Ophir Energy

I spotted Ophirs figs from my hotel yesterday and am looking stone wrong on this one after a reasonable set of figures were hijacked again. So, reserves up (13%), funds flow from production up (46%), reduced G&A(17%), increased liquidity (57%) and delivered NAV growth (6.4%).

But, and it’s a big but, no delivery of Fortuna which is ‘a priority’ I bet it is….. Otherwise it all looks ok as they are well enough funded, subject to no Fortuna nightmares and Bualuang and Kerendan fields are set to do the job and despite a much reduced exploration budget opportunities still exist in Equatorial Guinea (Yes!) and Mexico.

I met with Nick Cooper a couple of months ago and came to the conclusion that my long held bearish stance should be reversed, how wrong I was but I still believe that I did it for all the right reasons and am now in no mans land. The good thing is that Nick has agreed to come on my CEO interview slot on Core Finance in a couple of weeks and chat about Ophir, watch this space…..

Premier Oil

Results today from Premier who have confirmed all that we already know which is what finals are all about, the day that something new or unexpected turns up it’s time to worry.

Production wise it’s 75/- boepd (71,4) and Catcher came on stream on time and under budget at Christmas and will deliver a small present by eventually producing 60/- boepd. Thus guidance is a very conservative 80-85/- boepd but then these are promises made to be broken.

Elsewhere, Tolmount funding has been secured in an innovative way as befits a company with $2.7bn of debt and the impressive Zama discovery in Mexico (600 mmbbls gross) is still on the books and will see appraisal drilling 2H of this year. In SE Asia demand for gas has been strong especially in Indonesia from Singapore buyers and Vietnam also saw impressive operational performance. Prices remain solid if flat but the days of big highs and low lows appear to be over.

Sea Lion, I knew you would ask about that but nothing has noticeably changed although much must be going on behind the scenes. Discussions are still continuing with senior debt providers and supply chain contractors to ‘secure suitable funding and commercial terms’. All this adds up to a FID ‘ by the end of 2018 which smacks of further dawdling in the hope that the fairy godmother pitches up with a wad of cash. The scenario however remains the same, on the one hand the ‘senior debt providers’ they mention are unlikely to have their hands out proffering cheap moolah but on the other, as Prems point out, SL is the company’s largest pre-development project and by, say, 2023 if sanctioned would be a meaningful part of the business. With a decent combination of senior debt and a host of lower debt and supply chain contributions it should go. Rocks and hard places come to mind but to me the bottom line is clear, the economics of the project have got significantly better and at $60 ish it must be a runner, also whilst not really wanting to lend any more PMO is in my view dependent on the Falklands and the sooner they get on with it the better.

Financially the company report disposals of $300m in the year which is a tiny step but of course is how all journeys start. Reserves and resources are 902 mmboe (835) with opex of $16.4/boe being an impressive show of work in the last three years.

So, where does that leave us, in my view in a surprisingly good position looking forward over the next five years or so. Cash flow at say, $65 could finance and even reduce  debt substantially, deliver the key projects and have a company with 100/- bd of production to feed those hungry mouths. Premier therefore stays in the bucket list and I have Tony Durrant back in my CEO interview slot in a few days time, we shall what he can add to today’s numbers.