Ophir Energy looks to 2012 with confidence

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 to Noble Energy.

Meanwhile, the loss before tax was more of less flat at $19.08m (2010: $19.28m) as higher revenue was offset by rising exploration and administration expenses.

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The company completed a $384m initial public offering (IPO) in July, which "as set against a backdrop of turbulent capital markets and relatively low levels of new equity issuance." Ophir said it ended the year as the best performing IPO stock for 2011.

Cash inflow was $306.7m, compared to an outflow of $45.4m at December 31st 2010. The group had no debt, unchanged from the previous year.

The group's cash position stood at $396.6m at the year-end, mainly from the funds raised from the IPO. These will go towards its planned activities for 2012, but the group said it will need additional funding for forecast expenditure beyond this period.

2012 OUTLOOK IS 'PROMISING'...

In February, the company completed its recommended offer to acquired AIM-listed peer Dominion Petroleum, which was sought to expand its east African portfolio. Ophir now boasts to be the largest acreage holder in the fast-evolving offshore east African play.

Earlier this month, Octant Energy announced a $65m placing in Canada to fund a farm-in to Ophir's Madagascar, Democratic Republic of Congo (DRC), Uganda and Somaliland acreage. This is expected to remove significant capital expenditure requirements for Ophir's non-core assets. Jefferies said that the key advantage of the transaction is that it will allow Ophir to continue to use almost all of its capital to its core assets.

A nine well drilling campaign is planned for 2012, and the group said that preparations are underway for a planned 12-well programme in 2013.

Ophir's Chief Executive Officer Nick Cooper said that the board is "look[ing] to the future with confidence and excitement," as the oil and gas industry's focus on African exploration has risen dramatically in 2011 and early 2012. "The pace of activity on both the East African offshore gas play and the West African pre-salt play have increased as major oil companies have entered the region and made significant discoveries," the company said.

Since listing last year, the stock has almost doubled and is now trading on the FTSE 250. Shares fell to a low of 184.5p shortly after its IPO, but are now trading close to their highs at 424.2p. The current 52-week high is 440.8p.

BC