Thursday 3 May 2018

Ophir has agreed to acquire a package of Southeast Asian assets from Santos Limited, an Australian listed Oil & Gas company, for an aggregate cash consideration of $205 million pre-working capital adjustments, subject to certain approvals. The portfolio of assets includes material producing assets in Vietnam and Indonesia plus exploration and appraisal assets in Malaysia, Vietnam and Bangladesh.

The Transaction is in line with Ophir’s stated strategy of rebalancing its portfolio towards a larger production and cash flow base to enable us to sustainably support the refocused exploration portfolio and to consider returning capital to shareholders. This rebalancing will also facilitate further economies of scale in operating expenditures, general and administration expenses (“G&A”) and will provide greater capital allocation and financing efficiencies.

The Company intends to fund the consideration through its existing financial resources and a new acquisition bridge facility, which it intends to replace in due course with an increase in the Company’s existing Reserve Based Lending (“RBL”) facility.

Key Highlights

- A balanced and complementary portfolio of Southeast Asian assets with low operating costs, strong cashflows, near term development opportunities and exploration potential

- Resilient production in Vietnam and Indonesia, providing low risk cashflow

- Proforma 2018 forecast working interest production from Santos assets of ~13,500 boepd

- Proforma Group 2018 production increases to ~25,000 boepd

- Proforma Group 2018 forecast funds flow from production doubles to ~$180 million

- Production life extensions utilising strategic infrastructure positions

- 2P reserves increase of over 40% from 49.4 MMboe to 70.6 MMboe

- Upside optionality provided by the diverse portfolio of development, appraisal and exploration opportunities in Vietnam, Indonesia, and Bangladesh

- Expected to bring forward Ophir’s stated objective of being free cash flow positive, and therefore its ability to consider returning capital to shareholders

- Material cost synergies – estimated to be in excess of $13 million per annum

- Transaction expected to payback within three years at current commodity prices

- Transaction to be financed through existing financial resources and a new 18-month acquisition bridge facility of up to $130 million (for which term sheets have been agreed). The bridge facility will be subsequently refinanced into the Company’s existing RBL facility

Current Trading Update

Current operations are performing in line with the guidance provided at the full year results in March 2018. The Company’s existing production is expected to average 11,500 boepd in 2018 and generate net funds from production of $90 million.

Ophir continues to work to progress the project financing for the Fortuna project as outlined at the time of the full year results.