Ophir Energy shares rise on Credit Suisse upgrade

Ophir Energy surged after Credit Suisse upped its stance on the stock to ‘neutral’ from ‘underperform’ and lifted the price target to 100p from 90p following the capital markets day.

It said the Fortuna floating liquefied natural gas project in Equatorial Guinea was the features of the CMD, with surprisingly encouraging progress made so far.

“We partly de-risk the value of the project,” said CS, noting that Ophir seemed increasingly confident to sanction the project by mid-2016.

Credit Suisse said Ophir's gas in Equatorial Guinea is particularly well suited to FLNG as it is a biogenic gas resource, which requires minimal processing and negligible water handling capacity, thereby reducing the amount of processing equipment required. The absence of liquids production also helps in this regard.

Furthermore, Ophir's midstream agreement with Golar Solution makes the project more affordable as the typically high upfront capex associated with building a liquefaction facility is funded by the midstream operator (Golar) in exchange for a tolling fee throughout the life of the project, effectively exchanging upfront capex for opex.

At 1010 GMT, Ophir shares were up 8.9% to 97.15p.