Losses Rise but Ophir Sees Fortuna FID in 2017
UK-based independent Ophir Energy on September 14 reported a first half 2017 loss of $84.6mn, up from $48.4mn in the same period last year.
This year included $23.7mn for impairments of E&P assets and exploration write-offs of $100mn, up from last year's $60mn. Just over half – $57.6mn – was on offshore Thailand block G4/50.
Ophir is a 20% partner in the major undeveloped Shell-operated gas resources offshore Tanzania, has small producing interests in Asia, but is also looking to take a final investment decision (FID) this year on its floating LNG project off Equatorial Guinea with the OneLNG venture (Schlumberger & Golar LNG). Commodity trader Gunvor was named off-taker from the Fortuna project in August, but the government also has some rights.
Ophir CEO Nick Cooper said: “We remain confident of taking FID in the Fortuna FLNG Project FID by year-end 2017…. Fortuna has made significant progress in 1H 2017 and now has one primary milestone outstanding: namely the project financing. Once this is achieved, we will seek shareholder approval and the formal decree from the President of Equatorial Guinea.”
Cooper told analysts that Ophir is “four resource plays, three of which are gas – totaling 1bn barrels of oil equivalent (2C reserves) – so a lot of running room; we have the balance sheet to monetise this in stages.” He said 400mn boe of that would be unlocked by Fortuna. “We believe it’s the most cost-competitive LNG project to market today on the planet – and by 'to market', we mean to Dunkerque or to Asia.”
He told the Flame conference in May that it could beat US LNG into Europe, on price.
Tanzania (at 500mn boe) would not move forward very quickly, said Cooper, but was not costing the company money.
Ophir said its production guidance for 2017 is 12,000 boe/d net, chiefly from its Bualuang oil (Thailand), Kerendan gas (Indonesia) and Sinphuhorm gas (Thailand) fields. Production in August 2017 was 12,100 boe/d. Balance sheet was “healthy” with gross cash on balance sheet at end-June 2017 of $237mn, of which net cash $130mn. Of the latter, $40mn is earmarked to Fortuna.
First gas at Fortuna is expected late 2020. Initial offtake is expected to be 2.2-2.5mn mt/yr over 15-20 years that would monetise some 2.6 trillion ft3 of the discovered resource. It argues that it is fully funded to first gas on Fortuna, but says it needs “patience” to secure lender commitment for a Fortuna FID. In response to a question, Cooper said there is a Plan B if Chinese financing does not come through – in terms of having back-up lenders from elsewhere – but that was not the focus.
The company said it hopes to be the 4th FLNG project worldwide to start up, after Malaysia's PFLNG, Cameroon FLNG, and Prelude in Australia.
"We have found a lot of stuff already," said Cooper, adding that exploration is not a priority but is ongoing in Mexico, Myanmar and Indonesia.