TIDMOPHR
RNS Number : 9618M
Ophir Energy Plc
03 May 2018
3 May 2018
Ophir Energy plc
("Ophir" or the "Company")
Proposed Acquisition of a package of Southeast Asian assets from
Santos
Ophir has agreed to acquire a package of Southeast Asian assets
from Santos Limited, an Australian listed Oil & Gas company,
for an aggregate cash consideration of $205 million pre-working
capital adjustments, subject to certain approvals (the
"Transaction"). The portfolio of assets includes material producing
assets in Vietnam and Indonesia plus exploration and appraisal
assets in Malaysia, Vietnam and Bangladesh.
The Transaction is in line with Ophir's stated strategy of
rebalancing its portfolio towards a larger production and cash flow
base to enable us to sustainably support the refocused exploration
portfolio and to consider returning capital to shareholders. This
rebalancing will also facilitate further economies of scale in
operating expenditures, general and administration expenses
("G&A") and will provide greater capital allocation and
financing efficiencies.
The Company intends to fund the consideration through its
existing financial resources and a new acquisition bridge facility,
which it intends to replace in due course with an increase in the
Company's existing Reserve Based Lending ("RBL") facility.
Key Highlights
-- A balanced and complementary portfolio of Southeast Asian
assets with low operating costs, strong cashflows, near term
development opportunities and exploration potential
-- Resilient production in Vietnam and Indonesia, providing low risk cashflow
o Proforma 2018 forecast working interest production from Santos
assets of 13,500 boepd
o Proforma Group 2018 production increases to 25,000 boepd
o Proforma Group 2018 forecast funds flow from production
doubles to $180 million
-- Production life extensions utilising strategic infrastructure positions
-- 2P reserves increase of over 40% from 49.4 MMboe to 70.6 MMboe
-- Upside optionality provided by the diverse portfolio of
development, appraisal and exploration opportunities in Vietnam,
Indonesia, and Bangladesh
-- Expected to bring forward Ophir's stated objective of being
free cash flow positive, and therefore its ability to consider
returning capital to shareholders
-- Material cost synergies - estimated to be in excess of $13 million per annum
-- Transaction expected to payback within three years at current commodity prices
-- Transaction to be financed through existing financial
resources and a new 18-month acquisition bridge facility of up to
$130 million (for which term sheets have been agreed). The bridge
facility will be subsequently refinanced into the Company's
existing RBL facility
Nick Cooper, Chief Executive Officer, commented:
"It is a declared strategic objective of Ophir to rebalance its
asset base and become free cash flow positive in order to consider
regularly returning capital to shareholders. This transaction
accelerates the realisation of this goal.
Ophir has maintained a strong balance sheet through the down
cycle in order to benefit from such accretive opportunities that
fit our established expertise. The acquired assets also offer an
attractive combination of operational upside and material cost
synergies with our existing Southeast Asian production base".
Current Trading Update
Current operations are performing in line with the guidance
provided at the full year results in March 2018. The Company's
existing production is expected to average 11,500 boepd in 2018 and
generate net funds from production of $90 million.
Ophir continues to work to progress the project financing for
the Fortuna project as outlined at the time of the full year
results.
A conference call for investors and analysts will be held at
8.00am this morning.
Dial in: 0800 358 6377 or +44 (0)330 336 9105, code: 1866581
Replay available for five days: +44 (0) 207 660 0134, Code:
1866581
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulations (EU) No. 596/2014
("MAR") and is disclosed in accordance with the Company's
obligations under Article 17 of MAR.
For further enquiries, please contact:
Ophir Energy plc
Geoff Callow, Head of IR and Corporate Communications + 44 (0) 20 7811 2400
Brunswick (PR Adviser to Ophir)
Patrick Handley + 44 (0) 20 7404 5959
Wendel Verbeek
Barclays - Lead Financial Advisor
Will O'Malley + 44 (0) 20 7623 2323
Tom Macdonald
Bank of America Merrill Lynch - Joint Financial Advisor
Julian Mylchreest
Tony White + 44 (0) 20 7628 1000
Overview of the Transaction
The transaction is being structured as a series of acquisitions
and it is anticipated that the closing of the acquisition of the
producing assets will be able to occur before the closing of the
acquisition of the exploration assets owing to the regulatory and
partner approvals that are required.
