Interim Results

Ophir Energy plc

Interim Results for the six months ended 30 June 2013

London, 15 August 2013: Ophir Energy plc ("Ophir" or the "Group") announces its Interim Results for the six months ended 30 June 2013.

2013 Half-year results summary

In the first half of the year the Group added over 3 TCF of gross recoverable resource to its core position in Tanzania over Blocks 1, 3 and 4 whilst derisking the commerciality of those assets with strong flow tests on the Jodari and Mzia discoveries. The ability to execute and deliver the planned exploration programme over the next 18 months was enhanced by the Placing and Rights Issue completed in March 2013 which raised US$837.6million (£553.4 million) and the extension to the drilling contract for the Deepsea Metro I drillship. Three new directors have been added to the Board, deepening the oil and gas industry expertise the Group can draw on.

Key highlights:

§ Increased 2C recoverable resources across Tanzania Blocks 1, 3 and 4 to 15 TCF (2,500mmboe) following further successful exploration and appraisal drilling. Completed Drill Stem Tests ("DST") at Jodari-1 (Block 1) and Mzia-2 (Block 1), confirming good reservoir deliverability and flow rates to the upper end of the expected range

§ Executed successful ongoing drilling programme in Tanzania with exploration success at Ngisi-1 (Block 4), providing valuable appraisal of Chewa gas field

§ Strengthened the company's financial position by raising US$837.6million (£553.4 million) via the successful March Placing and Rights Issue

§ Extended the contract for the Deepsea Metro I drillship with partner BG Group plc for a period of at least 18 months for the continuation of the 2013-2014 East African offshore drilling programme

§ Made significant progress on Tanzanian LNG project - site selection for a multi train LNG facility progressing towards a second half 2013 announcement

§ Engagement with the Government of Tanzania on Block 7 gas terms

§ Achieved 'In principle agreement' with the Government of Equatorial Guinea to review commercialisation routes for Block R gas including Floating LNG.

Commenting today, Nicholas Smith, Chairman, said:

"In the first half of 2013 we have maintained our 100% success rate in drilling on Blocks 1, 3 and 4 in Tanzania leading to an increase in recoverable resource to 15TCF (2,500mmboe). The results of the drilling campaign, coupled with the strong flow tests at Jodari and Mzia, have allowed us to progress pre-planning for the LNG development with increased confidence. The equity raise in March combined with our ability to secure a rig under long-term contract for the East Africa drilling campaign means we are well positioned to continue to deliver for our shareholders over the next 12 months."

A call with management will be held at 0830 BST following this announcement. Participants can dial in using the following details:

Dial-in number: +44 (0) 1452 555566

Conference ID: 28394981

For Further Enquiries please contact:

Ophir Energy plc +44 (0)20 7290 5800

Nick Cooper, CEO

Lisa Mitchell, CFO

Richard Rose, Corporate Communications and Strategy

Brunswick Group +44 (0)20 7404 5959

Patrick Handley

Elizabeth Adams

Notes to Editors

Ophir Energy (OPHR.LN) is an African focussed, upstream oil and gas resource company which is a member of the FTSE 250. The Group's headquarters are located in London (England), with operational offices in Perth (Australia), Malabo (Equatorial Guinea), Dar es Salaam and Mtwara (Tanzania), Port Gentil (Gabon) and Nairobi (Kenya).

For further information on Ophir, please refer to www.ophir-energy.com 

Tanzania

Blocks 1, 3 and 4 (40% non-operated interest)

Exploration and appraisal activities have continued across the Ophir - BG Group Joint Venture acreage in the first half of the year with further drilling successes, resource upgrades and flow-tests that have underpinned the commerciality of the gas resource discovered to date. Ophir management estimates that by mid-year the Joint Venture had discovered 15 TCF (2,500mmboe) of 2C mean recoverable resources in Blocks 1, 3 and 4.

