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Ophir signs non-binding Heads of Terms Agreement with Schlumberger

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LNG Industry,

Ophir Energy has announced that it has signed a non-binding Heads of Terms Agreement with Schlumberger. Under this agreement, subject to due diligence, as well as proper documentation and government approval, Schlumberger will receive a 40% economic interest in the Fortuna floating LNG (FLNG) project, which is located offshore Equatorial Guinea. A definitive agreement will now be discussed by both parties, and is expected to be complete by 2Q16. Following this, a financial investment decision (FID) will be taken. As part of the definitive agreement, Schlumberger will reimburse a total of 50% of Ophir’s previous costs in a development carried interest. This reimbursement is expected to cover Ophir’s CAPEX until the first sales of LNG.

Ophir is also currently shortlisting LNG off-take offers. It expects to finalise this process in the next few weeks. The project remains on schedule to take FID in mid-2016, as all workstreams are progressing on time.

The Director General of Hydrocarbons in the Equatorial Guinea Ministry of Mines, Industry and Energy (MMIE), Mercedes Eworo Milam, said: “MMIE continues to lend full support to Ophir, GEPetrol and Sonagas as it progresses the Fortuna FLNG project towards FID.”

Schlumberger also signed an agreement with Golar on 22 January 2016. Under this agreement, both parties agreed to jointly develop gas reserves through FLNG units. Subject to successful FID, both Golar and Schlumberger have expressed interest to extend this agreement to include both existing and proposed Ophir assets in the future.

The CEO of Ophir, Nick Cooper, said: “We are very pleased to welcome Schlumberger into the Fortuna FLNG project. Innovative partnering in the upstream is increasingly important to deliver world-class projects that can create value throughout the cycle. Ophir’s cost to first gas is fully funded by this transaction, and we can now evaluate the other funding and off-take proposals that we have received to select at FID the combination that creates most value for shareholders.”

“Furthermore, as an early adopter of FLNG, our newly announced strategic relationship with Golar and Schlumberger has the potential to deliver more opportunities of this kind in the future.”

“These are tough times for the upstream sector, but this transaction will free up our balance sheet and further increase our financial flexibility. Through prudent capital discipline, an innovative approach and a strong balance sheet, Ophir remains convinced of the value creation potential of its asset portfolio throughout 2016 and beyond.”

Edited from press release by David Rowlands

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