Ophir loses Fortuna discovery license offshore E. Guinea

UK-based Ophir Energy has received notification from the Equatorial Guinea Ministry of Mines and Hydrocarbons that the Block R Licence, which contains the Fortuna gas discovery, will not be extended following expiry of the license on December 31, 2018.

Fortuna sits within the Block R licence, offshore Equatorial Guinea which is located in the south-eastern part of the Niger Delta complex. Ophir held an 80% operated interest in Block R.

Ophir said on Saturday, January 5 that, as a consequence of the license expiry, there would be an additional non-cash impairment of the asset, expected to be around $300 million, in Ophir’s full year financial results following the impairment taken in the half year results reported in September 2018.

“The board remains focused on implementing the strategy outlined in its announcement on 13 September 2018 and options available to maximize value for shareholders.”

Namely, Ophir said in September it had impaired the value of its Fortuna FLNG development in Equatorial Guinea and decided to downsize its London office and within 12 months establish a fit for purpose Asian based HQ to serve as the hub for our ongoing business.

When it comes to its Southeast Asia assets, the company stated on Saturday: “In this regard, the board would highlight the recent updates it has provided to the market in respect of its Southeast Asia assets, which it believes demonstrate the underlying quality of these assets including its recent acquisition of Santos.

In addition, as reported at the end of December 2018, Ophir and Indonesia’s Medco entered into discussions about a possible cash offer to be made by Medco for the entire issued and to be issued share capital of Ophir.

“Our discussions with Medco have taken place in the shared knowledge that there were a number of potential outcomes with respect to our Fortuna asset, and these discussions continue,” Ophir said.

Medco must either announce a firm intention to make an offer for Ophir or announce that it does not intend to make an offer for Ophir by no later than 5.00 pm on January 28, 2019.

Ophir added it would update its investors on the progress made throughout its portfolio and the advances to production and cashflow base in Southeast Asia in its pre-close trading statement on January 15, 2019.

Ministry’s decision ‘disappointing’ 

Alan Booth, Interim Chief Executive of Ophir, commented: “It is disappointing that the Ministry has decided not to extend the license, despite the amount of effort and cost dedicated to the delivery of the project and especially as we were still talking to highly credible potential co-investors. Nevertheless, we will continue to work constructively with the authorities in Equatorial Guinea.”

Booth added: “Looking ahead, the group’s cashflow, capital commitments and growth prospects will be focused in Southeast Asia, where we have built a robust operating platform capable of delivering value to shareholders.”

The Fortuna project entered FEED in July 2015. Ophir has been working to find financing and make a final investment decision on the Fortuna FLNG project for a while now but has suffered a number of setbacks in the process.

As previously reported, E. Guinea authorities allegedly gave Ophir an ultimatum to either find financing by December and make the final investment decision for the long-stalled Fortuna FLNG project, or risk losing the acreage there.

The Fortuna FLNG development also suffered a setback in 1H 2018 with the dissolution of OneLNG and the subsequent effective withdrawal of Schlumberger from the Fortuna project.

Offshore Energy Today Staff