06 July, 2015

Ophir Energy plc ("Ophir") provides an update on activity for the first half of 2015 on entering a close period prior to publication of interim financial results on 13 August 2015.

Operations

Production during the first half of 2015 averaged 14,600 boepd, the Bualuang field in the Gulf of Thailand contributing 12,600 boepd. Production is on track to meet expectations for the full year.

Ophir continues to advance and significantly de-risk the Fortuna FLNG project in Equatorial Guinea. The selection of Golar FLNG as the midstream partner lowers the capital intensity of the project, with upstream capex to first gas expected to be c. $800 mm, and accelerates the lead time to first gas. Both upstream and mid-stream FEED studies are commencing this quarter with a Final Investment Decision in mid-2016 and delivery of first gas in mid-2019.

In Thailand, rig discussions are at an advanced stage ahead of a drilling campaign in the second half that will include two exploration wells on the G4/50 licence - the specific prospects high graded for drilling will be detailed in due course.

Operations elsewhere are progressing to plan. The Group has recently completed the acquisition of 10,800 km2 of 3D seismic data offshore Myanmar. In Indonesia, mechanical completion of the Kerendan Gas Project in Kalimantan is forecast to complete this month and the development remains on schedule to start delivering 20 mmscfd in 2H 2016.

Cost Reductions & Synergies

The integration of Salamander Energy plc's operations and of the Niko asset package has progressed well during the first half of 2015. Management has implemented a company-wide cost rationalisation programme which is now delivering $60 million per annum of ongoing pre-tax G&A cost savings and synergies (excepting one off restructuring costs) across the combined business.

These G&A cost savings are driven by removal of overlapping activities, by streamlining of operations and via lower Group headcount and contractor staffing. Ophir is in the process of closing five of the eleven offices either owned by the Group, or inherited at the time of the Salamander acquisition in March. The remaining six offices have also been scaled back to reduce costs and improve efficiency.

Balance Sheet

The Group's balance sheet remains strong with $720 million of cash on the balance sheet at end June. Approximately $180 million of the debt acquired with Salamander, principally the Convertible Bonds and $45 million of the Unsecured Bonds, has been repaid since acquisition; resulting in a net cash position of ca. $405 million as at 30 June 2015. The Group plans to review the debt portfolio in the second half of 2015 to capture the improved credit profile of combining the Salamander assets into the broader portfolio.

Group revenue, cash flow and capex are expected to be in line with expectations and the cash at year end 2015 remains as previously forecast at $700-750 million with a net cash position of $350-400 million.

Within the current year's budget, and the three year plan, there is significant financial flexibility. Ophir has only $100 million of contractually committed exploration and appraisal expenditure in the remainder of the 2015 to 2017 period. Furthermore the carrying costs of the Tanzania LNG project are comfortably manageable with around only $40 million of spending across 2H 2015 and 2016.

Ophir's robust financial health and high degree of discretionary expenditure provide the Board with considerable financial and strategic flexibility at this point in the commodity cycle. The Board nevertheless remains committed to disciplined capital allocation and to managing the portfolio to optimise returns to shareholders across the asset life cycle.

Nick Cooper, Chief Executive Officer of Ophir commented:

"This is a tough time in the commodity cycle but Ophir has a strong balance sheet and minimal capex commitments. Our financial flexibility provides a competitive advantage and Management is actively screening opportunities to enhance shareholder returns.

"The integration of Salamander is progressing well: we are delivering cost savings of $60 mm, which exceed the previously identified synergies. Even after the partial deleveraging in the first half of 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.

"In its operations, Ophir has had a successful first six months to 2015. We delivered production as forecast and all development activities are progressing to plan. In particular, the Fortuna FLNG development in Equatorial Guinea is passing its mid-stream and FEED milestones, and is significantly de-risked ahead of a mid-2016 FID. All the Group's activities, strategic and operational, underscore our commitment to preserve financial strength and drive growth in NAV per share."

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