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Ophir’s Block R licence denied extension

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LNG Industry,

Ophir has announced that it has been informed by the Equatorial Guinea Ministry of Mines and Hydrocarbons that the Block R licence, which contains the Fortuna gas discovery, will not be extended following expiry of the licence on 31 December 2018.

As a consequence, Ophir claims that there will be an additional non-cash impairment of the asset (expected to be approximately US$300 million) in the company’s full year financial results following the impairment taken in the half year results reported in September last year.

According to the statement, the company’s board continues to be focused on carrying out the strategy it outlined in its announcement on 13 September 2018, as well as options available to maximise value for shareholders. In this regard, the board highlights the recent updates that it has provided to the market in respect of its assets in Southeast Asia, which it believes show the quality of these assets, including its recent Santos acquisition.

As the company outlined in its announcement on 31 December, Ophir and Medco have commenced discussions regarding a potential cash offer by Medco for the entire issued and to-be-issued share capital of Ophir. According to the statement, the talks have occurred in the shared knowledge that there were numerous possible outcomes with respect to the Fortuna asset (and these talks are still continuing).

Ophir claims that its next announcement will be its pre-close trading statement on 15 January this year, when the company will update investors on the progress made throughout its portfolio, and the advances to pits production and cash flow base in Southeast Asia.

The Interim Chief Executive of Ophir, Alan Booth, said: “It is disappointing that the Ministry has decided not to extend the licence, despite the amount of effort and cost dedicated to the delivery of the project and especially as we were still talking to highly credible potential co-investors. Nevertheless, we will continue to work constructively with the authorities in Equatorial Guinea. I should like to thank everyone in the Ophir project team; you gave this your very best endeavours.

“Looking ahead, the Group’s cash flow, capital commitments and growth prospects will be focused in Southeast Asia, where we have built a robust operating platform capable of delivering value to shareholders.”

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