Ophir to undertake 40% stake sale of Equatorial Guinea block – source

20 Nov 2015 – Oil and gas exploration and production firm Ophir [LON:OPHR] is looking to sell a 40% stake in its Block R licence in Equatorial Guinea, a source and a person familiar with the situation said.

RBC has been hired to advise on the sale, the source said.

Ophir owns 80% of the block, with the remaining 20% held by GEPetrol – the national oil company of the Republic of Equatorial Guinea. Binding offers for the stake are due at the end of the year and the sale is due to be completed by the end of 1Q16, the source said. The stake is estimated to be worth USD 250m, the source added.

In an 11 November company presentation, Ophir said it expected expenditure in 2015 to be around USD 250m and that spending next year would fall to between USD 175m and USD 225m.

“Ophir is trying to raise capital. And its assets in Equatorial Guinea aren’t as core as its Tanzanian assets,” a sector banker said.

Most companies would not want an 80% stake – it’s a huge development. Ophir traditionally makes discoveries and then farms down, the person familiar with the situation said.

In Tanzania, Ophir owns 20% of the offshore Mafia Deep Basin, after farming out a 60% stake to BG Group in 2010. The licence holds discoveries of 17 Tcf of gas.

Block R is part of the Fortuna FLNG development project. The project’s final investment decision is expected in mid-2016, with the first gas forecast for mid-2019. The field is expected to produce 2.2mtpa, according to Ophir’s website.

Golar LNG [NASDAQ: GLNG] is the midstream provider for the project, developing the floating LNG vessel. The entire project has a capex requirement of about USD 2.9bn, the source said.

Ophir expects funding options for the project to include project equity, debt, pre-sales of gas, vendor financing and asset divestment, it said in an earlier statement.

The company has finalised commercial terms and is in the process of signing offtake agreements with a shortlisted group of counterparties for the LNG that will be produced at Fortuna. It did not disclose the identities of these counterparties.

RBC declined to comment. Ophir did not respond to a request for comment.

Ophir has a market capitalisation of GBP 639m.  

by Katie McQue