The highlight in the first half of the year was the successful appraisal programme on the Jodari and Mzia discoveries in Block 1. A DST on the Jodari-1 well was also undertaken in the period and flowed at a tubing constrained flow rate of 70mmcfd, demonstrating excellent reservoir deliverability. The Mzia-2 appraisal well was drilled approximately 4km to the southeast of the original Mzia discovery well and encountered 62m of net pay in Cretaceous reservoirs, establishing pressure communication between the Mzia-1 and Mzia-2 gas columns. A DST on the well flowed at 57mmcfd (equipment constrained), which was at the upper end of the expected range. The result of the appraisal campaigns on these two fields has seen gross recoverable resources increase by 1.7 TCF to 8.6 TCF combined. Together with the previously discovered Chaza Field, the Block 1 "hub" area now has discovered 2C mean recoverable resource estimates in excess of 9TCF.

The Ngisi-1 exploration well (Block 4) was drilled in June and encountered an excellent quality gas-bearing reservoir. Two planned side tracks, which demonstrated the ability to drill highly deviated wells in the area, were subsequently successfully completed. These wells also appraised the underlying Chewa discovery and confirmed resource estimates at the Chewa field. Gross recoverable resources across the Block 4 Chewa-Pweza-Ngisi hub now stand at 4.5 TCF.

Good progress continues to be made on the mid-stream LNG project; the primary focus has been site selection and discussions with the Block 2 venturers on the potential for a jointly developed, multi-train LNG facility.

Forward Programme

Exploration and appraisal activities continue using the Deep Sea Metro I drillship with the Mkizi-1 exploration well in Block 1 being drilled after the period end which has proved up an additional 0.6 TCF of mean recoverable resource. The Deepsea Metro I drillship will then move to drill two appraisal wells, including a DST, on the Pweza discovery in Block 4. This will be the first DST on the series of Block 4 discoveries, following on from the successful tests in Block 1 on Mzia and Jodari. Discussions are ongoing with BG Group regarding the optimum programme beyond that, following receipt and ongoing interpretation of the final data from the outboard 3D seismic survey conducted in Block 1. This will allow the JV to fully assess the prospectivity of the outboard and terrace play systems. This, together with data from the inboard survey which was acquired early in 2013, will be used to finalise a drilling programme.

Work on site selection is nearing completion for the LNG park. Discussions have been held with the Government and TPDC which is anticipated will lead to an announcement to TPDC of a preferred site during the second half of the year. This will then allow the process of site acquisition and early works leading to pre-FEED to commence.

East Pande (70% operated interest)

Final processed data from the Ndizi 3D survey was delivered in January. Interpretation has reaffirmed the company's view of the prospectivity of the acreage with a new number of leads and prospects being added to the portfolio. The first planned drilling target is expected to be the 379 mmboe Tende prospect in the southern area of the Block. Ophir believes that the Block is primarily prospective for gas but does have the potential for oil, particularly in the south.

Forward Programme

As operator, Ophir anticipates drilling East Pande in Q1 2014 as part of the programme utilising the Deep Sea Metro I drillship.

Block 7 (80% operated interest)

The fast track data from the Upanga 3D survey undertaken in 2012 was received earlier this year and interpretation has confirmed Mlinzi as a complex of drillable prospects with an aggregate recoverable resource potential in excess of 20 TCF. The 2010 3D survey in the west of the Block, which was acquired by Dominion Petroleum, has been reprocessed and has confirmed the presence of the Ngao prospect with resource potential in excess of 5 TCF.

Forward Programme

A final well location has been selected and drilling is expected to begin in late Q4 2013. The Government of Tanzania has established a Government Negotiating Team to engage with Ophir on gas terms for the block, with first discussions taking place towards the end of the first half of the year.

Kenya

Blocks L9 and L15 (90% operated interest)

Block L9 contains a number of features in the outboard section of the acreage which Ophir believes is on trend with the Mbawa discovery drilled by Apache in 2012 in Block L8 directly to the North. The Nala survey, which was acquired in late 2012, was shot to evaluate the potential of three play systems; the southern extent of the Mbawa Inversion zone, the Mbawa West, en-echelon anticline play and the Simba Graben onlap play. The data is currently being interpreted.

On Block L15, the Ndoto 3D survey was also shot in H2 2012 and interpretation is focussing on two key plays - the Western edge of the Lamu toe thrust and fault blocks of the Davy Walu High.

