Ophir Energy shares dropped to a five-month low Friday as analysts warned investors of possible delays on the exploration venture in Tanzania with BG Group.
Shares fell 3.38% to 543.50p at 13:30 as rig sources said BG has not exercised its option to extend the Deepsea Metro I beyond June 8th as they search for cheaper drilling in the second half of 2013, according to Jefferies Group.
"We believe this may the delay high-impact exploration on outboard Block 1 and raise doubt in investors' minds about BG's enthusiasm chasing the exploration upside until a new rig is confirmed, weighing on the stock short term," the analyst said.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The Deepsea Metro I had an original contract term of 12 months from December, 2011.
The rig deal was signed in April 2011 and the first year of the contract was for $175m.
Current spot rates for rigs of this specification are low-to-mid $600,000 per day, up to 35% higher than the rate for 2012, Jefferies said.
Ophir remained positive on the venture as it released a report saying it had completed appraisal drilling on the Jodari asset, Block 1, offshore Tanzania.
Three wells were drilled into the discovery and the company said results demonstrated consistent, high-quality reservoir quality across the Jodari field.
"The appraisal programme has significantly de-risked the Jodari field underlining its potential to anchor Tanzania's first multi-train LNG development," Chief Executive Officer Nick Cooper, said.
"The Ophir-BG Joint Venture will now appraise the Mzia discovery and return to Jodari-1 to conduct Tanzania's first flow test. Thereafter the Joint Venture expects to return to high impact exploration drilling in Block 1 during the first quarter of 2013."
RD
-
ScottishPower launches half-price electricity at weekendsNews ScottishPower is offering 50% off electricity at weekends, which could slash hundreds off your bill. We look at who can get it and how to apply
-
Trump calls “tariff” the “most beautiful word in the dictionary”, but investors may disagreeDonald Trump has promised to slap Mexico, Canada and China with new tariffs on day one of his presidency. What does it mean for the economy and investors?
