Ophir launches share buyback to return cash to investors
(Adds details, analyst comment, share price)
By Karolin Schaps
LONDON, Aug 14 (Reuters) - Oil explorer Ophir Energy (Other OTC: OPGYF - news) , whose stock price has halved since the start of the year due to disappointing drilling results, has announced a $100 million share-buyback programme to return cash to investors.
The London-listed firm swung to profit in the first half of the year, making $339 million thanks to the sale of an oil field stake in Tanzania and recovering from a dip into the red at the end of last year.
"With our shares trading below the core value of the business, a capital return to shareholders has been approved via a share-buyback programme announced today," said Ophir Chairman Nicholas Smith.
Shares (Frankfurt: DI6.F - news) in the company were trading 3.1 percent higher at 0829 GMT, one of the top four risers on London's FTSE 250 companies index.
"An unexpected $100 million share-buyback programme will likely be welcomed by investors who have been calling for a return of capital post-completion of the Tanzania disposal," said Deutsche Bank (Xetra: 514000 - news) analyst Lucas Herrmann.
The oil and gas explorer also said it would cut back capital expenditure next year to focus on its existing portfolio and that it may invest in more mature assets to diversify its current model which is focused on exploration.
Ophir's investments in the second half of this year are expected to rise to around $600 million, from the $500 million figure predicted by the company earlier this year, due to an expansion of its drilling and seismic testing programme.
It has drilled a number of disappointing wells in Gabon over the past months which has weighed on its share price together with wider negative market sentiment towards the exploration and production sector.
Earlier this year the company made two takeover approaches for rival Premier Oil (LSE: PMO.L - news) which were both rejected. (Reporting by Karolin Schaps; Editing by Pravin Char)