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Over the years I’ve been a fan of Ophir Energy (OPHR), but it is one that I have got completely wrong and during that time it has done nothing other than to disappoint investors, whilst its value has steadily been eroded.
Several of the once really popular oil and gas companies seem to have almost have been forgotten by investors, as progress has been far slower than had originally been expected and people have gone off seeking riches elsewhere.
Ophir Energy (OPHR) has made far slower progress than many could have imagined a few years back, but the oil and gas fields which attracted many in the first place are still there, and the chances of them being developed still look very good.
Currently I am wary of a lot of oil and gas producers, given some of the recent rises that we’ve seen, but there are still a few out there that seem to offer decent value.
One of the problems for Ophir Energy (OPHR) had always been a lack of any oil and gas production, and income generated from that. But that is no longer the case since the completion of the acquisition of Salamander Energy at the start of the month – via a shares deal that saw an additional 152 million shares issued, taking the total number to 715 million and a market cap of £924 million at the current share price of 129p.
A look at the chart for Ophir Energy (OPHR) would hardly inspire you with confidence, but it is true that looks can be deceiving. Recent exploration drilling in Gabon failed to produce anything of note, other than data to re-assess the licenses for possible future work. More than a third has been wiped off of the company’s market cap during the three well exploration programme, despite Ophir pretty much having a free carry for these drills from OMV, plus being paid past costs associated with them. The question now is can the company’s valuation recover from the disappointment?
A disappointing drill result earlier this week saw over £350 million wiped off of the market cap of Ophir Energy (OPHR) in an instant, which seemed somewhat of an over-reaction, to say the least!
There has been Ali vs Frazier, Blur vs Oasis an even Kramer vs Kramer, but in the battle of Ophir Energy it is Lansdowne Partners vs Zak Mir.
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