Ophir Energy plc (Incorporated in England and Wales with registered number )

Transcription

1 This Prospectus comprises a prospectus relating to the New Ophir Shares and has been prepared in accordance with the Prospectus Rules made under Section 73A of the Financial Services and Markets Act 2000 (as amended) (the FSMA ) and has been approved by the Financial Conduct Authority (the FCA ) under the FSMA. This Prospectus has been made available to the public in accordance with Prospectus Rule 3.2. Ophir Energy plc ( Ophir ), the Directors whose names appear on page 55 of this Prospectus and the Proposed Director accept responsibility for the information contained in this Prospectus. To the best of the knowledge of Ophir, the Directors and the Proposed Director (who have taken all reasonable care to ensure that such is the case), the information contained in this Prospectus is in accordance with the facts and contains no omission likely to affect the import of such information. Investors should read the whole of this Prospectus carefully. In particular, investors should take account of the section entitled Risk Factors on pages 23 to 48 of this Prospectus for a discussion of the risks which might affect the value of an investment in Ophir, the Combined Group and the Ophir Shares. Ophir Energy plc (Incorporated in England and Wales with registered number ) Proposed issue of up to 170,000,000 new ordinary shares in connection with the proposed acquisition of Salamander Energy plc to be implemented by way of a scheme of arrangement under Part 26 of the Companies Act 2006 and Application for admission of up to 170,000,000 new ordinary shares to the premium listing segment of the Official List and to trading on the main market for listed securities of the London Stock Exchange Sponsor, Corporate Broker and Co-Financial Adviser Morgan Stanley & Co. International plc Lead Financial Adviser Corporate Broker and Co-Financial Adviser Credit Suisse Securities (Europe) Limited RBC Europe Limited Ophir Shares are currently listed on the premium listing segment of the Official List and traded on the London Stock Exchange s main market for listed securities. Applications will be made to the FCA for the New Ophir Shares to be issued pursuant to the Transaction to be admitted to the premium listing segment of the Official List and to the London Stock Exchange for the New Ophir Shares to be admitted to trading on its main market for listed securities. It is expected that Admission will become effective and that dealings in the New Ophir Shares will commence at 8.00 a.m. on the Business Day following the Effective Date which, subject to the satisfaction or waiver (if capable of waiver) of certain Conditions, including the sanction of the Scheme by the Court, which is expected to take place on 3 March 2015 (although this date is subject to change). The New Ophir Shares will rank pari passu in all respects with the Existing Ophir Shares. No application has been made for the New Ophir Shares to be admitted to listing or dealt with on any other exchange. Investors should only rely on the information contained in this Prospectus. No person has been authorised to give any information or make any representations other than those contained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been so authorised by Ophir, the Directors, the Proposed Director or the Sponsor. No representation or warranty, express or implied, is made by the Sponsor as to the accuracy or completeness of such information, and nothing contained in this Prospectus is, or shall be relied upon as a promise or representation by the Sponsor as to the past, present or future. In particular, the contents of the Ophir and Salamander websites do not form part of this Prospectus and investors

2 should not rely on them. Without prejudice to any legal or regulatory obligation on Ophir to publish a supplementary prospectus pursuant to Section 87G of the FSMA and Prospectus Rule 3.4, neither the delivery of this Prospectus nor Admission shall, under any circumstances, create any implication that there has been no change in the business or affairs of the Combined Group taken as a whole since the date of this Prospectus or that the information in it is correct as of any time after the date of this Prospectus. Persons who come into possession of this Prospectus should inform themselves about and observe any applicable restrictions and legal, exchange control or regulatory requirements in relation to the distribution of this Prospectus and the Transaction. Any failure to comply with such restrictions or requirements may constitute a violation of the securities laws of any such jurisdiction. The contents of this Prospectus should not be construed as legal, business or tax advice. Credit Suisse Securities (Europe) Limited, which is authorised and regulated in the UK by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively as financial adviser to Ophir and no one else in connection with the matters described in this Prospectus, and will not be responsible for anyone other than Ophir for providing the protections afforded to clients of Credit Suisse Securities (Europe) Limited nor for providing advice in relation to the matters referred to in this Prospectus. Neither Credit Suisse Securities (Europe) Limited nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Credit Suisse Securities (Europe) Limited in connection with this Prospectus, any statement contained herein or otherwise. Morgan Stanley & Co. International plc, which is authorised in the UK by the Prudential Regulation Authority and regulated in the UK by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively as financial adviser to Ophir and no one else in connection with the matters described in this Prospectus, and will not be responsible for anyone other than Ophir for providing the protections afforded to clients of Morgan Stanley nor for providing advice in relation to the matters referred to in this Prospectus. Neither Morgan Stanley nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Morgan Stanley in connection with this Prospectus, any statement contained herein or otherwise. RBC Europe Limited, which is authorised in the UK by the Prudential Regulation Authority and authorised and regulated in the UK by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively as financial adviser to Ophir and no one else in connection with the matters described in this Prospectus, and will not be responsible for anyone other than Ophir for providing the protections afforded to clients of RBC Europe Limited nor for providing advice in relation to the matters referred to in this Prospectus. Neither RBC Europe Limited nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of RBC Europe Limited in connection with this Prospectus, any statement contained herein or otherwise. Notice to Overseas Shareholders General The release, publication or distribution of this Prospectus in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of, and should observe, any applicable requirements. Any failure to comply with these requirements may constitute a violation of the securities laws of any such jurisdiction. To the fullest extent permitted by applicable law, the companies and persons involved in the Transaction disclaim any responsibility or liability for the violation of such requirements by any person. Unless otherwise determined by Ophir or required by the Takeover Code, and permitted by applicable law and regulation, the Transaction will not be made, directly or indirectly, in, into or from a jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Transaction by any such use, means, instrumentality or form within any jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this Prospectus and all documents relating to the Transaction are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a jurisdiction where to 2

