Investors have shrugged off disappointing drill results from Ophir Energy (OPHR) with its shares surprisingly moving 0.4% higher to 93.63p on the bad news, quickly reversing small losses when the stock market opened on 29 December.
No hydrocarbons were found in two wells located offshore Tanzania. Ophir has now completed its exploration commitments on the project which is being run by Royal Dutch Shell’s (RDSB) BG Tanzania subsidiary.
Canaccord Genuity analyst Charlie Sharp says ‘they were never going to change the overall story, success or otherwise’. Sharp has a 105p target price on the stock and a ‘buy’ rating.
The latest drilling focused on Kitatange-1 in Block 1 and Bunju-1 in Block 4 and cost $20m to drill. A bridging licence has subsequently been awarded for the existing discovery locations in Block 1.
Ophir has a 20% stake in Blocks 1 and 4, having farmed out 60% to BG in 2010 - BG was subsequently acquired by Royal Dutch Shell. Ophir sold a further 20% to Pavilion Energy in 2014 for $1.3bn.
Shares in Ophir have not enjoyed the strong rally seen across much of the oil and gas sector in 2016. They are down 5% year to date.
The market valuation took a big hit in April on the collapse of a deal with Schlumberger which had been in discussions to be Ophir’s partner on the Fortuna project in Equatorial Guinea.
