Ophir Energy could definitely use the $1.255 billion it received in March 2014 for the sale of a 20% interest in Tanzanian Blocks 1, 3 and 4.
The payment by Pavilion Energy reflects the purchase price consideration of $1.25 billion plus a completion adjustment of $5million to reflect interest and working capital movements since the effective date of the transaction of 1 January 2014. “A further $38 million is payable following the final investment decision in respect of the development of Blocks 1, 3 and 4, currently expected in 2016”.
The company’s 2013 balance sheet indicated a net loss after tax for the year of $245.8 million (2012: $40.7 million) reflecting asset impairments on Block 7, Tanzania and AGC and exploration write-offs in Ghana, Madagascar, Congo and Kenya. The loss was in spite of the company raising $837.6 million (gross) via the successful March 2013 Placing and Rights Issue.
The London listed independent has done well with its ‘rents’ in Africa. In December 2013 it announced that it had entered into a comprehensive farm-out agreement with OMV covering its deepwater blocks offshore Gabon. Under the terms of the agreement OMV has acquired 30% interests in the Manga and Gnondo Blocks and 10% interests in the Mbeli and Ntsina Blocks. Ophir continues to operate all four blocks. In consideration, OMV will pay past costs and will pay a promoted share of the Padouck Deep, Affanga Deep and Okala wells as well as a promoted share of two further wells and a 3D seismic survey across the blocks. Further conditional promotes are payable in the event of success with the Okala well. The farm-in agreements are subject to government approval.
Ophir said that the proceeds from the Tanzanian transaction will support its plans that include investing in a number of new opportunities that are under consideration and have transformational growth potential. The firm added that the new funds will also give it the flexibility to rapidly capitalize on any exploration success from its current drilling programme.
“We are delighted to welcome Pavilion Energy into the Tanzanian LNG development across Blocks 1, 3 and 4. The partial monetization of our interests is in keeping with Ophir’s strategy of minimizing exposure to development capex and realizing the value created from exploration success at the appropriate time.”