3 do so would violate the laws in that jurisdiction, and persons receiving this Prospectus and all documents relating to the Transaction (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction. The availability of the New Ophir Shares to Salamander Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are located. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements. Notice to Thai Salamander Shareholders The New Ophir Shares have not been and will not be registered with, or approved, by the Office of the Securities and Exchange Commission of Thailand. Any offering or distribution, as defined under Thai laws and regulations, of the New Ophir Shares in Thailand is not legal without such prior approval and registration. Accordingly, the New Ophir Shares cannot be directly or indirectly, offered or sold to, or otherwise acquired by, any person within Thailand. No action has been or will be taken by Ophir or Salamander or on behalf of Ophir or Salamander which would permit a public offering of any of the New Ophir Shares or distribution of this document in Thailand, and this document, as well as information contained therein, is not intended to constitute an offer to sell or the solicitation of an offer to purchase or otherwise acquire the New Ophir Shares in Thailand in which the offer or solicitation of the New Ophir Shares would be prohibited. No general solicitation has been or will be conducted and no advertisement in whatever form has been employed in Thailand where the offer or solicitation of the New Ophir Shares would be prohibited. Notice to Indonesian Salamander Shareholders This document has not been, and will not be, registered with the Financial Services Authority (Otoritas Jasa Keuangan) in Indonesia, and therefore, the New Ophir Shares may not be offered or sold in Indonesia or to Indonesian citizens in a manner which constitutes a public offer under Law No. 8 of 1995 on Capital Markets and the implementing regulations. Accordingly, Ophir and Salamander will not, directly or indirectly, expressly or implicitly: (i) offer the New Ophir Shares to more than 100, or sell the New Ophir Shares to more than 50, parties in Indonesia and/or Indonesian citizens; and (ii) offer the New Ophir Shares by way of mass media, including any newspaper, magazine, film, television, radio or other electronic media or any letter, brochure or other printed matter, distributed to more than 100 parties in Indonesia and/or Indonesian citizens. Notice to US Salamander Shareholders The Transaction relates to the shares of a UK company and is to be made by means of a scheme of arrangement provided for under the laws of England and Wales. A transaction effected by means of a scheme of arrangement is not subject to the proxy solicitation or tender offer rules under the US Exchange Act. Accordingly, the Transaction is subject to the disclosure requirements, rules and practices applicable in the UK to schemes of arrangement which differ from the requirements of US proxy solicitation or tender offer rules. The financial information included in this Prospectus relating to Salamander has been prepared in accordance with IFRS and therefore may not be comparable to the financial information of US companies or companies whose financial statements are prospered in accordance with US generally accepted accounting principles ( US GAAP ). US GAAP differs in certain significant respects from IFRS. None of the financial information in this Prospectus has been audited in accordance with auditing standards generally accepted in the United States or the auditing standards of the Public Company Accounting Oversight Board (United States). This document does not constitute an offer of securities for sale in the United States or an offer to acquire or exchange securities in the United States. The New Ophir Shares have not been, and will not be, registered under the US Securities Act or under the securities laws of any state or other jurisdiction of the United States. Accordingly, the New Ophir Shares may not be offered, sold, resold, delivered, distributed or otherwise transferred, directly or indirectly, in or into or from the United States absent registration under the US Securities Act or an exemption therefrom. The New Ophir Shares are expected to be issued in reliance upon the exemption from the registration requirements of 3

4 the US Securities Act provided by Section 3(a)(10) thereof. Salamander Shareholders (whether or not US persons) who are or will be affiliates of Salamander or Ophir prior to or after, the Effective Date will be subject to certain US transfer restrictions relating to the New Ophir Shares received pursuant to the Scheme. For the purposes of qualifying for the exemption from the registration requirements of the US Securities Act afforded by Section 3(a)(10), Salamander will advise the Court that its sanctioning of the Scheme will be relied upon by Ophir as an approval of the Scheme following a hearing on its fairness to Salamander Shareholders. However, if Ophir were to elect to implement the Transaction by means of a takeover offer, such takeover offer will be made in compliance with all applicable laws and regulations, including Section 14(e) of the US Exchange Act and Regulation 14E thereunder. Such a takeover offer would be made in the United States by Ophir and no one else. In addition to any such takeover offer, Ophir, certain affiliated companies and the nominees or brokers (acting as agents) may make certain purchases of, or arrangements to purchase, shares in Salamander outside such takeover offer during the period in which such takeover offer would remain open for acceptance. If such purchases or arrangements to purchase were to be made they would be made outside the United States and would comply with applicable law, including the US Exchange Act. Any information about such purchases will be disclosed as required in the United Kingdom, will be reported to a Regulatory Information Service of the UK Listing Authority and will be available on the London Stock Exchange website: It may be difficult for US Salamander Shareholders to enforce their rights and claims arising out of the US federal securities laws, since Ophir and Salamander are located in countries other than the United States, and some or all of their officers and directors may be residents of countries other than the United States. US Salamander Shareholders may not be able to sue a non-us company or its officers or directors in a non-us court for violations of the US securities laws. Further, it may be difficult to compel a non-us company and its affiliates to subject themselves to a US court s judgment. None of the securities referred to in this Prospectus have been approved or disapproved by the SEC, any state securities commission in the United States or any other US regulatory authority, nor have such authorities passed upon or determined the adequacy or accuracy of the information contained in this Prospectus. Any representation to the contrary is a criminal offence in the United States. NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENCE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES ( RSA421-B ) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF THE STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE OF THE STATE OF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT, ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. 4

