UK independent Ophir Energy has announced belt-tightening measures out to 2020 as it prioritizes its Fortuna floating liquefaction project offshore West Africa and expansion of its Asian producing assets. Among these, it said chief operating officer Bill Higgs would be stepping down.
“Ophir’s goal of becoming a sustainable exploration company remains in place and it is forecast that Ophir’s cash flow generation will support the drilling of 2-3 exploration wells per annum when the Fortuna FLNG project is on-stream in 2020,” the company said July 12.
But it said that corporate roles in London and expatriate positions will be reduced by half (equating to 15% of its workforce) resulting in annual cost savings of $10mn-$12mn, after one-off restructuring costs of $7mn: “The company will, nevertheless, retain all competencies essential to the delivery of its core projects, including the remaining work streams required to secure the Final Investment Decision (FID) of Fortuna, to undertake the expansion of the Asian production base and to operate Ophir’s exploration portfolio.”
Ophir insisted: “We currently expect FID of the Fortuna Project to be achieved in 2H 2017.” However, it noted that it has yet to award the LNG offtake agreements, and to close out the project debt facility, adding “both of these workstreams are currently being progressed.” Last month the three companies shortlisted to be off-taker were revealed by the Equatoguinean government as Shell, Gunvor and Vitol.
Chinese banks ‘lined up to finance Fortuna FLNG’
Ophir’s July 12 trading statement continued: “Final terms have now been agreed with a shortlist of off-takers and the project stakeholders are currently evaluating which of these offers to accept. These offers comprise Brent [oil-] linked contracts. Principle commercial terms have been agreed with a consortium of three China-based banks for the debt facility and documentation is being completed.”
“Once the offtake decision and debt facility have been agreed, the board of Ophir will be in the position to take the FID, which will also be subject to approval by Ophir’s shareholders and the President of Equatorial Guinea.”
Ophir CEO Nick Cooper had said two months ago that Chinese banks would finance 60% of the expected $2bn cost of the 2.5-2.8mn mt/yr Fortuna FLNG project, but he also said then that he hoped to definitively line up buyers for Fortuna’s LNG by the end of June 2017.
Ophir noted that 1H2017 production averaged 11,300 barrels of oil equivalent per day, 1,200 boe/d less than expected, due to temporarily lower than expected production on its Kerendan (Indonesia) and Sinphuhorm (Thailand) gas fields.
Cooper said July 12: “We have taken certain difficult but necessary decisions to further reduce our cost base….We are closing in on the Fortuna Project FID which will start the monetization of a substantial portion of Ophir’s resource base.”(Source: Mark Smedley)