March 26, 2012 7:57 pm

Ophir soars after gas find off Tanzania

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Shares in Ophir Energy rose by nearly a fifth following its latest drilling success with partner BG Group off the coast of Tanzania, which its management hope might help establish the province as geologically similar to that being developed nearby off Mozambique.

Shares in the company, seen as an eventual takeover target once full evaluation of its assets of east Africa is concluded, rose by 75.6p to 477.6p, valuing its equity at £1.75bn.

The company, backed by Lakshmi Mittal, one of Britain’s richest men, raised $375m when it floated in July at the bottom of its price range at 250p.

Nick Cooper, chief executive of the Africa-focused oil and gas explorer, said drilling success with BG pointed to a recoverable gas find of 3.4tn cubic feet (Tcf), equivalent to 567m barrels of oil.

The discovery, when added to the 4 Tcf already achieved by previous drilling in its blocks, takes BG and Ophir nearer to the threshold of 8-9 Tcf, which could justify investment in a lucrative two-train liquefied natural gas plant for export to world markets.

The joint venture, in which Ophir holds a 40 per cent interest and BG 60 per cent, aimed to drill in increasing deep waters to establish gas reserves. Mr Cooper said the finds to date, though important in their own right, might also provide clues as to whether Ophir’s theory that the deeper water fields in its block may enjoy “symmetry with waters off Mozambique” is correct.

These neighbouring fields have been established and Mozambique is set to become a major future supplier of LNG to energy-hungry economies of Asia over the next decade.

Fellow UK exploration company Cove Energy is conducting an auction process after attracting interest in its 8.5 per cent stake in a Mozambican field operated by Anadarko Petroleum. An approach from Royal Dutch Shell has placed a valuation of just under £1bn in its minority stake in a field now estimated to contain 17 to 30 plus Tcf of recoverable gas.

Last October Ophir’s entrenched its position as the biggest independent deepwater oil explorer offshore Tanzania and Kenya by agreeing a £118m takeover of its smaller rival in the region, Dominion Petroleum.

Shares in BG Group closed up 27p at £15.19 on Monday.

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