Nomura has given oil and gas explorer Ophir Energy a new price target of 727p, reflecting a 3% dilution from the placing.

Tom Robinson, a research analyst at Nomura, commented that a proposed placing and rights issue at Ophir Energy "provides visibility on financing".

He indicated that Ophir Energy's proposed fund raising of $788m net was higher than Nomura's expectations and in excess of the approximately $450m funding requirement for 2013.

"Nonetheless, if successfully completed it: 1) Removes an overhang which has seen the shares decline circa 15% Year-to-date (Peer group SXEP: -2.5%); 2) Leaves Ophir fully funded to at least mid-2014 on current equity levels; and 3) Places Ophir in a stronger negotiating position to complete asset farm-downs on favourable terms and add to the current E&A program," he said.

"Our upgrade earlier this year was predicated on securing financing. Arguably, it has come at a greater cost, but we believe it does not detract from what remains one of the most attractive exploration stories in our E&P coverage universe," he added.

Financial results and placingOn Tuesday morning, Ophir Energy unveiled its preliminary results for the year ended December 31st.

These showed that it had successfully completed the acquisition of Dominion Petroleum in February 2012 and added assets to Ophir's portfolio in Tanzania and Kenya.

A continued focus on capital discipline was also reported, with 896m barrels of oil equivalent (MMBOE) of net contingent resources discovered at a finding cost of $0.58/barrels of oil equivent.

Ophir Energy placed 30.5m shares in April 2012, raising $242m to part-finance its ongoing exploration programme and the net cash position at year-end was $228m

The group also announced that a total of 19.85m placing shares had been been placed at a price of 460p per placing share today.

Based on the placing price, the gross proceeds of the placing are approximately £91.3m.
MF

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