Ophir announces strategic updates
Following his appointment as interim CEO in May 2018, and the recently closed Santos production acquisition, Alan Booth and the Board have reviewed and agreed the key next steps to enable Ophir to deliver the inherent value in its asset base and maximise value for shareholders.
Ophir, as announced today in half-year results for the six months ended 30 June 2018, has an operating asset base capable of delivering free cash flow of $300 million over the next three years, a strong operating capability and potentially valuable gas assets in Equatorial Guinea and Tanzania. In order to accelerate progress toward sustainability and shareholder returns, the Board is taking several steps.
Firstly, the company will continue to build a strong, cash generative production and development base to serve as the platform for further growth and shareholder returns. The recent asset acquisition from Santos was the first step in this direction, significantly increasing the Company’s free cash generation. Delivering material free cash flow to drive net asset growth and returns to shareholders is the priority.
The company also plan to minimise Ophir’s exposure to frontier exploration. Focus on nearer field exploration opportunities that can drive production growth and/or extend field life and selectively evaluate opportunities for consolidation that could rapidly and effectively deliver the company objectives of materiality, sustainability and shareholder returns.
Ophir is going to consider options to unlock the potential value in its LNG assets – value that is not currently reflected in its share price despite a rapidly improving LNG landscape. The company will take further action to rightly size the cost structure of the business. Ophir is proposing to downsize its London office, following workforce consultation, and within 12 months establish a fit for purpose Asian based HQ to serve as the hub for its ongoing business, generating material cost savings.
The search for a new CEO is underway. All potential candidates have strong operational, leadership and commercial skillsets. The Board will expect the successful candidate to execute the above strategic priorities. With Asia becoming the hub of Ophir’s operations, it is likely that the new CEO will be based in the region.
The Board believes that these actions will create a focused, efficient business generating a significant amount of free cash flow and will provide a strong platform from which the new CEO will be able to grow the business, as well as consider other capital allocation options.