Build a strong foundation of Production & Development in SE Asia
Transition to an Asian HQ, London office to be significantly downsized
Evaluate attractive consolidation opportunities
Unlock the potential value in LNG assets
Following his appointment as interim CEO in May 2018, and the recently closed Santos production acquisition, Alan Booth and the Board have reviewed and agreed the key next steps to enable Ophir to deliver the inherent value in its asset base and maximise value for shareholders.
Ophir, as announced today in half year results for the six months ended 30 June 2018, has an operating asset base capable of delivering free cash flow of $300 million over the next three years, a strong operating capability and potentially valuable gas assets in Equatorial Guinea and Tanzania . In order to accelerate progress toward sustainability and shareholder returns, the Board is taking the following steps:
- Continue to build a strong, cash generative production and development base to serve as the platform for further growth and shareholder returns. The recent asset acquisition from Santos was the first step in this direction, significantly increasing the Company's free cash generation. Delivering material free cash flow to drive net asset growth and returns to shareholders is the priority.
- Minimise Ophir's exposure to frontier exploration. Focus on nearer field exploration opportunities that can drive production growth and/or extend field life.
- Selectively evaluate opportunities for consolidation that could rapidly and effectively deliver our objectives of materiality, sustainability and shareholder returns.
- Consider options to unlock the potential value in our LNG assets - value that is not today reflected in our share price despite a rapidly improving LNG landscape. We intend to ensure that our shareholders share appropriately in any value subsequently realised.
- Take further action to right size the cost structure of the business. We propose to downsize our London office, following workforce consultation, and within 12 months establish a fit for purpose Asian based HQ to serve as the hub for our ongoing business, generating material cost savings.
The search for a new CEO is underway. All potential candidates have strong operational, leadership and commercial skillsets. The Board will expect the successful candidate to execute the above strategic priorities. With Asia becoming the hub of our operations, it is likely that the new CEO will be based in the region.
The Board believes that these actions will create a focused, efficient business generating a significant amount of free cash flow and will provide a strong platform from which the new CEO will be able to grow the business, as well as consider other capital allocation options.