The acquisitions of the producing assets (Block 12 W PSC in
Vietnam and the Madura and Sampang PSCs in Indonesia) are
inter-conditional, with closing conditional upon the approval of
Ophir's shareholders.
Subject to closing of the acquisition of the producing assets,
the acquisitions of the three exploration and appraisal assets (in
Vietnam, Malaysia and Bangladesh) are subject to the approval of
Ophir's shareholders, regulatory consents, and respective
pre-emption regimes. The acquisition of each of these three assets
will close upon the satisfaction of the respective conditions
relating to such transfer of interests.
In the event that the acquisition of the producing assets
completes, but the acquisition of any or all of the exploration
assets do not complete, Ophir has agreed to meet the capital
commitments on these exploration licences. There is an aggregate of
$35.6 million of capital commitments associated with the
exploration assets. The maximum consideration payable in the event
that Ophir is unsuccessful in closing all of the three exploration
acquisitions, would therefore total $240.6 million (pre-working
capital adjustments). The Company has also agreed to pay a
$4million deductible deposit.
As noted above, the acquisitions are conditional on, inter alia,
the approval of shareholders at a general meeting of the Company. A
shareholder circular convening the general meeting and setting out
further details on the acquired assets and the rationale for the
Transaction will be published and posted to shareholders in due
course. The Company will make a further announcement about the
timing of the shareholder meeting when it publishes the
circular.
This transaction may constitute a reverse takeover as defined by
the Listing Rules of the UK Listing Authority.
Overview of the Assets being acquired
Vietnam
A 31.875% working interest in a material producing oil and gas
field and material stakes in two exploration blocks
-- Block 12W - Producing asset:
- 45 MMboe of 2P Reserves (gross)
- 23,600 boepd (gross) production from Chim Sào/Dua with
associated gas
-- Blocks 123 (50% operated interest) / 124 (40% non-operated
interest) - Exploration permits in frontier Phu Khanh Basin, with
large oil/LNG scale potential
Indonesia
A portfolio of operated producing East Java gas assets supplying
a growing market with robust pricing
-- Interests in two Production Sharing Contracts:
o Sampang - 45% operated interest
o Madura - 67.5% operated interest
-- Gas production from the Oyong, Wortel fields in the Sampang
PSC, and the Maleo & Peluang fields in the Madura PSC.
o 12 MMboe of 2P reserves (gross)
o 11,500 boepd (gross) production
-- Also includes the Meliwis discovery (77.5% operated interest)
which will be developed through the Madura infrastructure
-- Near field exploration and appraisal targets
Malaysia
A 20% non-operated working interest in the Deep Water Block R
PSC (offshore Sabah, Malaysia).
Bangladesh
A 45% operated interest in exploration Block SS-11, Bangladesh
immediately adjacent to multi-Tcf producing fields across the
border in Myanmar
-- An early stage exploration project with multiple plays
Financial information related to the assets the subject of the
Transaction
As at 31 December 2017, the value of the gross assets, the
subject of the Transaction totalled $481 million. The profit before
tax attributable to the assets the subject of the Transaction
totalled $113 million in 2017.
Rationale for the Transaction
The Transaction is consistent with Ophir's continued rebalancing
of its portfolio towards a larger production and cash flow base to
sustainably support the refocussed exploration portfolio and to
return capital to shareholders. This rebalancing will also
facilitate further economies of scale in operating expenditures,
general and administration expenses ("G&A") and will provide
greater capital allocation and financing efficiencies.
