Ophir to reveal latest on Medco Energi takeover offer following Fortuna setback

Following a fraught December and early January, the latest developments in the possible all-cash takeover by Indonesia’s Medco Energi of London-based Ophir Energy, including its heavyweight Fortuna FLNG project in Equatorial Guinea, are due to be revealed on Tuesday (15 January).

The negotiations were hit last week by the shock refusal of Equatorial Guinea’s government to extend Ophir’s licence to the giant Fortuna gas discovery, which ran out on 31 December. According to Ophir, the effect will be “an additional non-cash impairment of the asset” of around US$300M in the full-year results.

Ophir said it will update investors on the progress of the negotiations in a trading statement on 15 January. However, the seeming loss of the Fortuna licence has clearly come as a blow.

As interim chief executive Alan Booth said in a statement on 5 January “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.”  Ophir has been working on the Fortuna field for several years.

More irritating for Ophir, at the time of the refusal of an extension, Ophir was in discussions with “highly credible potential co-investors” about Fortuna and its US$1.2Bn FLNG, he added.

Contracts had already been agreed over the FLNG, with Golar given the job of converting the LNG carrier Gandria. With a capacity of 126,000 m³ and an estimated initial offtake of 2.2-2.5 mta, the project had however run into delays over funding. Now though, the apparent loss of the licence means that Ophir will retreat to its operations in southeast Asia.

Medco Energi has repeatedly lowered its price for Ophir. Even before failing to renew the Fortuna licence, Medco had twice dropped the offer price. From late October’s unsolicited opening offer of 58 p (US$0.74), the Indonesian company made a revised bid of 53.8 p a share, citing uncertainty over the Fortuna assets as one of the reasons. But after the announcement about the licence, Medco unilaterally dropped the offer to 48.5 p without first notifying Ophir, according to the London company.

Under stock exchange rules, Medco Energi must 'put up or shut up' no later than 5pm GMT on 28 January.

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