14th Nov 2013 08:39
LONDON (Alliance News) - Ophir Energy PLC said Thursday it has sold a 20% interest in its Tanzania Blocks 1, 3 and 4 to Pavilion Energy, sparking a 14% jump in the stock in early trading.
The deal, which is expected to complete during the first quarter o0f 2014, has a maximum consideration of USD1.288 billion. Upon completion of the transaction, Pavilion will pay Ophir USD1.250 billion, with the additional USD38 million payable following the final investment decision in respect of development of Blocks 1,3 and 4, currently planned for 2016, said Ophir.
Pavilion is a wholly-owned subsidiary of Temesek, a Singapore-based investment company. The sale is still subject to shareholder approval
Ophir said it will remain a significant investor in Tanzania going forward, through its continued stake in the joint venture and exploration drilling in Block 7 and East Pande. CEO, Dr Nick Cooper, said, "The sale is consistent with our strategy of adding value in the exploration and appraisal phase of the E&P cycle, monetising that value at the appropriate time and recycling that capital into further value creating opportunities. Tanzania remains a core part of our portfolio and we will continue to invest further in the country's growth through our exploration activities."
In its interim management statement for the third quarter, released in tandem with the sale notice, the energy, oil and gas exploration firm said its net cash balance was USD749.8 million at the end of September.
During the period - August 16 to November 14 - the firm said its near-term appraisal activities in Tanzania had concluded, following the successful completion of its Pweza drilling campaign and production testing, as well as the Mzia-3 well.
Ophir has secured a rig for its 2014 West Africa-operated multi-well drilling programme, set to commence in February 2014 in Gabon.
The company said it has continued to focus on its core assets and "portfolio rationalisation" during the quarter. This directive has caused a number of actions, including Ophir's exit from the Marine IX Block in Congo Brazzaville; the intention to relinquish its interest and operatorship in the Marovoay Block in Madagascar; and a reduction in the firm's stake the Berbera Blocks SL9 and SL12 in Somaliland from 75% to 25% by entering into a farm-down agreement, including as carry of Ophir's remaining 24% share in a planned seismic programme.
Cooper said in a statement, "The last three months has been another active period for the Company both corporately and operationally... We are about to enter a period of significant high-impact drilling that could be transformational for the Company on success. This starts shortly with the Mlinzi Mbali-1 in Block 7, Tanzania and continues in Gabon with Padouck Deep, the first well on the pre-salt play, in Q1 2014 with further drilling planned during 2014."
Shares in Ophir were up 14.08% at 376.90 pence per share in morning trading, the biggest gainer on the FTSE 250 by far.
By Alice Attwood; [email protected]; @AliceAtAlliance
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