10.57 22/02/2012
Ophir rises on read-through from Cove deal
StockMarketWire.com
African oil explorer Ophir Energy (LON:OPHR) gained more than 7% after Cove Energy (LON:COV) was the subject of a £992 million offer from Royal Dutch Shell (LON:RDSB).

Ophir operates in East Africa - close to Cove's main assets offshore Mozambique - and the market appears to be looking at other likely M&A candidates.

Have kept an eye on this one for a couple of days and have now dipped a toe in the water.

Today's Telegraph
Market Report: Ophir firms as analysts fuel bid speculation

Ophir Energy was in demand as City analysts tipped the company to be the next independent oil explorer to receive a takeover offer from an oil major, possibly BP.

On Monday, Royal Bank of Canada (RBC) argued that if Ophir is successful with its drilling campaign off the coast of Tanzania, it will become a highly attractive target for a larger oil producer.

Al Stanton, an analyst at RBC, said: "Experience tells us that prospect inventories and drilling schedules expand rapidly in newly established basins, especially when a company has a sizeable acreage position, as Ophir does in Tanzania."

"Experience also tells us that if a "Junior" [independent oil company] builds up a substantial resource base, "Big Oil" [such as Royal Dutch Shell] will take it out. Shell and PTTEP's [a Thai oil producer] bids for Cove Energy [which has operations in Mozambique] should reassure Ophir's shareholders," concluded Mr Stanton.

BP is understood to have held discussions with Ophir at the end of last year about a deal that would have provided the FTSE 100 oil group with its first oil assets in East Africa. The pair were talking about a "farm out or farm in" deal in East Africa. These type of deals typically allow an oil company to bring in a new partner into a certain area where it is looking for oil and gas.

However, some sources also previously speculated that BP may be interested in acquiring the whole of Ohpir, which rose 5.9 to 431.9p.

very good article on ophir in ST Biz today

Was it encouraging?

BP and Royal Dutch Shell are looking at a $4bn (£2.5bn) stake in a gas field in Mozambique, a sale that would confirm East Africa as the hottest growth area in world energy.

Eni, the Italian oil and gas giant, has claimed that the Area-4 gas find is the biggest in its history, but is looking to sell down its 70 per cent stake to find a partner who can help shoulder the capital expenditure.

There has been a huge surge in interest in the region, and several parties are understood to have flown to Milan to discuss buying a 20 per cent share of the field. Even taking the lower estimates of similar deals in the region, and ignoring the probable premium to work with an established player like Eni, that stake should be worth more than $4bn.

Most of the major players have been late to get into East Africa, and will now have to take over or form joint ventures with smaller explorers who gambled that there were big finds to be had in the region.

Shell's chief executive, Peter Voser, right, has already shown his interest in the region with a near-£1bn bid for London-listed Cove Energy, which is significant for holding a 8.5 per cent stake in another field off the coast of Mozambique.

However, Thailand's PTT has made a higher bid, while two Indian companies are also interested. It is thought that this sale process should be concluded in the next month, though there could still be a surprise winner as 25 companies, including BP, went into the "data room" – where firms show sensitive financial and operational information to potential bidders. It is understood that at least 45 companies applied to enter the process.

BP has been linked to a potential tie-up with Ophir Energy, a well-regarded Ftse-250 group that has potentially substantial discoveries off both the west and east coasts of Africa. It is understood that BP did talk to the company about taking a stake in a Tanzanian offshore field, but that Ophir wants to wait until it has more detailed information on its find, in the hope that the results will force a higher price later in the year.

Even then, BP cannot be guaranteed a stake, as Ophir will likely take note of the competitive tension taking place in other sales processes and run an auction.

Shell and BP will also find they are in a highly competitive process to team-up with Eni. Paris-based Total has been reported as being among the oil producers and utilities also interested in bidding.

BP declined to comment and Shell did not return calls.