5 TABLE OF CONTENTS Page SUMMARY... 6 RISK FACTORS PRESENTATION OF INFORMATION INDICATIVE TRANSACTION STATISTICS EXPECTED TIMETABLE OF PRINCIPAL EVENTS OPHIR DIRECTORS, PROPOSED DIRECTOR, COMPANY SECRETARY, 55 REGISTERED OFFICE AND ADVISERS... PART I INFORMATION ON THE TRANSACTION PART II INFORMATION ON OPHIR PART III INFORMATION ON SALAMANDER PART IV OPERATING AND FINANCIAL REVIEW OF OPHIR PART V CAPITALISATION AND INDEBTEDNESS PART VI HISTORICAL CONSOLIDATED FINANCIAL INFORMATION 120 RELATING TO THE OPHIR GROUP... PART VII HISTORICAL CONSOLIDATED FINANCIAL INFORMATION 121 RELATING TO THE SALAMANDER GROUP... PART VIII UNAUDITED PRO FORMA FINANCIAL INFORMATION OF THE 122 COMBINED GROUP... SECTION A: UNAUDITED PRO FORMA FINANCIAL 122 INFORMATION... SECTION B: REPORTING ACCOUNTANTS REPORT ON UNAUDITED PRO FORMA FINANCIAL INFORMATION PART IX TAXATION PART X DIRECTORS, RESPONSIBLE PERSONS, CORPORATE GOVERNANCE 135 AND EMPLOYEES... PART XI ADDITIONAL INFORMATION PART XII DEFINITIONS PART XIII GLOSSARY OF TECHNICAL TERMS

6 SUMMARY Summaries are made up of disclosure requirements known as Elements. These Elements are numbered in Sections A E (A.1 E.7). This summary contains all the Elements required to be included in a summary for this type of security and issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of security and issuer, it is possible that no relevant information can be given regarding the Element. In this case, a short description of the Element is included in the summary with the mention of the words not applicable. Section A Introduction and warnings Element A.1 Warning to investors This summary should be read as an introduction to this Prospectus. Any decision to invest in Ophir Shares should be based on consideration of this Prospectus as a whole by the investor. Where a claim relating to the information contained in this Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the EEA States, have to bear the costs of translating the prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary, including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this Prospectus or it does not provide, when read together with the other parts of this Prospectus, key information in order to aid investors when considering whether to invest in Ophir Shares. A.2 Subsequent resale or final placement of securities by financial intermediaries Not applicable. The Company is not engaging any financial intermediaries for subsequent resale or final placement of the New Ophir Shares after publication of this Prospectus. Section B Issuer Element B.1 Legal and commercial name B.2 Domicile/legal form/legislation/country of incorporation B.3 Current operations and principal activities and markets Ophir Energy plc ( Ophir or the Company ). The Company is domiciled in England and Wales. The Company was incorporated and registered in England and Wales on 18 February 2004, with registered number , as a public company limited by shares. Ophir s registered office is situated in London, United Kingdom and the Existing Ophir Shares are admitted to the premium listing segment of the Official List of the UK Listing Authority and traded on the London Stock Exchange s main market for listed securities. The principal legislation under which the Company operates is the Companies Act and regulations made thereunder. Ophir is a FTSE 250, upstream oil and gas exploration company. The Company is incorporated in England and Wales with headquarters in London (England) and operational offices in Perth (Australia), Dar es Salaam and Mtwara (Tanzania), Malabo (Equatorial Guinea), Libreville (Gabon) and Nairobi (Kenya). 6

7 B.4a Significant recent trends affecting the Combined Group and its industry Since its foundation in February 2004, Ophir has acquired an extensive portfolio of oil and gas interests in Africa and South East Asia. The majority of Ophir s current assets are offshore in water depths greater than 250 metres and are thus classified as deepwater. The Company is a material and strategic offshore acreage holder in West and East Africa, with 14 blocks in five countries. Ophir has recently signed the PSC for a deepwater asset offshore Myanmar and agreed to acquire seven assets in Indonesia from Niko Resources. Ophir has made a number of significant gas discoveries in Tanzania and Equatorial Guinea. In March 2014, the Company completed the sale of a 20 per cent. stake in Blocks 1, 3 and 4, Tanzania for US$1.25 billion, with a further US$38 million payable at final investment decision. Ophir is considering its options in respect of Blocks 1, 3 and 4, Tanzania and is currently in ongoing discussions with parties in relation to the possible disposal of all or part of the interests it holds in Blocks 1, 3 and 4, Tanzania. At the date of this Prospectus, the Company has undertaken early stage exploration activities, but has not generated any revenue from oil and gas, although it has incurred costs primarily related to the acquisition and exploration of its asset portfolio. The Company has experienced operating losses in each full financial year which has been reported on since its incorporation. However, Ophir did not experience operating losses in the six months ended 30 June 2014 and 30 June Due to the general nature of oil and gas exploration and, where successful, the long lead times in developing projects, the Company may incur further operating losses in the current and future financial years as its exploration activities continue. If Completion does not occur, there can be no assurance that the Company will earn significant revenues and the Company may be dependent on future portfolio management to be able to meet the future funding of the Company. The Salamander Group s model concentrates on a small number of asset positions, or hubs, that each offer production, development and exploration opportunities to provide greater control and a more detailed understanding of the assets. With continuing development and exploration in the Gulf of Thailand and the success of the West Kerendan-1 gas discovery in Indonesia, the Salamander Group s production is expected to increase to approximately 15,000 boepd by The key factors affecting the Company s results of operations and financial condition, and those that are expected to affect the Combined Group s results of operations and financial condition in the future, include the following: * acquisition, exploration and development expenditure and success rates; * rapid expansion of the Company s operations; * oil and gas prices; * foreign exchange; * issues of Ophir Shares; and * the acquisition of Salamander. B.5 Description of the Combined Group The Company is currently the ultimate holding company of the Ophir Group. If the Scheme becomes effective, the Company will become the ultimate holding company of the Combined Group. 7

