Ophir Energy Plc
It’s so refreshing to see an E&P company execute on a plan. Drill a well, discover gas and then immediately nail future funding requirements at a time when the sp is at highs. Of course, some shareholders might say that they should have waited until after the second drill as demand for the shares is extremely high already. But as XEL and GKP will know only too well – it’s sometimes better to woo the ‘city’ with attractive placing opportunities rather than hold out for top dollar prices. Making institutional friends may well come in handy in the future. Thus far, Ophir is performing and acting like the prefect of the E&P sector and looks destined for the FTSE100 if they continue to have success with the drill bit.
When the good times roll – get your funding sorted. A priceless lesson for all E&P’s to learn and take note of.
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28 March 2012, Ophir Energy PLC
PLACING OF UP TO 30.5 MILLION NEW ORDINARY SHARES
Ophir Energy plc announces capital raising to part-finance an expanded 2012/2013 Exploration Programme:
-- Placing of up to 30.5 million new ordinary shares of 0.25 pence each; -- Expected proceeds to be used to part-finance an expanded 2012/2013 exploration programme:
– Enable Ophir to remain at 40% equity position for longer in Blocks 1, 3 and 4 to test deeper prospect inventory and chase the base of slope stratigraphic fan play (Mozambique analogue)
– Facilitate an Ophir-operated drilling programme on East Pande and Block 7 (Tanzania) plus Block L9 (Kenya)
-- Facilitate additional exploration in Gabon
Nick Cooper, Chief Executive Officer commented:
“Ophir’s portfolio has advanced substantially since IPO now combining the largest offshore acreage holding in East Africa with a significant position in West Africa. We will continue to actively manage this portfolio and once the resource potential of a particular asset is well understood, we will work to introduce partners and to maximise value for shareholders.
We are delighted with our drilling results to date in Tanzania: four successes in four wells and ca. 7 TCF of recoverable resources discovered. The Jodari-1 discovery, announced on March 26, 2012, maintains our momentum and is the largest discovery in the Company’s history. More broadly, the industry’s understanding of the scale and potential of the East African play continues to evolve with additional 3D seismic and drilling information.
Ophir’s East African acreage is characterised by relatively high net equity stakes for a mid-cap independent. The Company holds a 40% non-operated stake in Blocks 1, 3 and 4 with BG; and stakes of 60-90% in our operated Block 7 and East Pande (Tanzania); Blocks L-09 and L-15 (Kenya).
The proceeds from this placing will be used to finance a significant portion of our expanded 2012-2013 African exploration programme. It will allow Ophir to maintain its current equity position in the Block 1, 3, 4 JV with BG while we continue to investigate the world-class potential of this asset base. At the same time we plan to introduce industry partners into our operated East African positions during the second half of 2012 and are preparing for an Q1 2013 East African programme on our operated acreage in Block 7, East Pande and L-09.
In West Africa, by the end of the year we will see the results of extensive 3D seismic pre-salt exploration programme in Gabon and of a three-well programme in Equatorial Guinea.
The East African offshore gas play continues to evolve at pace; the West African programme is gearing up for drilling in Q2 2012. Ophir looks forward to a 2012-2013 programme of 22 high impact wells targeting over 9 TCF plus over 1.3 BbbL of net, unrisked, recoverable resources(1.) .”
1. Based on Ophir management estimates.
Use of proceeds
Since the Initial Public Offering (IPO), Ophir’s portfolio has progressed substantially. The Company has undertaken five 3D and one 2D seismic programmes, and drilled two wells. An additional eight wells are planned to spud before the end of 2012.
New 3D seismic data in the Gabonese pre-salt and post-salt plays is being processed; with the first drilling expected to commence at the end of the year.
The Company’s East African position was strengthened through the acquisition of Dominion Petroleum Ltd in February 2012, which added both Kenyan and Tanzanian licences to the Ophir portfolio. The Company plans to drill on this acreage and on Ophir’s operated East Pande Block in Q1 2013.
In Tanzania, Ophir and BG have commenced a 3D seismic survey over the eastern portion of Block 1 to investigate the possibility of an analogous depositional setting to the late 2011/early 2012 offshore stratigraphic discoveries in Mozambique. The interpretation of this new seismic data by mid-year may impact the timing, scale and prioritization of the Company’s current drilling programme.
The current 2012 programme of nine wells remains fully funded from the proceeds of the Company’s 2011 IPO and the residual cash balance as at December 31, 2011 of USD $396.6 mm. In light of a possible expanded 2012 exploration programme and the upcoming 2013 programme, the Company has determined that additional funding flexibility is required to fully interpret and rank the prospect inventory on its existing asset base, to progress existing discoveries further along the value chain, and to apply the team’s knowledge to new entry opportunities, while retaining material equity in their existing, highly-prospective positions.
The Company is therefore now conducting an equity placing to provide financial flexibility to part-fund the Company’s activities through 2013. This will enable Ophir to remain at 40% for a longer period in Blocks 1, 3 and 4 to rigorously test deeper prospect inventory and to chase the base of slope stratigraphic fan play (Mozambique analogue). It will also facilitate an operated East African offshore drilling programme on East Pande and Block 7 (Tanzania) and Block L-09 (Kenya) plus an expanded West African programme in Gabon and potentially in Equatorial Guinea.
The Company’s plan to drill nine wells in 2012 remains on course. The Company’s 2013 African programme of twelve-thirteen wells includes:
– Five-six additional exploration and appraisal wells with BG across Tanzanian Blocks 1, 3, and 4
-- Three wells on Ophir-operated Tanzanian and Kenyan acreage (East Pande, Block 7 and L-09) -- One additional well targeting the Manga prospect in Gabon -- Two-three proposed wells in Equatorial Guinea -- One well in Madagascar
In total, Ophir anticipates the drilling of 22 wells in 2012-2013(1) . In parallel, the Company will continue to actively manage its portfolio and bring partners into the Company’s operated high working-interest positions.