From Capital Markets Presentation
• Focussed on 4 of 5 key emerging sub-Saharan exploration themes
• Portfolio currently contains c 2Bboe net risked resources (Ophir estimates)
• Upcoming 9 to 13 well drilling campaign
• Tanzania drilling balance between Cretaceous and Tertiary
• Targeting c 600MMboe net risked resources (2.4Bboe net un-risked)
• Proven drilling and discovery track record to date
• Additional major seismic programmes to mature additional prospects
• Cash position US$410 million, net spend US$348 million, fully funded to 1H 2013

Ophir in good shape after successful IPO
StockMarketWire.com
2011 was a transformational year for Ophir. The Group successfully completed a $384mm IPO during a period of difficult market volatility.

The Group has since joined the FTSE 250 and has commenced the busiest operational program in its history with a nine well program in 2012.

After the acquisition of Dominion Petroleum, Ophir's East African portfolio position has grown such that the Group is now the largest acreage holder in the fast evolving offshore East African play.

This compliments the Group's extensive portfolio of interest in West Africa and enables Ophir to be an active driller on both sides of the continent in 2012 and beyond.

Nck Cooper, CEO, Ophir Energy said:"Looking into 2013, early stage preparations are already underway for a further twelve wells across our core countries.The Board looks to the future with confidence and excitement."

From today's UK Analyst Stockmarket report:

In its first full year report since listing on the London Stock Exchange in July 2011, Africa focused oil and gas explorer Ophir Energy (OPHR) reported three significant gas discoveries in Tanzania and revealed plans for a further nine well exploration programme in 2012. During the year ended 31st December, the firm acquired AIM listed Dominion Petroleum, which it claimed increased its portfolio to be the largest acreage in the offshore East African play. The firm also noted that it retained a cash position of 396.6 million dollars (250.3 million pounds). The shares grew by 5.8p to 430p.

On the FTSE 250, Ophir Energy, the African energy firm which began trading in London last year, is hailing 2011 as a 'transformational year' as both revenue and cash-flow surged. Revenue jumped from just $0.53m in 2010 to $14.68m in the 12 months ended December 31st 2011, helped by a farm-out gain from its AGC Profond interests toNoble Energy.

Result of Jodari-1 well, Block 1 offshore Tanzania
RNS
RNS Number : 0179A
Ophir Energy Plc
26 March 2012

Ophir Energy plc

Result of Jodari-1 well in Block 1 offshore Tanzania

"4.5 TCF gas discovery, significantly exceeding pre-drill estimates"

London, 26 March 2012: Ophir Energy plc ("Ophir" or "the Company") announces that the Jodari-1 well in Block 1 offshore Tanzania is a 4.5 TCF gas discovery.

Highlights

· Fourth consecutive gas discovery for the Ophir-BG joint venture in Tanzanian offshore Blocks 1, 3, 4 and largest discovery by Ophir in its history

· Estimated mean in-place resource number of 4.5 TCF. Recoverable mean resource estimated as 3.4 TCF (567 MMboe), exceeding mean pre-drill recoverable resource expectations of 2.2 TCF by 55%

· A total 124m of net pay encountered across the stacked target horizons in high-quality reservoirs

· Jodari-1 has de-risked the Lower Tertiary section, of comparable age to the outboard basin floor fan play in Mozambique, and in pursuit of which the Ophir-BG joint venture is now acquiring 3D in the eastern area of Block 1, Tanzania

· Cumulative discovered, recoverable gas resources in Blocks 1, 3, 4 are now c. 7 TCF and nearing the minimum threshold volumes required for a two-train LNG development

Jodari-1 was designed as a play-finder well to test slope-channel targets of Miocene, Lower Tertiary and Upper Cretaceous age. Log analysis shows that the well intersected the edge of a Miocene accumulation and two intervals of Lower Tertiary age, with 113m and 11m of gross pay respectively and high quality reservoirs. The Upper Cretaceous encountered formation gas but was not considered pay at this location. The significantly greater aggregate pay thickness and excellent net to gross ratio have substantially exceeded pre-drill expectations and result in the 3.4 TCF mean recoverable resource estimate.

