UK-based explorer Ophir Energy announced today (6 July) that it will shutter five of 11 offices and reduce its staff as part of a cost reduction program put in place following its acquisition of Salamander Energy.
Ophir said the cost reduction program will yield US$60 million/yr of pre-tax general and administrative cost savings due to removing overlapping activities (from the Salamander acquisition), and streamlining operations. It plans to lower its headcount and contractor staffing. The six remaining offices have also been scaled back to reduce costs and improve efficiencies, the company said.
The £314 million ($490 million) Salamander acquisition was first announced in November, and closed in March. Ophir said $180 million of the debt it acquired during the Salamander acquisition has been repaid, which resulted in a net cash position of approximately $405 million as at 30 June 2015. However, Ophir said its balance sheet remains strong with $720 million of cash at end June. Ophir said it plans to review the debt portfolio in 2H 2015 to capture the improved credit profile of combining the Salamander assets into the broader portfolio.
“This is a tough time in the commodity cycle, but Ophir has a strong balance sheet and minimal capex commitments,” said Nick Cooper, CEO of Ophir. “Our financial flexibility provides a competitive advantage and management is actively screening opportunities to enhance shareholder returns.
“Even after the partial deleveraging in 1H 2015, the cash flow from our producing assets will return Ophir to a similar cash position by end 2016 to that which the group expected to have had pre-acquisition,” he said.
Additionally, Ophir announced today that production during 1H 2015 averaged 14,600 boe/d, with the Bualuang field in the Gulf of Thailand contributing 12,600 boe/d. Also in Thailand, rig discussions are at an advanced stage ahead of a drilling campaign that will include two exploration wells on the G4/50 license. The block covers 2900sq km surrounding the Bualuang production license and contains five sub-basins. Exploration drilling is expected to commence in 2H 2015, Ophir said.
Image: Ophir Energy
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