Indonesian giant eyes Coast oil block owner Ophir

Oil exploration in northern Kenya. FILE PHOTO | NMG

London-listed Ophir Energy is in talks with suitor Medco Energi, a subsidiary of an Indonesian oil giant, with hopes of creating a Southeast Asian oil and gas powerhouse.

Ophir Energy has had longstanding interests in Kenya until 2016 when it announced it was exiting oil exploration investments at the Coast-based Block L9, after writing off a loss of Sh6.4 billion ($62.7 million) spent in search of hydrocarbons.

Under the new deal, Ophir said Jakarta-listed Medco has until January 28 to make a firm offer.

“The Boards of Ophir and Medco confirm they are in discussions about a possible cash offer to be made by Medco for the entire issued share capital of Ophir,” said Ophir in a statement.

“This announcement does not amount to a firm intention to make an offer … and there can be no certainty that any offer will be made,” it said in a regulatory notice.

Ophir, an upstream gas and oil exploration and production company focused on Africa and Asia said earlier Kenya was among the countries it was exiting or planning to exit “as there were insufficient returns or accumulated losses.”

“We are exiting our low-priority assets in order to focus our people and capital on maximising value creation from high-priority acreage. As a result, during 2015 we exited — or started the process of exiting — from Kenya, Seychelles and a number of blocks in Indonesia and Tanzania,” said the firm in 2016.

Several exploration companies have sold or sought to sell stakes in Kenya in view of the volatility in the international prices of oil that have left them struggling with cash flows and running costs.

Others have been seeking cash to expand exploration activities despite the fall in the prices of hydrocarbons.

Ophir Energy has spent hundreds of millions of shillings in buying stakes in exploration blocks in other countries.