The well was spudded on 7th January 2012 in 1153m of water and was drilled by the drillship "Deep Sea Metro 1" to a total depth of 4465m subsea in 73 days. The Metro-1 drillship will now return to Mzia-1 (where the top hole section was drilled in early January prior to commencing Jodari-1) in order to complete the bottom portion of the well. The Mzia-1 well is estimated to take 75 days to drill and is targeting a 4.6 TCF Upper Cretaceous prospect with a different seismicanomaly to that calibrated by the Jodari-1 well.

Jodari-1 was the fourth well to be drilled by the Ophir-BG joint venture in their jointly held acreage and was the first well to be operated by BG. Ophir holds 40% of Blocks 1, 3 and 4; BG operates with 60%.

Nick Cooper, CEO of Ophir Energy plc said:

"The result from Jodari-1, at 3.4 TCF recoverable, has materially exceeded pre-drill estimates and represents the largest discovery in Ophir's history. The 2012 Ophir-BG drilling programme in Tanzania has two objectives: firstly to test deeper intervals below the Miocene and secondly to accumulate sufficient resources to promptly confirm a two train LNG development.

These excellent Jodari-1 results are important for the future development of Tanzanian offshore industry and for the Ophir-BG partnership since they achieve both of these objectives by de-risking the previously untested deeper Lower Tertiary levels and also taking a major step closer to the second LNG train.

This is a very strong start to our five well 2012 Tanzania drilling campaign and the Metro-1 drillship will now move to drill Mzia-1, which is targeting mean recoverable resources of 4.6 TCF. "

Fourth Tanzania well discovers gas - 26 March 2012
RNS
RNS Number : 0385A
BG GROUP plc
26 March 2012

News Release

26 March 2012

Fourth Tanzania well discovers gas

BG Group today announced its fourth Tanzanian gas discovery from the Jodari-1 exploration well located in Block 1 offshore southern Tanzania. Preliminary evaluation of the well results indicates gross recoverable resources are in the range of 2.5 to 4.4 trillion cubic feet (tcf) of gas.

The partnership of BG Group (60% and operator) and Ophir Energy plc (40%) have had exploration successes in all four wells so far drilled in Tanzania, with mean total gross recoverable resources currently estimated to be approaching some 7 tcf of gas.

Jodari-1 is located approximately 39 kilometres offshore southern Tanzania and in a water depth of 1150 metres. It is part of the current three-to-four well exploration programme, which also includes the acquisition of 2 500 square kilometres of 3D seismic data in Block 1.

The next target for drilling is the Mzia-1 location in Block 1, some 23 kilometres to the north of Jodari-1. The discoveries announced previously are Chaza-1 in Block 1, and the Chewa-1 and Pweza-1 discoveries in Block 4.

Nomura has raised its target price for oil and gas group Ophir Energy from 525p to 667p and retained a buy rating on the stock following yesterday's announcement of a record gas discovery in Tanzania.

"The 3.4 TCF of recoverable gas proved by Jodari takes discovered gas
across Blocks 1,3 and 4 in Tanzania to 7 TCF, and much closer to the 10 TCF of gas required for two trains of LNG," Nomura said.

Credit Suisse says European oil stocks will continue to outperform the market

Tue 12:00 pm by Jamie Ashcroft The bank’s selected oil stocks are up 20 per cent in the year to date, versus a 2 per cent decrease during the same time for the Stoxx Europe 600 oil & gas index (SXEP) and a 9 per cent gain for Brent crude.


Analyst Ritesh Gaggar says the bank’s strategists remain positive on global equity markets and he believes the E&P sector is a proxy for the ‘risk on’ trade.

