London-based Ophir Energy said the Block R licensee containing the Fortuna gas discovery, will not be extended following the expiry of the license on December 31, 2018.
Equatorial Guinea Ministry of Mines and Hydrocarbons issued a notice informing Ophir of its decision.
As a consequence, there will be an additional non-cash impairment of the asset, expected to be around $300 million, in Ophir’s full year financial results following the impairment taken in the half year results reported in September 2018, Ophir said in a statement.
Ophir said it remains focused on implementing the strategy outlined in September.
The company further reminded that it has entered into discussions about a possible cash offer to be made by Medco for the entire issued and to be issued share capital of Ophir.
“Our discussions with Medco have taken place in the shared knowledge that there were a number of potential outcomes with respect to our Fortuna asset, and these discussions continue,” the statement reads.
Ophir intends to update its investor on the progress made throughout its portfolio in a statement on January 15.
The next scheduled announcement by the Ophir will be our pre-close trading statement on 15 January 2019 when we shall update investors on the progress made throughout our portfolio and the advances to our production and cashflow base in Southeast Asia.
Speaking of the Equatorial Guinea government’s decision, Alan Booth, interim CEO of Ophir, said, “It is disappointing that the Ministry has decided not to extend the licence, despite the amount of effort and cost dedicated to the delivery of the project and especially as we were still talking to highly credible potential co-investors.”
He added that Ophir will continue to work with the authorities in Equatorial Guinea.