Forward Programme

Ophir intends to drill on Block L9 in H2 20141. Activity in and around Kenya offshore is increasing, with Anadarko currently drilling the second well, Kiboko, in a two well campaign. Kiboko is located in Block L11B to the South East of L9.

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Equatorial Guinea

Block R (80% operated interest)

Evaluation of the well data from the 2012 drilling campaign is ongoing. A Competent Persons Report was completed that confirmed that mean 2C gross recoverable resources stand at 2.3 TCF on the block. There is in addition further low-risk upside gas potential, and a higher risk liquids play on the acreage. Ophir entered the second exploration period in April 2013. The period runs for 12 months although Ophir has requested an extension to the period until December 2014.

The company continues to progress routes to commercialise its gas resources with three options being considered:

1. utilisation of a Floating LNG (FLNG) scheme; or

2. a dedicated new train at the existing Punta Europa LNG facilities; or

3. backfilling the existing train in operation at Punta Europa as production from the Marathon operated Alba field declines

Feasibility of all options continues to be assessed. A full project evaluation of a Floating LNG scheme is being developed in coordination with the Government of Equatorial Guinea.

Forward Programme

Further exploration and appraisal drilling is planned on Block R in 2014. Ophir continues to seek to introduce suitable partners pre-drilling while commercialisation plans are moving towards a preferred option supported by Government.

Gabon

Mbeli/Ntsina (50% operated interest)

Processing of the 3D seismic survey which was shot over the pre-salt play in the Mbeli and Ntisna Blocks was completed in the first half of the year. These were specifically designed to image the pre-salt play system and the data has confirmed the prospectivity of the play in-line with previous evaluations.

Forward programme

The company continues to investigate options for a suitable Rig for its West coast operated programme with the view to drilling two pre-salt wells commencing early in 2014. Consideration is also being given to a further outboard 3D survey to chase a post-salt play analogous to the Barra discovery which was made by Petrobras in Brazil.

Manga/Gnondo (100% operated interest)

Two types of play are being targeted on these blocks; the Ogooué Delta play and the outboard post-salt play. The Affanga Deep prospect (Gnondo) in the Ogooué delta play is now drill-ready and adjacent prospects are being mapped as follow-up candidates. The outboard play, which is analogous to the Barra discovery made by Petrobras in Brazil, was initially investigated by the Afo 3D survey which was acquired in Manga/Ntsina. The survey has provided further support for the play in the North Gabon basin but was not, however, large enough to fully understand the play system. Further seismic data is therefore required. Interpretation of the Pachg Liba 3D survey (Gnondo) is also nearing completion and the prospect will also be matured as a potential future drilling candidate.

Forward Programme

Ophir plans to drill the Affanga Deep prospect as part of a three-well Gabon programme in H1 2014. Consideration is also being given to a further outboard 3D survey to chase a post-salt play analogous to the Barra discovery which was made by Petrobras in Brazil.

AGC

Profond Block (79.2% operated interest)

A 1,000sq km 3D survey was shot across the Profond Block in the first half of the year and fast-track data is now being interpreted. Ophir have proposed a 12 month extension to the PSC term to the AGC authorities and this is currently being considered. The extension will allow Ophir time to complete the seismic interpretation, mature risk-covered prospects and complete a farm-out.

Congo (Brazzaville)

Marine IX Block (48.46% operated interest)

In June Ophir officially notified the Government of its decision not to enter the second term of the PSC and are in the process of formally exiting from Congo.

Ghana

Offshore Accra Contract Area (20% operated interest)

In July the company completed drilling the Starfish exploration well, located within the frontier Keta basin offshore Ghana. Although the well encountered an interval of approximately 230m of sandstone in the primary target, this was found to be water wet. The data from this well will now be incorporated into further analysis of the remaining prospectivity of the acreage, particularly the potential outboard of the Starfish location.

Earlier this month the Ministry of Energy and Petroleum in Ghana granted a six month extension to the Initial Exploration Period which now ends on 23 March 2014.

