Shares in Ophir Energy jumped by 10 per cent Thursday after the Africa-focused oil and gas group confirmed it was in talks to sell down part of its stakes in exploration blocks off the coast of Tanzania. After local press reports in India overnight pointed to talks between Ophir and Gail of India, the FTSE 250 constituent confirmed that it had begun a sale process for three of its five offshore licences off Tanzania in which it holds a 40 per cent stake. More ON THIS TOPIC Comment Ophir Energy – no news is bad news Ophir descends on deepwater doubts Oil and gas group unveils loss of $19m BG Group in African coast breakthrough IN OIL & GAS Investors warn on fossil fuel spending Riverstone Energy raises £760m in London listing Grangemouth move reflects poorly on UK ‘Red director’ Bogdanov sticks to old ways Ophir is partnering BG Group in Blocks 1, 3 and 4 where it holds 40 per cent stakes in acreage where substantial volumes of natural gas have been found. BG Group acquired 60 per cent majority stake in the blocks originally controlled by Ophir in 2010. Ophir declined to comment on the identity of any interest parties or the proportion of its interest in the fields it was considering for sale. The media reports suggested that the talks concerned between 10 and 30 per cent. The company said: “The company can confirm it has a process ongoing to sell down a part interest in these blocks but there is no certainty that this process will conclude successfully nor can there be any certainty over the value of any such deal if it were to complete.” The explorer has previously been viewed as a long-term takeover target following the success of its exploration programme off Tanzania. It remains majority owner of East Pande and Block 7 in the country, and owns other exploration licences in neighbouring Kenya and several other African countries. Brian Gallagher, analyst at Investec, commented: “Any approaches that would monetise Ophir’s assets will be taken as a strong positive. To date all major east African gas transactions have occurred across the border in Mozambique and a benchmark would be a positive and underline the quality of the assets.” Shares in Ophir, which had slipped by nearly a third over the past year, ended the day up 10 per cent at 329.8p, valuing its equity at just under £1.8bn. In March it launched a placing and rights issue that raised close to $840m. Gail, a state-owned Indian company, has previously been interested in the recent wave of gas discoveries off Africa’s east coast. Last year, it entered the running to acquire UK-listed explorer Cove Energy, which owned a 8.5 per cent share in the Rovuma gasfields operated by Anadarko Petroleum off Mozambique. Gail eventually withdraw its interest and PTT Exploration & Production of Thailand outbid Royal Dutch Shell by offering $1.9bn for the asset. In August, Anadarko sold a 10 per cent stake of its stake in the gasfield to Gail’s Indian peer Oil and Natural Gas Corporation for $2.64bn in a deal that highlighted the strong demand among Asian energy suppliers to acquire stakes in these fields. BG is now in talks with the Tanzanian government and Statoil of Norway, which have also discovered large gas deposits in adjacent field, over proposals to build facilities that could require an investment of $14bn to deliver LNG supplies to gas-hungry Asian economies.
NEN Price at posting:
29.5¢ Sentiment: Hold Disclosure: Held
