Ophir Energy hits stumbling block at Fortuna

The FTSE 250 company said that, since the 16 January heads of terms agreement with Schlumberger for upstream participation, Schlumberger has satisfactorily completed technical due diligence.

However, Ophir and Schlumberger were unable to complete the transaction on the terms agreed, and discussion have terminated.

Ophir’s board said the project still represents a technically and financially attractive project, and it continues to progress the project.

After completion of the upstream FEED studies and EPCIC bids having been received as planned earlier in the month, the forward upstream capex requirement from FID to first gas has been further reduced to $450m-$500m from $600m.

The company said it remains in active discussions with a number of other parties over participation in the project, including the possibility of equity participation, vendor financing and pre-sales of gas.

Offtake selection has progressed to a decision between three solutions, Ophir’s board confirmed, with fully-termed LNG sales agreements nearing completion.

Given the additional time now required to develop the project, first gas was now forecast in early 2020.

"The Fortuna project workstreams are progressing towards FID. We have been reviewing a number of options and our discussions continue with other quality counterparties that can offer an attractive source of funding,” said Ophir CEO Nick Cooper.

“In addition, the reduction in the capex to first gas has lowered the project breakeven oil price to approximately $40 per barrel.”

Cooper said the company was continuing to work closely with Golar, the prospective offtakers and other potential partners to reach final investment decision in 2016.