Result for the Period

During the first six months of 2013 the Group strengthened the balance sheet with the successful placing and rights issue that took place in March. The placing of 19.85 million shares raised £91.3 million (US$137.0 million) and a 2 for 5 share rights issue raised a further £462.1 million (US$700.6 million). The funds will go towards financing an expanded 2013/2014 drilling programme consisting of:

· The BG Group operated Blocks 1,3 and 4 joint venture

· East Pande (Tanzania)

· Block 7 (Tanzania)

· Block L9 (Kenya)

· Pre-salt and Post-salt (Gabon)

For the period ended 30 June 2013 the Group recorded a loss of US$19.4 million (30 June 2012: US$24.4 million / year ended 31 December 2012: US$40.7 million). No dividends were paid or declared by the Group during the period. The loss is a direct result of exploration expenditure, regulatory and corporate costs associated with operating the Ophir Energy group and its assets.

The loss for the period, includes exploration expenditure expensed of US$3.8 million (30 June 2012: US$2.1 million), general and administrative costs of US$15.7 million (30 June 2012: US$21.8 million), finance costs of US$0.2 million (30 June 2012: US$0.4 million) and other expenses of US$0.5 million (30 June 2012: US$0.9 million).

Cash balances as at 30 June 2013 were US$485.6 million (30 June 2012: US$454.1 million / year ended 31 December 2012: US$227.7 million) with an additional US$353.5 million (30 June 2012 / year ended 31 December 2012: nil) held in current investments.

Exploration Expenditure

Exploration expenditure comprises of pre‑licence exploration costs of US$0.3 million (30 June 2012: US$2.1 million) for new business development, an inventory write off of $0.4 million and a $3.1 million (30 June 2012: nil) exploration write off following the formal exit from Marine IX Block in Congo charged directly to the Income Statement.

Administrative Expenses

Administrative expenses totalled US$15.7 million (30 June 2012: US$21.8 million). These consist of ongoing salaries and wages, professional and corporate, office and IT costs. The reduction in administrative expenses is due to the Group incurring various one off fees from the Dominion acquisition in the prior half year period.

Finance Expenses

Finance costs for the period of US$0.2 million (30 June 2012: US$0.4 million) relate to foreign exchange losses which arose following the fluctuation of the presentational currency, the US Dollar, against other currencies the Group utilises.

Other Expenses

Other expenses of US$0.5 million (30 June 2012: US$0.9 million) mainly consisted of depreciation and amortisation and relate to the write down of the Group's furniture and equipment and geological databases over their estimated useful lives.

Cash Flow

The Groups net cash inflow for the period was US$255.8 million (30 June 2012: US$57.8 million cash inflow).

Operating Cash Flow

The Groups net cash used in operating activities was US$21.2 million (30 June 2012: US$19.0 million). The Group had $3.8 million (30 June 2012: US$2.1 million) related to exploration expenditure and inventory that was written off.

Investing Activities

Cash flow used in investing activities was US$526.0 million (30 June 2012: US$162.4 million). Exploration expenditure of US$168.9 million (30 June 2012: US$138.8 million) related to amounts spent on the drilling activities in Blocks 1,3 and 4 in Tanzania and on drilling of the Starfish-1 well in Ghana. The Group also placed US$353.5 million (30 June 2012: nil) raised from the successful Placing and Rights issue that took place in March in deposit accounts with maturities of between 3 and 12 months.

Financing Activities

The net cash inflow for financing activities was US$803.1 million (30 June 2012: US$239.1 million cash outflow) which was a result of the capital equity raising proceeds of $837.6 million less associated costs of $34.5 million.

As at 30 June 2013, the Group's cash and cash equivalents were US$485.6 million (30 June 2012: US$454.1 million).

Non-Current Assets

As at 30 June 2013, intangible assets consisted of exploration and evaluation assets totalling US$1,119.8 million (30 June 2012: US$695.0 million) and goodwill of US$57.2 million (30 June 2012: US$57.4 million). Additions in the period to 30 June 2013 of US$161.2 million (30 June 2012: US$148.7 million) to the Group's existing exploration and evaluation assets result from the ongoing exploration activity primarily in Ghana and Tanzania.

