Ophir and OneLNG to form joint operating company to develop Fortuna FLNG project
Ophir Holdings & Ventures (Ophir), a wholly owned subsidiary of Ophir Energy, and OneLNG, a JV between subsidiaries of Golar LNG and Schlumberger, have signed a binding shareholders' agreement to establish a joint operating company (JOC) to develop the Fortuna project, in Block R, offshore Equatorial Guinea utilizing Golar's FLNG technology.
OneLNG and Ophir will have 66.2% and 33.8% ownership of the JOC respectively (with economic entitlements materially consistent with the equity interest in the JOC). The JOC will facilitate the financing, construction, development and operation of the integrated Fortuna project and, from final investment decision (FID), will own Ophir's share of the Block R licence and the Gandria FLNG vessel. This innovative structure aligns investment across the value chain and provides a framework to promptly deliver a fully financed project.
The Shareholders' Agreement and FID are subject to, amongst other things:
- agreement of final terms and execution of documentation for the project debt financing
- approval by the shareholders of Ophir Energy plc
- approval by the government of Equatorial Guinea
FID is now expected to take place in the first half of 2017 with first gas anticipated in the first half of 2020. Initial offtake is expected to be 2.2 MMtpy - 2.5 MMtpy for a duration of between 15 and 20 years which will monetize around 2.6 Tcf of the discovered resource.
The expected total capital expenditure for the integrated project is approximately $2 B to reach first gas. Approximately $1.2 B is expected to be debt financed, with full drawdown by the start of commercial operations. Prior to FID, a decision will be taken as to the final offtake pricing mechanism. Shortlisted proposals from potential offtakers will be evaluated on the basis of value maximization. At an assumed FOB gas price of $6/MMbtu the JOC will generate approximately $560 MM in cash flow (pre debt service) per annum.
Nick Cooper, Chief Executive of Ophir, commented: "Formation of the Fortuna JOC provides the framework for FID and clear line of sight to first gas. This progress is due to the innovative partnering between OneLNG and Ophir, the quality of the resource base, the excellent project economics and support from the Government of Equatorial Guinea.
"Ophir's committed future expenditure to first gas will not exceed $150 MM and certain other commercial exposures have been limited. We will now be able to advance the project while preserving our balance sheet strength."
Jeff Goodrich, CEO of OneLNG commented: "OneLNG was formed to provide an integrated approach to operators to reduce risk and costs and accelerate the time to monetize stranded gas reserves, and thereby transforming the economic viability of such projects. We are pleased to sign a shareholders' agreement with Ophir for the formation of the Fortuna JOC. We look forward to working with Ophir and all of the other stakeholders to deliver OneLNG's and Africa's first deep-water FLNG project."
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