Ophir Energy posts extensive update on passable year

12th Jan 2017 09:38

(ShareCast News) - Ophir Energy updated the market on its asset portfolio and trading for the year to 31 December on Thursday.The London-listed firm said the Fortuna FLNG project remained firmly on schedule for a final investment decision in the first half of this year.At Kerendan, Ophir said PLN has informed it that the last transmission pylon required to complete the 290 km Tanjung line was installed in December, and cables were currently being pulled.The line will connect the Kerendan gas field into the regional power grid and will enable gas production from Kerendan to ramp up to the full daily contract quantity of 20 MMscfd.At the same time, Ophir was continuing to accrue a take-or-pay receivable due from PLN for 80% of the DCQ volume.Separately, SKKMigas recently approved the West Kerendan-1 Put on Production plan."This is a critical step to enabling Ophir to monetise an additional 50 Bcf of gas in the Kerendan area which is expected to add 7 MMscfd to the production profile from 2019," Ophir's board said in a statement.On the exploration front, preparations for Ophir to recommence operated deepwater oil exploration with the Ayame-1 well in Cote D'Ivoire were reportedly at an advanced stage."This well is expected to spud in late May and will target approximately 240 mmbbl mean recoverable resources with an estimated 28% chance of commercial success."Ophir has a 45% operated interest in the licence."Separately, investment decisions would be made during 2017 regarding the options to commence further wildcat activity in the next six to 18 months.In December, Ophir secured its first exploration footprint outside Asia and Africa when it won the Block 5 licence, offshore Mexico, in the latest Mexico bid round."This was the first deepwater bid round in Mexico since the government's move to liberalise the energy sector and provide greater access for international companies," the board explained."Block 5 is in an underexplored, proven oil basin, and it was the most contested acreage in the bid round."Ophir will have a 23.3% non-operated interest in Block 5, with other partners including operator Murphy Oil, Petronas Carigali and Sierra Oil and Gas.Looking at current trading, production from the Bualuang and Sinphuhorm fields was ahead of forecast in 2016, but the Kerendan field ramped up more slowly than expected resulting in a full year production average of 10,800, against guidance of 10,500-11,500 boepd."Underlying 2016 operating cash flow from production - including Sinphuhorm - was in line with previous guidance of $50-70m."In addition the group accrued a $14m receivable to the balance sheet for the take or pay obligation for the contracted volumes not drawn by the off-taker of Kerendan gas during 2016."Capital expenditure for 2016 was approximately $170m, the board confirmed, at the high-end of previous guidance.A farm out of Block AD-03 in Burma, with Ophir being reimbursed for back costs, was assumed in previous cash guidance for 2016 of $175-225m."If this deal had been completed then net cash at year end would have been in line with guidance," Ophir said."As it is, net cash at year end was approximately $165m."Following redetermination of the group's reserves-based lending facility at year-end, Ophir chose not to draw the additional funds available leading to a gross debt position at year-end of $203m.The Group closed the year with gross cash and funds available of $368m and with year-end gearing - on a gross debt basis - of about 10%."2017 production guidance is estimated at 12,500-13,500 boepd and is expected to generate underlying operating cash flow from production - including Sinphuhorm - of $80-120m."Production is due to increase in 2017 as a result of a ramp up to full production at Kerendan and the drilling in mid-2017 of three infill production wells at the Bualuang field."Capital expenditure for 2017 is expected to be $150-200m, Ophir said, and the board commenced a refinancing of its debt facilities at the end of 2016 which should complete in the second quarter."The group expects to finish 2017 with a net cash position of $75-100m, and with the refinancing of the group's debt facilities in 2017, a gross cash position of $350-400m."