Ophir Energy is holding out hope that the Fortuna FLNG project offshore Equatorial Guinea will reach final investment decision (FID) by the end of the year, however, the company still has a few hurdles to pass.
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Fortuna FLNG. Illustration from Ophir. |
“Given that the remaining milestones are dependent on multiple stakeholders, it has proven difficult to precisely forecast FID timing,” Ophir said in its 1H 2017 report. “However, with the strong progress seen in the first half of 2017 and the current intensive effort from all parties, we presently still expect FID of the Fortuna Project to be achieved in Q4 2017.”
During 1H 2017, project partners signed an umbrella agreement that established the full legal and fiscal framework for the Fortuna FLNG project. The key milestone outstanding prior to FID is the completion of the project funding, which Ophir expects to be completed ahead of an FID decision during 4Q 2017.
“Our priorities in 2017 are achieving the Fortuna FLNG Project FID and realizing incremental value across our operated production base. Fortuna has made significant progress in the first half of 2017 and now has one primary milestone outstanding: namely the project financing. Once this is achieved, we will seek shareholder approval and the formal decree from the President of Equatorial Guinea,” Ophir Chief Executive Nick Cooper said.
In the meantime, Ophir is allocating its capital to projects that the company believes will offer the best risk weighted return on capital. The company said it will focus on monetizing its net 1 billion boe of discovered resources.
The Ophir board plans to follow this plan for the next two to three years, which it expects to deliver material returns to shareholders in the current environment. Plans include directing exploration efforts on a smaller number of high quality opportunities that can be paced in a way that matches the company’s financial capacity and strategic priorities.
“A comprehensive board review in 1H 2017 identified that in a ‘lower for longer’ commodity cycle, Ophir’s competitive advantages were its material discovered resources and its healthy balance sheet. The careful use of this balance sheet to monetize our four resource plays offer a differentiated proposition of lower risk and quicker returns to Ophir’s shareholders,” Cooper said.
“The board has prioritized this monetization of our resource plays and since May we have streamlined the organization, further reduced our overhead costs and concentrated our exploration activities on to a smaller number of high quality plays that can be paced in a way that matches our financial capacity,” he said.
During the 1H period, Ophir posted a revenue of US$88.3 million, up from 1H 2016’s $52.1 million. Its full year2017 capital expenditure forecast remains at about $160 million.
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