Focus on costs lifts Ophir in 2017

The London-listed firm said unit operating costs, excluding Sinphuhorm, decreased 4% to $12.79 per barrel of oil equivalent (boe).

Net funds flow from production improved 46% to $90m, which the board said was equivalent to $21.30 per boe.

The board said it had “right-sized” the business during the year, with further reductions of general and administrative expenses by reducing its headcount at the London head office, along with reductions of expatriate employees.

General and administrative costs had reduced by 60% over a three-year period.

Net cash at year-end stoof at $117m, lower than the $160m reported at the end of 2016.

During the year, Ophir completed the refinance of its $250m reserve-based lending facility, ending the year with gross liquidity of $427m - up from $371m year-on-year.

“2017 saw Ophir take important steps to adapt and right-size the business, meet key operational targets and replenish our exploration portfolio,” commented chief executive Nick Cooper.

“Nevertheless, we are disappointed to have not yet achieved the Fortuna project FID despite having made significant progress on the project.”

The rebalancing of the company’s portfolio and its capex prioritisation away from its prior primary exploration focus saw Ophir approach sustainability, Cooper explained.

“In 2017 we have grown reserves by 13%, increased net funds flow from production by 46%, reduced gross general and administrative costs by a further 17%, increased liquidity by $57 million and by year end we had delivered net asset value growth of 6.4%.”

The firm’s 2018 priorities were threefold, Cooper said.

First was to deliver the Fortuna project FID, second was to further monetise the company’s “significant” contingent resources, and third was to grow production and cash flow.

“Ophir operates a long life, low cost production base and has a strong balance sheet.

“We sanctioned a fourth phase of development on our Bualuang oil field which will grow production in 2018-19, agreed an increased gas price on our Kerendan field and are in negotiation to double production from this asset by 2020,” Cooper said.

“The group is well-positioned to take advantage of the opportunities that this down cycle has presented by growing our cash flows and capturing excellent options in proven hydrocarbon systems, as shown by our recent block awards in Equatorial Guinea and Mexico.”