8 B.6 Major shareholders As at the Latest Practicable Date, insofar as it is known to the Directors from notifications received by the Company in accordance with the Disclosure and Transparency Rules or the Takeover Code, the names of each person, other than a Director, who, directly or indirectly, is interested in three per cent. or more of the voting rights attaching to the issued share capital of the Company, and the amount of such person s interest, is as follows: As at the Latest Practicable Date Immediately following the Transaction Shareholders Number of Ophir Shares Percentage of issued Ophir Shares Number of Ophir Shares (1) Percentage of issued Ophir Shares (2) Capital Group Companies 75,808, % 75,808, % Kulczyk Investments S.A. (3) 56,607, % 56,607, % BlackRock Group 53,256, % 57,029, % SailingStone Capital Partners LLC 50,069, % 69,821, % Hotchkis & Wiley Cap Mngmnt LLC 39,136, % 39,136, % M&G Inv Management Ltd 37,853, % 40,808, % Janus Capital 33,022, % 33,022, % Wellington Mnt. Co 28,416, % 28,416, % Mittal Investments S.a.r.l 25,314, % 25,314, % The Vanguard Group 19,784, % 21,279, % Notes: (1) Calculated by reference to the number of New Ophir Shares such Shareholder will receive under the Transaction on the basis of the number of Ophir Shares set out in this table and the number of Salamander Shares held by such Shareholder in Salamander as at the Latest Practicable Date as disclosed in the most recent disclosure by such Shareholder under Rule 8 of the Takeover Code. (2) Calculated by reference to the issued share capital of the Company of 575,186,914 Existing Ophir Shares as at the Latest Practicable Date (excluding Ophir Shares held in treasury) and on the assumption that: (a) 153,163,173 New Ophir Shares are issued on the Effective Date in connection with the Transaction; and (b) Ophir does not issue any further new Ophir Shares or undertake any buybacks of Ophir Shares in the period between the Latest Practicable Date and the Effective Date. (3) Kulczyk Investments S.A. indirectly owns a 100 per cent. interest in Oil and Gas Exploration Limited and includes Hydrocarbon Investments Limited. Save as set out above, the Company is not aware of any person who, as at the Latest Practicable Date, exercises, or could exercise, directly or indirectly, jointly or severally, control over the Company. None of the major shareholders of the Company set out above has different voting rights from any other holder of ordinary Existing Ophir Shares in respect of any ordinary Existing Ophir Shares held by them. 8

9 The interests of the Directors and of members of Senior Management (and of persons connected with them) in the share capital of the Company (all of which are beneficial unless otherwise stated), as at the Latest Practicable Date, are as follows (not including options disclosed below): As at the Latest Practicable Date Immediately following the Transaction Name Number of Ophir Shares Percentage of issued Ophir Shares Number of Ophir Shares (1) Percentage of issued Ophir Shares (1) Nicholas Smith ,000 (2) 0.022% 128,000 (2) 0.018% Dr Nicholas Cooper ,001 (3) 0.134% 1,257,031 (3) 0.173% Bill Higgs % % Ronald Blakely... 47,000 (4) 0.008% 47,000 (4) 0.006% Alan Booth ,000 (5) 0.022% 125,000 (5) 0.017% Vivien Gibney... 10, % 10, % Lyndon Powell... 33, % 33, % Bill Schrader... 10, % 10, % Clark Brannin % % Andrew Brown % % Michael Fischer % % Andrew Oldham % % Oliver Quinn % % Gawain Ross... 6,155 (6) 0.001% 6,155 (6) 0.001% Tony Rouse % 106,347 (7) 0.015% Dato Sandroshvili % % Dina Taylor % % Note: (1) Calculated by reference to the issued share capital of the Company of 575,186,914 Existing Ophir Shares as at the Latest Practicable Date (excluding Ophir Shares held in treasury) and on the assumption that: (a) 153,163,173 New Ophir Shares are issued on the Effective Date in connection with the Transaction; and (b) Ophir does not issue any further new Ophir Shares or undertake any buybacks of Ophir Shares in the period between the Latest Practicable Date and the Effective Date. (2) Mr Smith holds a beneficial interest in 128,000 Ophir Shares. The legal interest is held by Vestra Nominees Limited. (3) Dr Cooper holds a beneficial interest in 769,201 Ophir Shares. The legal interest is held by Goldman Sachs International. The beneficial interest in 800 Ophir Shares is held by a connected person, Alison Nightingale. The legal interest is held by James Capel (Nominees) Ltd. As at 14 January 2015, Dr Cooper also held a beneficial interest in 851,600 Salamander Shares, 1,600 of which were held by a connected person, Alison Nightingale. (4) Mr Blakely and members of his family hold a beneficial interest in 47,000 Ophir Shares. The legal interest is held by RBC Dominion Securities. (5) Mr Booth holds a beneficial interest in 125,000 Ophir Shares. The legal interest is held by TD Direct Investing Nominees (Europe) Ltd. (6) Mr Ross has a beneficial interest in 6,155 Ophir Shares. The legal interest is held by his wife. (7) Mr Rouse holds a beneficial interest in 185,953 Salamander Shares and also holds up to 236,654 options under the Salamander Share Schemes that vest, subject to performance criteria, in May 2015 and up to 190,903 options under the Salamander Share Schemes that vest, subject to performance criteria, in April The number of Ophir Shares immediately following the Transaction assumes these options do not vest on or prior to the Effective Date. The interests of the Directors and the Senior Management and their connected persons together represented approximately per cent. of the issued share capital of the Company as at the Latest Practicable Date and are expected to represent approximately per cent. of the issued share capital of the Company immediately following Completion of the Transaction). In addition to the above, a total of 3,408,023 options over Ophir Shares have been granted to the Directors and Senior Management under the Ophir Share Schemes. 9

