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Tuesday, January 26, 2016
Ophir Eergy and Schlumberger have entered into a Heads of Terms agreement which will give Schlumberger a 40% economic interest in Ophir’s Fortuna FLNG project offshore Equatorial Guinea. Ophir and Schlumberger will now work towards signing a definitive agreement, which is expected to be signed in Q2, ahead of the FID for the project.
Under the definitive agreement Schlumberger will reimburse 50% of Ophir’s past costs in the form of a development carried interest. This is expected to cover Ophir’s share of capital expenditures up until first sales of LNG.
Ophir is currently working on shortlisting gas off-take offers and expects to complete this process within the coming weeks. All workstreams are progressing in line with expectations and the project remains on track to achieve FID in mid-2016.
Mercedes Eworo Milam, Director General of Hydrocarbons in the Equatorial Guinea Ministry of Mines, Industry and Energy (MMIE), commented: “MMIE continues to lend full support to Ophir, GEPetrol and Sonagas as it progresses the Fortuna FLNG project towards FID.”
In related news, an agreement was signed recently between Golar and Schlumberger to jointly develop gas reserves through FLNG technology. Subject to a successful FID and implementation of the partnership in the Fortuna project, both Schlumberger and Golar have expressed interest to extend this partnership to include other existing or potential new Ophir assets in the future.
Nick Cooper, CEO of Ophir, commented: “We are very pleased to welcome Schlumberger into the Fortuna FLNG project. Innovative partnering in the upstream is increasingly important to deliver world class projects that can create value throughout the cycle. Ophir’s cost to first gas is fully funded by this transaction, and we can now evaluate the other funding and offtake proposals that we have received to select at FID the combination that creates most value for shareholders.
“Furthermore, as an early adopter of FLNG, our newly announced strategic relationship with Golar and Schlumberger has the potential to deliver more opportunities of this kind in the future. These are tough times for the upstream sector, but this transaction will free up our balance sheet and further increase our financial flexibility. Through prudent capital discipline, an innovative approach and a strong balance sheet, Ophir remains convinced of the value creation potential of its asset portfolio throughout 2016 and beyond.”
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