UK 17:16 Thursday, 29 October 2026
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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.
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Comments
wildrides
Blimey ………. that is some cash pile
Gary Newman
Wildrides,
Certainly is given its market cap, and still retain 20% in Tanzania as well having sold off the other 20% they had. What has also been interesting during the oil price drop is the amount that it got hammered as compared to the likes of Cairn (up until the tax news anyway) and other larger ones without production. Wouldn’t surprise me if they look at other acquisitions whilst oil prices are low – plus i like the fact that they plan to sell off part of assets (like with Tanzania) in order to fund development/production, rather than taking on huge amounts of debt. They do now have the Salamander debt but i think it actually makes sense to have at least some debt on the balance sheet as long as it is a manageable amount.
It will fluctuate with the oil price though, so shorter term could well go a bit lower if oil dips again.
I’m surprised more didn’t buy SMDR whilst it was cheap as a way of getting cheap Ophir shares, I did write about it on here in the low 60s (think it hit around 79p when the deal went through, and a 0.5719 ratio).
JSB
Gary,
a better call than IAE!! Avoid debt.
I think SMDR had about $500m debt so net cash not so fantastic, but certainly nothing to be concerned about. Recently added big at 121p here, great recovery play.
bobo
Gary Newman
Bobo,
Yeah pretty sure SMDR was around that amount, and for a company the size of OPHR that is a comfortable amount to have on the balance sheet i think, especially with the cash they have, and also taking into account what they effectively paid for SMDR assets.
I still think IAE can come good longer term, but all depends on the oil price. In terms of the covenants, they are more technical rather than putting them in immediate financial difficulties, and we’re seeing a number of other producers successfully re-negotiate covenant terms recently (ENQ, and Tullow today as well i see). Didn’t expect it to drop quite so sharply, but as long as people are scaling in rather than trying to guess an exact bottom with current oil price volatility, I still see a good chance for a profit there – plus maybe interest from a third party in light of the changes to the North Sea taxes, which i think could see increased activity in the area.
JSB
I worry about IAE. They have their hedge but I just don’t see them being able to service the debt on current production
Trap just dumped their athena share on them because it’s loss making, think that’s about 4000bopd of loss making production.
It will be a white knuckle ride for them through to production from the new field, the delay will be disastrous for their cash flow forecasts.