10 B.7 Selected historical key financial information FINANCIAL INFORMATION ON THE OPHIR GROUP Consolidated Income Statement 6 months 6 months ended ended 30 June 30 June (unaudited) (unaudited) Year ended 31 December 2013 Year ended 31 December 2012 Year ended 31 December 2011 (US$ 000) Revenue... Gain on farm out ,020 13,844 Other income Exploration expenses... (67,706) (3,779) (229,103) (4,521) (15,688) General & administration expenses... (27,217) (15,723) (32,098) (36,394) (16,156) Other operating expenses... (774) (520) (46,357) (1,676) (870) Finance expenses... (1,039) Operating loss ,323 (20,010) (307,546) (42,579) (19,075) Finance income... 12, ,079 1,636 Profit/(Loss) before tax ,436 (19,374) (280,467) (40,943) (19,075) Taxation... (250,383) 34, Loss from continuing operations for the period/year 339,053 (19,374) (245,807) (40,715) (19,075) Consolidated Balance Sheet As at 30 June 2014 (unaudited) As at 30 June 2013 (unaudited) As at 31 December 2013 As at 31 December 2012 As at 31 December 2011 (US$ 000) Non-current assets ,677 1,186,754 1,153,301 1,031, ,935 Current assets... 1,550, , , , ,033 Total assets... 2,317,085 2,056,235 1,854,110 1,281, ,968 Non-current liabilities... (27,322) (57,251) (21,043) (57,273) (384) Current liabilities... (267,922) (104,981) (156,158) (120,249) (28,524) Total liabilities... (295,244) (162,232) (177,201) (177,522) (28,908) Net assets... 2,021,841 1,894,003 1,676,909 1,104, ,060 Equity... 2,021,841 1,894,003 1,676,909 1,104, ,060 Consolidated Cash flow 6 months ended 30 June 2014 (unaudited) 6 months ended 30 June 2013 (unaudited) Year ended 31 December 2013 Year ended 31 December 2012 Year ended 31 December 2011 (US$ 000) Operating cash flows... (231,955) (21,243) (14,901) (29,907) (22,469) Cash flows from investing activities ,499 (526,047) (532,946) (380,690) (43,893) Cash flows from financing activities... 1, , , , ,072 Net increase (decrease) in cash and cash equivalents , , ,721 (167,584) 306,710 Cash and cash equivalents at the start of the year , , , ,585 89,925 Effect of foreign exchange rate changes... 7,031 2,048 16,298 (1,258) (50) Cash and cash equivalents at the end of the year... 1,040, , , , ,585 10

11 FINANCIAL INFORMATION ON THE SALAMANDER GROUP Consolidated Income Statement Consolidated Balance Sheet 11

12 Consolidated Cash Flow Statement The following significant changes to financial condition and operating results of the Ophir Group during those periods: In the year ended 31 December 2011, the Ophir Group capitalised US$70.4 million of exploration and evaluation ( E&E ) expenditure, wrote off US$13.4 million of E&E expenditure and expensed US$2.3 million in connection with pre-license activities. In July 2011, the Ophir Group raised gross proceeds of US$394.8 million as a result of the Initial Public Offering. In the year ended 31 December 2012, the Ophir Group capitalised US$415.5 million of E&E expenditure, wrote off no E&E expenditure and expensed US$4.5 million in connection with pre-licence exploration activities. On 2 February 2012, the Ophir Group acquired 100 per cent. of the share capital of Dominion, a group incorporated in Bermuda that was admitted to trading on AIM prior to the acquisition. The purchase consideration of US$220,221,437 was satisfied by a combination of cash and equity. The Ophir Group issued 38,790,455 new shares with a fair value of US$181.5 million. In March 2012, the Ophir Group completed a placing of 30,500,000 Ophir Shares at a price of 4.95 per share, raising gross proceeds of US$263,399,000. In the year ended 31 December 2013, the Ophir Group wrote off US$54.0 million of E&E expenditure, expensed US$2.4 million in connection with pre-licence exploration activities and incurred impairment charges related to exploration of US$172.4 million. In March 2013, the Ophir Group undertook a placing of 19,850,000 Ophir Shares at a price of 4.60 per share and a 2-for-5 rights issue of 168,025,675 Ophir Shares at a price of 2.75 per share. In the six months ended 30 June 2014, the Ophir Group recognised a gain on farm out of US$673.0 million for the six months ended 30 June 2014 following the completion in March 2014 of its sale of a 20 per cent. interest in Blocks 1, 3 and 4 offshore of Tanzania to Pavilion pursuant to a farm out agreement dated 14 November There has been no significant change in the financial and operating results of the Ophir Group since 30 June 2014, being the date to which the last published unaudited interim condensed financial statements were prepared. 12

13 B.8 Selected key financial information The unaudited consolidated pro forma financial information of the Combined Group set out below has been prepared in a manner consistent with the accounting policies adopted by the Ophir Group in preparing the historical consolidated financial information for the financial year ended 31 December 2014, on the basis set out in the notes below and in accordance with Annex II to the Prospectus Directive Regulation. Unaudited pro forma income statement for the six months ended 30 June 2014 Adjustments Salamander Group for the Ophir Group six months for the six ended 30 June months ended 2014 (as 30 June 2014 reconciled) Combined Group Pro forma for the Acquisition six months accounting ended 30 June adjustments 2014 Notes (1) (2) (3) (4) (US$ 000s) Revenue , ,781 Cost of sales: Operating costs... (39,689) (39,689) Royalty payable... (15,460) (15,460) Amortisation of oil and gas properties... (40,813) (9,144) (49,957) Movement in inventories of oil. 6,602 6,602 Total cost of sales... (89,360) (9,144) (98,504) Gross profit... 88,421 (9,144) 79,277 Gain on farm out , ,020 Exploration expenses (67,706) 12,998 (389,024) (443,732) General & administration expenses... (27,217) (4,996) (32,213) Other operating expenses... (774) (20,640) (21,414) Share of profit of investments accounted for using the equity method... 7,856 7,856 Operating profit , ,279 (418,808) 262,794 Finance income... 12,113 1,685 13,798 Finance costs... (16,917) (16,917) Other financial (losses)/ gains... (2,936) (2,936) Profit / (loss) from continuing operations before taxation ,436 86,111 (418,808) 256,739 Taxation... (250,383) (94,296) 18,900 (325,779) Profit / (loss) for the period ,053 (8,185) (399,908) (69,040) 13

