11th Nov 2015 08:08
LONDON (Alliance News) - Ophir Energy PLC Wednesday said full year production is expected to beat its guidance, but warned production will fall in 2016 as the FTSE 250-listed company continues to cut its spending in light of lower oil prices.
Ophir said production is currently averaging 13,400 barrels of oil equivalent per day and said full year production is expected to beat its guidance of 12,700 barrels per day on a pro-forma basis.
However, Ophir said production in 2016 is expected to fall to a range of 10,500 to 11,500 barrels of oil equivalent per day.
Revenue and operating cashflow for the current full year remain on track to hit its guidance.
Ophir is also expecting its full year capital expenditure to be at the lower end of its guidance at around USD250.0 million, and it will continue to cut its capital expenditure moving forward, and said it expects to spend around USD175.0 to USD225.0 million in 2016.
In addition, Ophir has signed heads of agreement with a group of buyers for its liquefied natural gas from its Fortuna FLNG project offshore Equatorial Guinea.
The offtake agreement for Fortuna has been signed with a group of "globally established LNG buyers" and said the total amount of LNG requested under the deal has "substantially exceeded the available offtake from the project", meaning it will not be able to sign a formal deal with all the buyers.
"Ophir expects that all of the heads of agreements will have been signed by the end of November. There will then follow a further shortlisting process to select one or two of these LNG buyers with whom to sign full sales and purchase agreements in the first quarter of 2016," said the company.
Those sales and purchase agreements align with Ophir's plan to make a final investment decision for the Fortuna project in the middle of 2016.
"Ophir is in parallel progressing its funding arrangements for the Fortuna FLNG project. It is expected that the funding options for the project will include project equity, debt, pre-sales of gas, vendor financing and asset divestment. The appropriate balance both equity and debt funding will be sourced to maximise the project's returns for Ophir's shareholders," it said.
In addition, Ophir said further technical work at Fortuna has increased its gross contingent resource estimate on Block R to 3.00 trillion cubic feet of gas from the previous estimate of 2.60 trillion cubic feet. Ophir said an additional 800.00 billion cubic feet has been identified as low-risk, gross prospective resources.
Ophir shares were up 1.5% to 95.75 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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