Ophir Energy signs Fortuna contract with Schlumberger

Ophir Energy has signed a non-binding head of terms agreement with Schlumberger, which will receive a 40% interest in the company’s Fortuna project in Equatorial Guinea.

Under the definitive agreement, which is expected to be signed in the second quarter, Schlumberger will reimburse 50% of Ophir’s past costs in the form of a development carried interest. This is expected to cover Ophir's share of capital expenditures up until first sales of liquefied natural gas.

Chief executive 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 offtake proposals that we have received to select at financial investment decision the combination that creates most value for shareholders.”

In addition, Ophir said it is likely to produce 10,500 to 11,500 barrels of oil equivalent per day in 2016, with the Kerendan gas field expected to start contributing to these volumes in the second half of the year.

Meanwhile, capital expenditure for the year is seen at between $175m and $225m.

Group operating cash flow from producing assets is forecast to be $75m to $100m which, along with a planned 2016 refinancing of the debt facilities, is expected to lead to a 2016 year end cash position of between $550m and $600m.