14 Unaudited pro forma statement of financial position as at 30 June 2014 Adjustments Ophir Group net assets as at 30 June 2014 (as reported) Salamander Group net assets as at 30 June 2014 (as reconciled) Acquisition accounting adjustments Combined Group Pro forma as at 30 June 2014 Notes (1) (2) (3) (4) (US$ 000s) Non-current assets Goodwill... 20, , ,230 Exploration and evaluation assets , ,024 (389,024) 872,528 Property, plant and equipment... 6, , , ,821 Financial assets... 16,460 57,211 73,671 Investments accounted for using the equity method... 46, , ,000 Total noncurrent assets ,677 1,368,003 58,570 2,193,250 Current assets Inventory... 23,316 51,228 74,544 Trade and other receivables... 36,269 25,033 61,302 Cash and cash equivalents... 1,040, ,773 (20,640) 1,153,956 Financial assets Investments , ,000 Total current assets... 1,550, ,877 (20,640) 1,740,645 Total assets... 2,317,085 1,578,880 37,930 3,933,895 Current liabilities Trade and other payables... (211,367) (95,857) (307,244) Bank borrowings due within one year... (80,226) (80,226) Convertible bonds... (91,897) (91,897) Taxation payable... (21,157) (75,436) (96,593) Provisions... (35,398) (35,398) Total current liabilities... (267,922) (343,416) (611,338) Noncurrent liabilities Deferred income tax... (26,968) (215,559) (315,000) (557,527) Bank borrowings... (223,632) (223,632) Bonds payable... (145,596) (145,596) Provisions... (354) (52,614) (52,968) Total noncurrent liabilities... (27,322) (637,401) (315,000) (979,723) Total liabilities... (295,244) (980,817) (315,000) (1,591,061) Net assets... 2,021, ,063 (277,070) 2,342,834 Notes: (1) The Ophir Group financial information for the year ended 31 December 2013 has been extracted without material adjustment from the audited consolidated financial statements of the Ophir Group for the year ended 31 December No adjustment has been made to reflect the trading results of the Ophir Group since 31 December The financial information as at 30 June 2014 has been extracted without material adjustment from the unaudited interim results of the Ophir Group for the six months ended 30 June (2) The consolidated income statement and balance sheet for the year ended 31 December 2013 and the six months ended 30 June 2014 of the Salamander Group has been extracted without adjustment from notes 2 and 3 respectively to the table in section 3 of Part V (Reconciliation of Financial Information on the Salamander Group on the basis of the Accounting Policies of the Ophir Group) of the Circular which has been incorporated into Part VIII (Unaudited Pro Forma Financial Information of the Combined Group) of this Prospectus. 14

15 (3) (a) The unaudited pro forma statement of net assets as at 30 June 2014 has been prepared on the basis that the Transaction will be treated as an acquisition of the Salamander Group by the Ophir Group in accordance with IFRS 3 Business Combinations. For purposes of the pro forma, the excess purchase consideration over the book value of the net assets acquired has been attributed to goodwill and no pro forma impairment charge has been applied to the goodwill balance in the period presented. The preliminary goodwill arising has been calculated as follows: US$ 000s Total consideration transferred (i) ,993 Less book value of net assets acquired... (598,063) Acquisition accounting adjustments (ii)... (277,070) Goodwill purchase (before measurement of the assets acquired and liabilities assumed at their fair value on the Effective Date) 135,230 Note: (i) The calculation of the consideration is based on the Closing Price of Ophir Shares of pence and a US$/GBP exchange rate of on 7 January 2015, being the latest practicable date for the purposes of the pro forma statement and assumes that there will be 270,940,133 Salamander Shares in issue not already owned by the Ophir Group or held by Salamander Group at completion and that each Salamander Share will be exchanged for of an Ophir Share. The calculation of the actual consideration to be reflected in the first set financial statements prepared of the Ophir Group to be prepared after the transaction has been completed will be based on the actual share price and foreign exchange rate of the closing date of the transaction, which may be materially different from that included in the pro forma. (ii) The acquisition accounting adjustments relate to the fair value measurement of the acquired assets and liabilities of the Salamander Group on the basis that the Transaction will be treated as an acquisition of the Salamander Group by the Ophir Group in accordance with IFRS 3 Business Combinations. (iii) The adjustments in respect of Exploration and evaluation assets, Property, plant and equipment and Investments for using the equity method relate the assessment of the fair value of interests in oil and gas assets. These have been based on economic models prepared in respect of these assets using the information currently available which includes the competent person s reports with respect to reserves, production sales contracts and other forecast data including oil and gas production, future capital expenditure and operating expenditure. Summarisation of the acquisition accounting adjustments included in the pro forma and its impact on the Combined Group: Net assets as at 30 June 2014: * Exploration and evaluation assets (US$389,024 thousand) have decreased as a result of the valuation performed by the Ophir Group. * Property, plant and equipment (US$151,896 thousand) has increased as a result of the valuation performed by the Ophir Group. * Investments accounted for using the equity method (US$181,336 thousand) have increased as a result of the valuation performed by the Ophir Group. The calculation of the fair value by the Ophir Group of Investments accounted for using the equity method has been performed on the basis of the valuation of the underlying oil and gas assets held by the investee. * Deferred income tax (US$237,000 thousand) has increased as a result of the increase in the fair value of Property, plant and equipment (US$151,896 thousand). The Ophir Group has calculated the deferred tax liability balance (US$237,000 thousand) by applying the prevailing corporate tax rate to the difference in the value between the brought forward tax carrying value of the assets and their fair value as at 30 June The corporate tax rates applied for the purposes of calculating the deferred tax liability have been 50 per cent. for assets held in Thailand and 44 per cent. for those assets held in Indonesia. * The Ophir Group has estimated the other remaining assets and liabilities on the basis that their fair value is approximate to their carrying value in the Salamander Group s balance sheet as at 30 June Income Statement for the six months ended 30 June 2014: * Amortisation of oil and gas properties (US$9,144 thousand) for the six months ended 30 June 2014 has been increased to reflect the increase in the amount of Property, plant and equipment (US$151,896 thousand). The increase in the Amortisation of oil and gas properties (US$9,144 thousand) has calculated at the same rate as that of the Salamander Group for the six months ended 30 June * Exploration expenses (US$389,024 thousand) for the six months ended 30 June 2014 has been increased to reflect the decrease in the amount of Exploration and evaluation assets (US$389,024). * Taxation (US$14,220 thousand) for the six months ended 30 June 2014 has decreased to reflect the increase in the Amortisation of oil and gas properties (US$9,144 thousand). 15

