Ophir Energy shares fall on Tanzania exploration report

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.

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.

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

Recommended

Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020

Most Popular

Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021
The FTSE 100 is set for a makeover with an influx of new tech stocks
UK stockmarkets

The FTSE 100 is set for a makeover with an influx of new tech stocks

The FTSE 100 – the dullest index in the world – is about to reinvent itself as a host of new firms list on the market. The change is long overdue, say…
24 Jan 2021
Think Tesla is a bubble? This might be the best way to bet on it bursting
Oil

Think Tesla is a bubble? This might be the best way to bet on it bursting

The huge rise in Tesla’s share price means that, by market value, it’s now the sixth-largest company in the US and and the world’s biggest car-maker. …
25 Jan 2021