Current Assets

The Group's current assets increased to US$869.5 million (30 June 2012: US$482.9 million) as a result of the increase in cash and cash equivalents and investments following the March 2013 Placing and Rights issue.

Liabilities

Total liabilities as at 30 June 2013 were US$162.2 million (30 June 2012: US$139.4 million / year ended 31 December 2012: US$177.5 million). This mainly consists of a deferred tax liability of US$57.0 million (30 June 2012: $57.2 million) relating to the Dominion acquisition and US$98.2 million (30 June 2012 $70.8 million) of expenditure accrued or recognised as due to be paid on recent drilling activities in Ghana and Tanzania.

Commitments and Contingent Liabilities

In acquiring its oil and gas interests, the Group has pledged that various work programmes will be undertaken on each permit/interest. The exploration commitments are tabulated in note 14 to the Interim Financial Statements and are an estimate of the minimum expected cost of performing these work programmes. As at 30 June 2013 the Group had no contingent liabilities.

Risk Management

The Executive Directors continually monitor the Group's risk exposures and report to the Audit Committee and Board of Directors on a six monthly basis or more frequently as required.

The principal risks of the Group remain as detailed on pages 38 to 39 of the 2012 Annual Report and Accounts:

Strategic Risks: Political risk, inadequate resource and reliance on key personnel, investment decisions.

Operational Risks: Drilling operations risk, HSE Incident risk, Discovery risk and success risk, IT risks, Availability of rigs and services.

Financial Risks: Inability to fund exploration work programmes, Counterparty credit risk, Cost and capital spending, Interest Rate and foreign exchange risk.

External Risks: Sovereign and country risk, Legal, regulatory or litigation risk, Investor and stakeholder sentiment.

Funding of activities

Our funding strategy continues to be to actively manage our exploration activities using existing funds from the successful Placing and Rights Issue in March 2013, and to also continue to utilise effective portfolio management by way of farm downs.

The financial position of the Group, its cash flows, liquidity position and borrowing facilities, and its business activities, together with the factors likely to affect its future development, performance and position are set out in this Business and Operations Review and in the Group's 2012 Annual Report and Accounts on pages 6 to 39.

The Financial statements have been prepared on a going concern basis. In making this assessment the Directors have considered Group budgets and cashflow statements for at least the next 12 months and the Directors are of the opinion that the Company will have sufficient funds to meet its obligations and capital commitments for expenditure over the next 12 months.

Outlook

Ophir has had a successful 6 months with the completion of the first drill stem test at Jodari 1 confirming excellent reservoir deliverability. This was followed by a further successful DST at Mzia-2 (Block 1) Tanzania.

The contract for the Deepsea Metro I drillship was extended for 18 months for the continuation of the 2013-2014 East African offshore drilling programme across both the BG joint venture and Ophir's operated acreage. Ophir is well placed to proceed with drilling across its high impact operated acreage with both gas and liquid targets during the next 12 months.

The Directors confirm that to the best of their knowledge:

a the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting";

b the half year report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year);

c the half year report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein);

The Directors of Ophir Energy plc are as listed in the Company Information section at the back of this report.

By order of the Board

Nicholas Smith

Chairman

14 August 2013

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 which comprises the condensed consolidated income statement and statement of comprehensive income, the condensed consolidated statement of financial position, the condensed consolidated statement of changes in equity, the condensed consolidated statement of cash flows and related notes 1 to 16. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Directors' Responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Ernst & Young LLP

London

14 August 2013

The maintenance and integrity of the Ophir Energy plc web site is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial information since it was initially presented on the web site. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

1 (3.8) cents per share

2 (6.5) cents per share

3 (10.0) cents per share

Approved by the Board on 14 August 2013

Nicholas Smith Nick Cooper

Chairman Chief Executive Officer

(1)19,850,000 ordinary shares in relation to the placement announced by the Company on 4 March 2013 and subsequently issued on 5 March 2013. 

168,025,675 ordinary shares in relation to the 2 for 5 rights issue announced by the Company on 4 March 2013 and subsequently issued on 26 March 2013.