Ophir Keeps Down Costs, Sees Growth

UK upstream minnow Ophir said its costs were lower and its production higher than expected over the course of 2018. The company,which has advised shareholders to hold on to their shares, is pursuing further savings from a move to Singapore from London.

Interim CEO Alan Booth said January 15: "With the successful integration of the Santos southeast Asian assets, Ophir has significantly strengthened its production and development portfolio. We are now well positioned to generate significant free cash flow going forward. Our underlying business and balance sheet remain robust.... As outlined in our strategy statement on 13 September, we are building a company with increasing cash generation, and declining risk capital expenditure. Our future investment decisions will continue to focus on maximising returns to shareholders."

Capital expenditure was estimated at $122mn, below previous guidance of $145mn, which helped reduce net debt to $35mn from the expected $65mn; and operating expense was estimated at $12 /barrel of oil equivalent, "highlighting the low cost and cash generative nature of our expanded production base," it said. 

Buying the Madura and Sampang production-sharing contracts in Indonesia and Block 12W in Vietnam from Santos for $205mn materially increased production and cash flow. These assets have performed better than expected with the assets returning cashflow of $110mn in full year 2018, representing about half the initial purchase price.

Daily production averaged 29,700 boepd, 8% ahead of guidance with Madura, Sampang and Block 12W contributing 18,000 boe/d. With the derisking of the Sampang and Madura PSCs through the FID of the Meliwis development and the Paus Biru exploration success will allow more fields in the licences to be brought on stream but also extend the economic life of the existing fields, it said.

Ophir expects to complete its move from London to Singapore by September 2019, yielding further significant costs savings during the coming year. But the company's 2018 financial statements are likely to include provisions of about $10mn for restructuring and relocation costs.