Ophir announces gas discovery and dry well in mixed update on Asian assets (OPHR)

Ophir Energy (LSE:OPHR) advanced 2pc to 33.8p this morning following a mixed update that saw it announce one gas discovery and one dry well across its assets in South East Asia.

The business said that the Paus Biru-1 exploration well at its 45pc-owned and operated Sampang production sharing contract (PSC) in Indonesia encountered c.29m of estimated net pay in its target Mundi formation. A drill stem test flowed gas at a rate of 1.2MMscfd and, after being shut in for nine days to build pressure, a maximum flow test on the well produced 12.8MMscfd for 55 minutes.

Ophir is now preparing a plan of development for the discovery that it will submit to Indonesia’s regulator for approval. The well, which cost $15m to drill, lies around 27kms east of the producing Oyong gas field, which is also in the Sampang PSC.

However, elsewhere in today’s update, Ophir announced that it has abandoned a step out exploration well drilled to test a small target to the north of its Bualuang field in Thailand. The firm found that the leading T2 reservoir target in the area is not well developed in this location, and the well is now considered a dry hole.

The well formed part of a $25m phase four development drilling campaign at the field that Ophir otherwise completed successfully. Four workovers and three new production wells were drilled and taken on stream, helping Bualuang production reach an average of 9,600bopd in November versus a year to date average of 8,000bopd.

The firm’s interim chief executive Alan Booth said: ‘This is a strong endorsement of the assets acquired from Santos earlier this year.  Paus Biru is an example of the attractive near field exploration opportunities within the Sampang and Madura PSCs. Such discoveries can be highly valuable as they deliver both fresh production volumes and extend the economic life of the fields already in production.’

Ophir purchased the field in Indonesia and Thailand as part of its $205m acquisition of a package of producing, exploration and appraisal assets across South East Asia from Santos earlier this year.

Despite the deal looking set to double Ophir’s 2018 funds flow from production to c.£161.9m – a considerable portion of its current £296m market cap – its shares are yet to enjoy any meaningful positive movement. We wrote on this subject at length as part of a special ValueTheMarkets report in October that can be accessed here.

Author: Daniel Flynn

Disclosure: The author does not own shares in the companies mentioned above

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