Shares in Ophir Energy dropped more than 10 per cent on Thursday after the UK independent oil and gas group said services group Schlumberger had pulled out of its key gas project in Equatorial Guinea.
The Fortuna deepwater liquefied natural gas (LNG) project is regarded as potentially transformational for Ophir but has been beset by delays in securing financing to develop it. Ophir and its partner, Golar LNG, which operates floating LNG facilities, on Thursday said Schlumberger had pulled out of the project but insisted they remained in talks with “a number of counterparties” over “a financing solution”.
Ophir has “already held informal discussions with other, well-capitalised, potential partners for our Fortuna project,” the London-listed group added. It would now formalise those discussions and remained focused on “maximising value creation for shareholders from the monetisation of the Fortuna discovery”.
The Fortuna project would be west Africa’s first deepwater floating LNG but Ophir has struggled to secure a $1.2bn financing package for it. The company said earlier this year it was working towards a final investment decision by the end of 2018.
News of the setback comes less than two weeks after Ophir’s longstanding chief executive Nick Cooper announced he was stepping down with immediate effect. At the time Bill Schrader, Ophir’s chairman, insisted his departure had nothing to do with continuing delays to the Fortuna project. The company has in recent months focused on implementing a strategy to move away from its early days as a frontier explorer and instead grow its output and cash flow.
Stephane Foucaud, analyst at GMP FirstEnergy, said the news “jeopardises the project”. The delay to the project should be put in context of Ophir’s upstream licence expiring around the end of 2018.
“There is therefore a scenario where Ophir loses the associated licence at that time,” he added.
Shares in the company fell almost 11 per cent to 56.30p in London. They have fallen from 76p in January this year and remain well below their peak of more than 450p in 2012.
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