16 Income Statement for the year ended 31 December 2013: * Amortisation of oil and gas properties (US$28,806 thousand) for the year ended 31 December 2013 has been increased to reflect the increase in the amount of Property, plant and equipment (US$151,896 thousand). The increase in the Amortisation of oil and gas properties (US$28,806 thousand) has calculated at the same rate as that of the Salamander Group for the year ended 31 December * Exploration expenses (US$389,024 thousand) for the year ended 31 December 2013 has been increased to reflect the decrease in the amount of Exploration and evaluation assets (US$389,024). * Taxation (US$45,030 thousand) for the year ended 31 December 2013 has decreased to reflect the increase in the Amortisation of oil and gas properties (US$28,806 thousand). The fair values of all the assets and liabilities acquired in the transaction that will be included in the first set of financial statements prepared after the transaction has been completed, will be determined based on the closing date, and this may differ materially from those based in the pro forma. As a result, the change in measurement of the fair value of the assets and liabilities acquired, the calculation of any goodwill arising from the transaction may differ materially from that included in the pro forma. (b) Transaction costs expected to be incurred by the Ophir Group and the Salamander Group as a result of the Transaction of approximately US$11.64 million and US$9.0 million respectively have been recognised as an operating expense and deducted from cash and cash equivalents in the unaudited consolidated pro forma income statement and balance sheet respectively. These costs will not have a continuing impact on the Combined Group. No adjustments have been made to the unaudited pro forma to reflect transactions or activities including any expected synergies or costs savings or any other transactions, of the Ophir Group or the Salamander Group since 30 June The unaudited consolidated pro forma income statements and unaudited pro forma statement of financial position of the Combined Group have been prepared for illustrative purposes only, in accordance with item 20.2 of Annex I to the Prospectus Directive Regulation. The unaudited pro forma income statement has been prepared to illustrate the effect on earnings of the Combined Group in the six months ended 30 June 2014 as if the Transaction had taken place on 1 January The unaudited pro forma statement of financial position has been prepared to illustrate the effect on assets and liabilities of the Combined Group as at 30 June 2014 as if the Transaction had taken place on that date. B.9 Profit forecast or estimate Not applicable. Neither Ophir nor Salamander has made a profit forecast or estimate. B.10 Audit report on the historical financial information qualifications B.11 Insufficient working capital Not applicable. There are no qualifications included in any audit report on the historical financial information included in this Prospectus. Not applicable. In the opinion of the Company, the working capital available to the Ophir Group is sufficient for its present requirements, that is for at least the next 12 months following the date of this Prospectus. In the opinion of the Company, the working capital available to the Combined Group is sufficient for its present requirements, that is for at least the next 12 months following the date of this Prospectus. 16

17 Section C Securities Element C.1 Type and class of securities being offered C.2 Currency of the securities issue C.3 Number of issued and fully paid Ophir Shares and par value C.4 Rights attached to the Ophir Shares Ordinary shares in the capital of the Company, with the New Ophir Shares to be issued pursuant to the Transaction. When admitted to trading, the International Securities Identification Number (ISIN) for the New Ophir Shares will be GB00B24CT194. The Ophir Shares are denominated in sterling. On the Latest Practicable Date, the Company had 575,186,914 Ophir Shares in issue (all of which were fully paid or credited as fully paid) and 18,139,530 Ophir Shares held in treasury. The Ophir Shares have a par value of 0.25 pence each. The New Ophir Shares will be ordinary shares in the capital of Ophir with a nominal value of 0.25 pence each, will be issued credited as fully paid and will rank pari passu in all respects with the Ophir Shares in issue at the date of this Prospectus, save that they will only participate in any dividend which is made, declared or paid by Ophir after 24 November The Ophir Shares rank equally for voting purposes. On a show of hands, each Shareholder has one vote and, on a poll, each Shareholder has one vote for every Ophir Share held. Each Ophir Share ranks equally for any dividend declared and all dividends shall be declared and paid according to the amounts paid up on the Ophir Shares. Each Ophir Share ranks equally for any distributions made on a winding up of the Company. Each Ophir Share ranks equally in the right to receive a relative proportion of shares in the case of a capitalisation of reserves. C.5 Restrictions on transfer The Ophir Shares are freely transferable and there are no restrictions on transfer. However, the making of the proposed issue of New Ophir Shares to persons located or resident in, or who are citizens of, or who have a registered address in countries other than the United Kingdom, may be affected by the law or regulatory requirements of the relevant jurisdiction, which may include restrictions on the free transferability of such New Ophir Shares. C.6 Application for admission to trading on regulated market The Existing Ophir Shares are currently admitted to trading on the London Stock Exchange s main market for listed securities. Application will be made to the London Stock Exchange for the New Ophir Shares to be admitted to trading on its main market for listed securities. The London Stock Exchange s main market is a regulated market. C.7 Dividend policy The Directors do not anticipate paying dividends in the near future. The Directors will continue to evaluate the Company s dividend policy following Completion. The Directors envisage that, if dividends are paid in the future, the Company s dividend policy would be determined based on, and depend on, the results of the Company s operations, financial condition, cash requirements, prospects, profits available for distribution and other factors deemed to be relevant at the time. 17

