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Ophir signs deal with Schlumberger JV for Equatorial Guinea project

Published 10/11/2016, 10:03
Updated 10/11/2016, 10:10
© Reuters.  Ophir signs deal with Schlumberger JV for Equatorial Guinea project
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(Reuters) - British oil and gas explorer Ophir Energy Plc (L:OPHR) said it had signed an agreement with OneLNGSM, a joint venture between units of Golar LNG Ltd (O:GLNG) and Schlumberger (N:SLB), to develop the Fortuna project in Equatorial Guinea.

Shares in the company rose as much as 13.8 percent, before trading at 77.75 pence at 0956 GMT on the London Stock Exchange on Thursday.

Ophir said earlier this month that it could go forward without new partners for the Fortuna floating liquefied natural gas project as the cost estimates had halved to around $450 million (£363.23 million). Schlumberger had walked away from the deal in June.

Jefferies analysts said the return of Schlumberger would be looked at positively by the market. The brokerage has a "hold" rating on the stock.

Ophir said it would have a 33.8 percent stake in the joint operating company, while OneLNG would own the rest.

The company expects the final investment decision to take place in the first half of 2017, with first gas expected in the first half of 2020. The final decision is subject to approval by Ophir shareholders and clearance from the government of Equatorial Guinea.

Capital expenditure for the integrated project is expected to be about $2 billion to reach first gas, of which about $1.2 billion is expected to be debt-financed.

"Ophir's committed future expenditure to first gas will not exceed $150 million and certain other commercial exposures have been limited. We will now be able to advance the project while preserving our balance sheet strength," Ophir CEO Nick Cooper said.

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