In other words investor’s will buy stocks in the higher risk/reward oil sector as they become more confident and less risk averse.

He highlights that the bank’s selected oil stocks are up 20 per cent in the year to date, versus a 2 per cent decrease during the same time for the Stoxx Europe 600 oil & gas index (SXEP) and a 9 per cent gain for Brent crude.

Looking ahead, Gaggar’s view on the sector remains positive even though these stocks have already risen strongly.

He says his top picks in the sector have are made in the context of three themes. These include strong balance sheets, frontier exploration potential and possible merger and acquisition candidates.

Notably he upgraded his target for Afren (LON:AFR) to 185p from 170p - current price 142p. The upgrade comes as Afren reported a new discovery in the Kurdistan region of Iraq today.

The analyst also upgraded his target for Genel (LON:GENL), which is also active in Kurdistan, to 1,180p from 1,142p – current price 698p. However, he downgraded fellow Kurdistan operator DNO International to ‘underperform’ and cut its target to 9.4NOK from 10.2NOK – current price 9.2NOK.

Gaggar’s also upgraded Dragon Oil (LON:DGO) with his target rising to 868p from 818p - current price 636p.

Meanwhile North Sea firm Faroe Petroleum’s (LON:FPM) target is increased to 247p from 231p - current price 170p, while the target for EnQuest (LON:ENQ) was raised to 158p from 127p – current price 121p, and Premier Oil’s (LON:PMO) target was upgraded to 518p from 490p – current price 379p.

Tullow Oil’s (LON:TLW) target is increased to 1,853p from 1,800p – current price 1,462p.

Also Gaggar repeated a 680p target for Africa focussed Ophir Energy (LON:OPH) – current price 509p, and the target for Falkland oil firm Rockhopper Exploration (LON:RKH) was also maintained at 408p – current price 345p.

Elsewhere Asia focused Soco International (LON:SIA) was downgraded to ‘underperform’, but its price target was increased to 352p from 313p – current price 288p.

Ophir Energy +101.5pc this year

Ophir Energy’s stellar rise has been driven by a remarkable run of drilling success in May Ophir and operating partner BG Group announced their fifth consecutive discovery of significant volumes of gas offshore Tanzania.

Having only listed last year, Ophir has already found itself the subject of takeover speculation, with oil supermajors keen not to miss out on the exciting new East African frontier.

While further successes would send shares higher, Deutsche Bank initiated coverage recently with a 'hold’ rating, warning that “near-term risk and reward is more finely balanced” and that “perhaps more importantly, we believe Ophir has given a strong sign that industry interest in its Tanzania position won’t be welcomed just yet

Oil giant BG Group (BG.) has achieved "excellent results" in partnership with Ophir Energy from a drill stem test on its natural gas well in Block 1 of the Jodari field offshore Tanzania. According to the firm the well flowed at a maximum rate of 70 million standard cubic feet of natural gas per day. The well in question was the first in deep water offshore Tanzania and is situated 39 km off the southern coast of the country. Separately, the group confirmed that its Everest East expansion project in the UK North sea delivered its first production and is on target to produce 10,000 bopd with total gross reserves of 20.6 million barrels of oil equivalent. The shares were down by 6.5p at 1,184.5p.

Long on OPHR.

28 Oct 2013 Ophir Energy OPHR Credit Suisse Outperform 327.40 329.10 550.00 495.00 Reiterates

SP TARGET 495p

Ophir Energy confirmed the part sale of its interests in Blocks 1, 3 and 4 Tanzania for $1.3b, where appraisal activities have increased resource estimates and further derisked the commercial value of the potential development.

"We are about to enter a period of significant high-impact drilling that could be transformational for the Company on success," the company said in a statement.

"This starts shortly with the Mlinzi Mbali-1 in Block 7, Tanzania and continues in Gabon with Padouck Deep, the first well on the pre-salt play, in Q1 2014 with further drilling planned during 2014."