The assets to be acquired pursuant to the Transaction are also
consistent with Ophir's Southeast Asian focused strategy and
provide a good combination of strong cashflows with near term
growth potential:
-- Significant future oil and gas production underpinned by 21.2
MMboe of remaining 2P reserves (YE 2017) and 5.0 MMboe of estimated
reserve add from the future Meliwis development
-- Discovered resources and high impact exploration provide
material opportunities for growth in Bestari
-- Over 40% increase in 2P reserves
-- Proforma 2018 forecast funds flow from production doubles to $180 million
-- Bangladesh exploration acreage a continuation of our offshore
Myanmar play - offering attractive exploration upside close to
Shwee production
Financial effects of the Transaction for Ophir
The Transaction will:
-- Add 13,500 boepd of net working interest production to Ophir
in 2018 and 21.2 MMboe to Ophir's net working interest reserves
-- Increase proforma 2018 funds from production to $180 million
-- Increase proforma 2018 capital expenditure (excl. acquisition cost) to $175 million
-- Year-end net debt is revised to $160 million; year-end liquidity is revised to $260 million
-- In excess of $13 million per annum of G&A synergies
(management estimate) post restructuring charges. The previous
acquisition of Salamander Energy plc in 2015 demonstrated our
ability to extract synergies, with a reduction in G&A costs of
60% over the 3-year period following the acquisition
-- Post transaction leverage remains a conservative <1x Net
Debt:EBITDAX ; thereby preserving financial flexibility to deliver
the rest of our portfolio's upside, including Fortuna
About Ophir:
Ophir Energy is an independent Upstream oil and gas exploration
and production company. It is listed on the London Stock Exchange
(LEI: 213800LAZOZTKPAV258).
Disclaimers
This announcement is for information purposes only is not
intended to and does not constitute a circular or form part of any
offer or invitation to sell or issue, or any solicitation of any
offer to purchase or subscribe for, any shares or any other
securities, nor shall it (or any part of it), or the fact of its
distribution, form the basis of, or be relied on in connection
with, any contract therefor.
Merrill Lynch International ("Bank of America Merrill Lynch"), a
subsidiary of Bank of America Corporation, is acting exclusively
for Ophir in connection with the acquisition and for no one else
and will not be responsible to anyone other than Ophir for
providing the protections afforded to its clients or for providing
advice in relation to the acquisition.
Barclays Bank PLC, acting through its Investment Bank
("Barclays"), which is authorised by the Prudential Regulation
Authority and regulated in the United Kingdom by the Financial
Conduct Authority and the Prudential Regulation Authority, is
acting exclusively for Ophir and no one else in connection with the
Transaction and will not be responsible to anyone other than Ophir
for providing the protections afforded to clients of Barclays nor
for providing advice in relation to the Ophir or any other matter
referred to in this announcement.
This announcement includes forward-looking statements. These
forward-looking statements involve known and unknown risks and
uncertainties, many of which are beyond Ophir's control and all of
which are based on the Directors' current beliefs and expectations
about future events. Forward-looking statements are sometimes
identified by the use of forward-looking terminology such as
"believe", "expects", "may", "will", "could", "should", "shall",
"risk", "intends", "estimates", "aims", "plans", "predicts",
"continues", "assumes", "positioned" or "anticipates" or the
negative thereof, other variations thereon or comparable
terminology. These forward-looking statements include all matters
that are not historical facts. They appear in a number of places
throughout this announcement and include statements regarding the
intentions, beliefs or current expectations of the Directors or
Ophir concerning, amongst other things, the results of operations,
financial condition, liquidity, prospects, growth, strategies and
distribution policy of Ophir and the industry in which it
operates.
These forward-looking statements and other statements contained
in this announcement regarding matters that are not historical
facts involve predictions. No assurance can be given that such
future results will be achieved; actual events or results may
differ materially as a result of risks and uncertainties facing
Ophir. Such risks and uncertainties could cause actual results to
vary materially from the future results indicated, expressed or
implied in such forward-looking statements. Such forward-looking
statements contained in this announcement speak only as of the date
of this announcement. Ophir expressly disclaims any obligation or
undertaking to update the forward-looking statements contained in
this announcement to reflect any change in their expectations or
any change in events, conditions or circumstances on which such
statements are based unless required to do so by applicable law,
the Prospectus Rules, the Listing Rules or the Disclosure Guidance
and Transparency Rules of the FCA or the Market Abuse
Regulation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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