Ophir a concern for Credit Suisse over Guinea project

Shares in Ophir Energy tumbled on Thursday, after Credit Suisse downgraded its rating to neutral and cut its share price target by a quarter.

The oil and gas exploration company had previously been rated outperform by the broker, with a price target of 80p.

But Credit Suisse has now reduced its target to 60p, on concerns over Ophir’s key Fortuna FLNG gas project in Equatorial Guinea and the recent departure of chief executive Nick Cooper.

The West African project, to develop a liquefied natural gas scheme, is a core part of Ophir’s business. But despite making what Credit Suisse called “good progress” throughout most of 2017, Ophir and its partners in Fortuna FLNG have since encountered “serious problems in trying to raise financing, a key remaining hurdle”.

Credit Suisse also pointed to reports that the government of Equatorial Guinea had threated to revoke the British company’s license if financing is not secured by the end of the year.

“We see this deadline as hard to hit,” it said, “particularly as Ophir goes through management transition. We are therefore reducing chance of success for the project to 33% from 90%.”

The note added that Mr Cooper’s departure came amid “increased pressure around the Fortuna FLNG, a project that over the years had turned into his legacy”. Mr Cooper took over as chief executive of the Africa-focused business seven years ago and helped float the business on the London Stock Exchange in 2011.

Non-executive director Alan Booth has been appointed interim chief executive until a replacement for Mr Cooper can be found.

“The appointment of a new CEO, and the subsequent new strategy announcement, are the key catalysts for the stock,” argued Credit Suisse.

As of 1pm GMT the shares were down 3p at 60.10p, though in earlier trading they had fallen as much as 6%.