of its dead-end Fortuna LNG project, as the government of Equatorial Guinea decided not to offer a further extension to the Block R licence.

Ophir said the 55 p/share Medco offer would provide Ophir shareholders "with a certain upfront value in cash" for the strategy that Ophir set out in September 2018, including rationalising the upstream portfolio, reducing overhead costs and maximising returns to shareholders. It is also reducing its exposure to frontier exploration as far as possible, leaving Myanmar, Malaysia, the Aru Trough off Indonesia and selling its 40% stake in EG-24 in Equatorial Guinea to Kosmos.

Ophir also took steps to reduce the cost base through downsizing the London headquarters and relocating to Asia, bringing senior management closer to the key assets. 

Revenue increased 58% to $298mn, from $189mn in 2017; unit operating costs rose from $11.43/barrel of oil equivalent to $11.67/boe and net funds flow from production rose 55% from $90.1mn to $143.5mn, equivalent to $23/boe, from 2017's average $21.58/boe). It ended the year with gross liquidity of $391mn, down from 2017's $427mn.
Output averaged 29,700 boe/d on apro forma basis, up from 2017's 11,800 boe/d.