Ophir Energy Plc In New Gas Strike

Shares in £1.5bn oil and gas explorer Ophir Energy (LSE: OPHR) haven’t been doing so well of late, dropping more than 30% over the past 12 months. In fact, the price has slumped from a high of nearly 550p in late 2012 to just 254p as I write.

We’ve even seen a fall of 5p (2%) this morning, despite news of an important gas find offshore at the Taachui-1 well, part of Block 1 in Tanzania — Ophir has 20% of the rights to Blocks 1, 3 and 4.

Continuing success

oil rigThe Deepsea Metro I drillship encountered a 289m gross column with a net pay of 155m, and there could be more — based on the size of the current discovery, the company told us the gas could extend to a second compartment to the West of a similar size. So far, Ophir has estimated a mean recoverable resource of around a trillion cubic feet (TCF) of gas from Taachui.

Chief executive Nick Cooper said “The Taachui-1 discovery continues the 100% drilling success rate on Blocks 1, 3 and 4 and adds further resource to support the LNG development in Tanzania“, going on to tell us that it “extends the proven hydrocarbon system to the eastern limit of, and partly de-risks, Ophir’s East Pande permit“.

He also told us that the company’s aggregate estimated volumes of 16.7 TCF are “approaching the threshold needed to underpin a potential third LNG Train from Blocks 1, 3 and 4“.

That’s good news, but what will it do for Ophir’s fortunes?

Further tests

It’s hard to say right now, but we should know more when the company conducts its planned Drill Stem Test on the new Taachui find, with the results expected before the end of June.

Before today, a majority of 19 analysts forecasting had Ophir on a pretty strong Buy recommendation. How soon Ophir shareholders will see the firm’s discoveries turn into profit is still a big unknown, but this news reinforces the feeling that the City is on the nail with this one.

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Alan does not own any shares in Ophir Energy.