Ophir CEO won’t see Fortuna FID happening. Steps down
London-listed Ophir Energy has informed that its CEO Nick Cooper would be stepping down from the board with immediate effect.
In a statement on Friday, Ophir said Cooper, “by mutual agreement” has stepped down, will remain an employee of the company “at this time”, and will be leaving after a short handover period. He will be replaced by Alan Booth, currently a non-executive director, who will take over as an interim CEO until a new CEO is discovered.
The news comes in a week of reports that Ophir has been given an ultimatum by E. Guinea authorities to either find financing and make a final investment decision for the long-stalled Fortuna FLNG project, or risk losing the acreage there.
The 3.7 Tcf project’s FID had been initially expected in mid-2016 but was then postponed for the fourth quarter of 2016 only to be postponed again for the first half of 2017. In September 2017, Ophir aimed at 4Q 2017 FID.
However, amid slow progress with securing the finances for the project, Ophir in late November 2017, secured a twelve-month extension to the Block R license to the end of December 2018, pushing the FID to the first quarter of 2018.
Then, a recent presentation by Ophir set the expected FID for the second half of 2018, another delay. Total capital cost for the Fortuna development is expected to be $2.1b, with first gas slated for 2022, that is, in case Ophir manages to secures the financing and sanctions the project in 2018.
“Frustrating not to have yet secured project financing and reached FID.”
In its AGM presentation, Ophir said despite several major milestones made at the project, securing finances remained the key for the final investment decision. One slide had this sentence:”Frustrating not to have yet secured project financing and reached FID.”
Worth noting, in its announcement on Friday of Cooper stepping down, Ophir does not list Fortuna delays as a reason.
Ophir praised Cooper’s achievements while Chief Executive Officer, such as”leading the company through a successful IPO in 2011, realizing value through selling part of its interest in Tanzania in 2013, the acquisition of Salamander in 2015 and, most recently, the proposed acquisition of Santos’ South East Asian assets.
“The Board continues to focus on realizing value for shareholders from the Fortuna Project, and will continue to work with the Government of Equatorial Guinea to develop this important resource.
As a reason for new CEO, the company said: “This decision to appoint a new Chief Executive Officer reflects the Company’s ongoing move to rebalance its portfolio towards a larger production and cash flow base, to support more focused sustainable exploration activity.
“The recently announced Santos acquisition is an important step in this direction. The Board will strengthen management operational capabilities to deliver this strategy, alongside continuing its plans to realize value from Ophir’s substantial discovered gas resources.”
The announcement only barely touches the Fortuna project. Ophir said: “The Board continues to focus on realizing value for shareholders from the Fortuna Project, and will continue to work with the Government of Equatorial Guinea to develop this important resource.”
Bill Schrader, Chairman of Ophir, said: “On behalf of the Board, I would like to thank Nick very much for his service to the Company. Nick was appointed CEO in 2011 when Ophir was a frontier explorer. Today, we have a production-focused business model, exemplified by the proposed Santos transaction. This positions the company well for the future and provides a great platform to Nick’s successor. We wish Nick all the very best for the future. In Alan Booth, we have an excellent Interim CEO with the relevant operational experience.”
Nick Cooper said: “I have thoroughly enjoyed my seven years at Ophir and am proud of what we have achieved together. Ophir has transformed from a high risk, frontier explorer to a sustainable, balanced, upstream company. A solid platform has been built for new leadership to take the Company forward. I wish the staff, Board and shareholders of Ophir all the very best for the future.”
Meanwhile the clock is ticking for the Fortuna project, as Reuters has reported this week that the E. Guinea authorities are starting to lose patience. The news agency said Ophir had been given an ultimatum to find the FID cash by December, or risk either being pushed out of the project, or event getting the projects scrapped entirely.
According to Reutes, Gabriel Obiang Lima, E. Guinea minister of mines and hydrocarbons said: “We have a clear idea of who we would give the license to but at this stage we are not prepared to comment,”
Lima reportedly said another option is to scrap Fortuna and instead pipe gas from Block R into an existing land-based LNG project on Bioko Island, 150 km (95 miles) southwest.