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.
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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
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