6th Jul 2015 06:49
LONDON (Alliance News) - Ophir Energy PLC Monday said its expects to meet its financial and production targets for the full year and said it has a healthy cash balance as it continues to reduce costs.
The FTSE 250-listed oil and gas company said revenue, cash flow and capital expenditure all are expected to be in line with expectations for the full year.
Ophir's cash balance currently stands at USD720 million and its net cash position stands at USD405 million, with the cash balance expected to be in the range of USD700 to USD750 million at year end with a net cash position of around USD350 to USD400 million.
Ophir said it has "significant financial flexibility" with only USD100 million of contractually committed exploration and appraisal expenditure from now until 2017. In addition, it said the carrying costs of the Tanzania liquefied natural gas project are "comfortably manageable" with around USD40 million of spending expected in the second half of 2015 and in 2016, it said.
"Ophir's robust financial health and high degree of discretionary expenditure provide the board with considerable financial and strategic flexibility at this point in the commodity cycle," said Ophir.
Ophir said it has also achieved annual cost savings of around USD60 million of ongoing pre-tax general and administrative costs, partly from synergies achieved from the acquisition of Salamander Energy PLC in 2014. Those savings are being driven by the removal of overlapping activities, streamlining operations and through a lower headcount.
"The board nevertheless remains committed to disciplined capital allocation and to managing the portfolio to optimise returns to shareholders across the asset life cycle," it added.
"The integration of Salamander is progressing well: we are delivering cost savings of USD60 million, which exceed the previously identified synergies. Even after the partial deleveraging in the first half of 2015, the cash flow from our producing assets will return Ophir to a similar cash position by end 2016 to that which the group expected to have had pre-acquisition," said Chief Executive Nick Cooper.
Production for the first half of 2015 averaged 14,600 barrels of oil equivalent per day, of which 12,600 barrels came from the Bualuang field in the Gulf of Thailand. Production remains on track to meet the company's full-year guidance, Ophir said.
"In its operations, Ophir has had a successful first six months to 2015. We delivered production as forecast and all development activities are progressing to plan," said Cooper.
By Joshua Warner; [email protected]; @JoshAlliance
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