Ophir Energy Plc Fortuna FLNG Project and Trading Update (2974F)
11 November 2015 - 8:01AM
UK Regulatory
TIDMOPHR
RNS Number : 2974F
Ophir Energy Plc
11 November 2015
11(th) November 2015
Ophir Energy plc
("Ophir")
Fortuna FLNG Project and Trading Update
Heads of Agreement for gas offtake from Fortuna FLNG
Ophir Energy announces that it has finalised commercial terms
and is in the process of signing Heads of Agreement ("HoAs") for
LNG offtake from the Fortuna FLNG Project with a shortlisted group
of counterparties, all of which are globally established LNG
Buyers.
The offtake contracts offer flexibility to competitively deliver
the gas into either the Atlantic or Pacific Basin and have been met
with strong interest from LNG buyers. The total requested demand
under the HoA's has substantially exceeded the available offtake
from the project.
Each of the LNG buyers has completed due diligence on the
Fortuna FLNG Project prior to agreeing terms. Ophir expects that
all of the HoAs will have been signed by the end of November. There
will then follow a further shortlisting process to select one or
two of these LNG Buyers with whom to sign full Sales & Purchase
Agreements ("SPAs") in Q1 2016. This timing is in line with the
planned project Final Investment Decision ("FID") in mid-2016.
Fortuna Resource Update
Following further technical work on the gas reservoirs in the
Fortuna field complex, ERC Equipoise ("ERCE"), a leading
independent evaluator of oil and gas reserves, has increased its
estimate of the gross contingent resource on Block R from 2.6 Tcf
to 3.0 Tcf. An additional 0.8 Tcf of low risk gross prospective
resource (0.7 Tcf risked) is also available and included in the
base case planning for Fortuna FLNG.
In addition to these certified resources, management includes a
further 0.3 Tcf of contingent resources in the base case that is
associated with the implementation of compression later in field
life. The approved development scheme will be further certified by
ERCE at FID, which will be the point that resources convert to
reserves and that reserves are booked for the Fortuna FLNG
development.
Fortuna Funding Update
Ophir is in parallel progressing its funding arrangements for
the Fortuna FLNG Project. It is expected that the funding options
for the project will include project equity, debt, pre-sales of
gas, vendor financing and asset divestment. The appropriate balance
both equity and debt funding will be sourced to maximise the
project's returns for Ophir's shareholders.
Trading Update
Ophir's production for the year to 9th November 2015 has
averaged 13,400 boepd (on a proforma basis). Full year 2015 Group
production is expected to be above previous guidance at ca. 12,700
boepd on a proforma basis.
Group revenue and operating cashflow from production for the
full year are in line with previous forecasts. Capital expenditure
in 2015 is expected to be towards the lower end of the range at
around $250 million. Group cash at year end is forecast to be
approximately $650 million with a net cash position of
approximately $350 million.
Looking forward to 2016, Ophir's production is expected to
average between 10,500 and 11,500 boepd, with the Kerendan gas
field forecast to start contributing production in the second half
of the year.
Ophir continues to reduce its total capital expenditure and cost
base to maximise liquidity and retain balance sheet strength.
Following material reductions to capital expenditure in 2014 and
2015, in 2016 Ophir expects to further reduce capital expenditure
to be between $175 million and $225 million. Group operating
cashflow from production is forecast to be approximately $100
million which, along with a planned refinancing of the Group debt
facilities, is expected to lead to a 2016 year end cash position of
between $575 million and $625 million and net cash position of
between $250 million and $300 million.
Nick Cooper, Chief Executive Officer of Ophir, commented:
"The fact that the Fortuna FLNG Project delivers economically
attractive returns in the current price environment and is
attracting quality downstream partners is testimony to the relative
cost competitiveness of the project. The finalisation and signing
of Heads of Agreement for the offtake with leading LNG players, is
another major step in derisking the project on the run to FID. We
are pleased that the agreements are for a total demand several
times greater than the available offtake volume, but are not
surprised because the project can deliver volumes into both the
Atlantic and Pacific Basins in the top quartile of greenfield LNG
project economics."
Ophir is today holding a capital markets presentation focused on
the Fortuna FLNG project. This will be webcast live at 2pm today
and sign in details can be found at www.ophir-energy.com/investors.
No new material information will be revealed.
Ends
For Further Enquiries please contact:
Ophir Energy plc +44 (0)20 7811 2400
Nick Cooper, Chief Executive Officer
Bill Higgs, Chief Operating Officer
Geoff Callow, Head of Investor Relations
Brunswick Group +44 (0)20 7404 5959
Patrick Handley
Carolina Desmeules
This information is provided by RNS
The company news service from the London Stock Exchange
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