18 Section D Risks Element D.1 Key information on key risks relating to the Combined Group or its industry * While Ophir believes that the business growth opportunities, cost savings and synergies expected to arise from the Transaction have been reasonably estimated, unanticipated events or liabilities may arise which result in a delay or reduction in the benefits derived from the Transaction, or in costs significantly in excess of those estimated. This may result in the Combined Group s results of operations, financial condition and/or prospects, and the price of New Ophir Shares, being adversely affected. * The Combined Group s future prospects will, in part, be dependent on effective integration of the Ophir Group and Salamander Group, including with respect to key employees and operational systems. * The Ophir Group does not currently produce any oil or gas and, although the Ophir Group has made some discoveries, it does not currently have any oil or gas reserves. Furthermore, as part of Ophir s active portfolio management, the Ophir Group may dispose of all or part of an asset in which discoveries have been made. If the Transaction does not complete Ophir may never produce any oil or gas and never have any earnings. * Although the Salamander Group currently has two producing assets, following Completion the overall Combined Group s total reserves and resources will consist of contingent and prospective resources. Accordingly, the success of the Combined Group will still depend on its ability to acquire, find, develop and commercially exploit resources and reserves, which are capital intensive activities. * Oil and gas prices are subject to volatility due to a variety of factors beyond Ophir s and Salamander s control. Prices have recently declined considerably, which has had, and may continue to have, a significant impact on the Ophir Group, the Salamander Group and, following Completion, the Combined Group and there can be no assurance that a recovery in oil and gas prices will be forthcoming. In particular, Salamander s revenues, profitability and cash flows depend substantially on the prices at which it sells its natural gas, crude oil and condensate. * The oil and gas contingent and prospective resources data contained in this Prospectus are estimates only and are inherently uncertain. * Appraisal and development activities involving the drilling of wells may be unpredictable and not result in the outcome planned, targeted or predicted, as extensive testing is required to understand the properties of a discovery. In addition, such activities may require further additional funding and significant infrastructure, including storage, transportation or processing capacity. * Oil and gas exploration, development and production can be dangerous and involve numerous risks and hazards, including health, safety and environmental risks, particularly in the case of deepwater operations, as was seen in the Gulf of Mexico in * Gas discoveries may require Ophir and, following Completion, the Combined Group, to invest in or have access to LNG development projects which have long lead times and require material investment in receipt, processing and transportation infrastructure and the marketing of LNG. * Ophir s and Salamander s businesses require and, following Completion, the Combined Group s business will require significant capital expenditure and the future expansion and development of 18

19 their businesses could require future debt and equity financing. The future availability of such funding is not certain. * The Ophir Group and the Salamander Group operate and, following Completion, the Combined Group will operate, in jurisdictions that are subject to significant political, economic, legal, regulatory and social uncertainties. In some of the jurisdictions in which the Ophir Group and the Salamander Group operate and following Completion, where the Combined Group will operate, there is a history of civil and political conflict including civil war and government change by coup d état. * The Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s businesses depend on permits and consents granted by the authorities of the countries where the Ophir Group, the Salamander Group and, following Completion, the Combined Group operate and may experience substantial delays or increased costs in obtaining all necessary permits. * The Ophir Group and the Salamander Group conduct and following Completion, the Combined Group will conduct business in jurisdictions with inherent risks relating to fraud, bribery and corruption. * Tax regimes in certain jurisdictions in which the Ophir Group, the Salamander Group and, following Completion, the Combined Group will have a presence may be subject to differing interpretations and are often subject to legislative change and changes in administrative interpretation in those jurisdictions. Such changes may be implemented with retrospective effect and as a result, transactions may be challenged by tax authorities and any profits from activities in those jurisdictions may be assessed to additional tax or additional transactional taxes. D.3 Key information on key risks relating to the Ophir Shares * The price of Ophir Shares could be volatile as a result of a number of factors including fluctuation in the price of oil, gas and other petroleum products and the results of exploration, development and appraisal programmes. * The sale of Ophir Shares by substantial Ophir Shareholders could depress the price of Ophir Shares. * Any change in current tax law or practice could adversely affect holders of Ophir Shares. * Holders of Ophir Shares in the United States and other overseas jurisdictions may not be able to participate in future equity offerings of Ophir Shares. 19

20 Section E Transaction Element E.1 Total net proceeds and estimated total expenses The total costs and expenses relating to the issue of this Prospectus, the Circular and to the negotiation, preparation and implementation of the Transaction are estimated to be between 6,380,000 and 7,700,000 million, (excluding VAT, the Takeover Panel fee and the UK Listing Authority listing fee) and are payable by the Company. E.2a Reasons for the Transaction, use of proceeds, estimated net amount of the proceeds Not applicable. This Prospectus and the Transaction does not constitute an offer or invitation to any person to subscribe for or purchase any shares in Ophir or Salamander. Ophir and Salamander will not receive any proceeds as a result of the proposed issue of New Ophir Shares. The Board of Directors of Ophir believe there is compelling strategic logic for a combination of the two businesses that would substantially benefit the shareholders of both companies. The Combined Group would have a strong balance sheet, enhanced operating capability in both Africa and South East Asia, and deep expertise across key technical and commercial functions. The Combined Group has the opportunity to generate immediate operating and financial synergies across the combined portfolio. Leveraging Ophir s exploration track record and financial strength and Salamander s established Asian operating platform, the Combined Group would be well-positioned to accelerate exploration activity in Salamander s licences in offshore Thailand, and in Ophir s recently acquired acreage in Myanmar and Indonesia, while continuing to pursue the significant opportunity set in South East Asia. The combination would provide shareholders with exposure to 21 production, development and exploration blocks in South East Asia, as well as to Ophir s extensive footprint in Africa. Ophir, as enlarged by the combination with Salamander, will benefit from diversified funding sources, which will significantly enhance the long-term sustainability of the combined business. Salamander s current production base is highly cash generative and, as anticipated production grows over the coming years, Ophir plans to use its strong balance sheet position to enhance the cash flow returns from the underlying assets. This cash flow can be reinvested in Ophir s proven business model, namely that of exploration/appraisal and continued monetisation of exploration/appraisal success. E.3 Terms and conditions of the Transaction Not applicable. This Prospectus and the Transaction does not constitute an offer or invitation to any person to subscribe for or purchase any shares in Ophir or Salamander. Ophir and Salamander will not receive any proceeds as a result of the proposed issue of New Ophir Shares. For completeness, however, it is intended that the Transaction will be effected by means of a court-sanctioned scheme of arrangement between Salamander and the Salamander Shareholders under Part 26 of the Companies Act. The purpose of the Scheme is to provide for Ophir to become the holder of the entire issued and to be issued ordinary share capital of Salamander. The Transaction is also subject to the Conditions and further terms which are summarised below: * the approval of the Scheme and related resolutions by Salamander Shareholders at the Court Meeting and the Salamander General Meeting; * the Scheme becoming unconditional and effective and being sanctioned by the Court subject to the Takeover Code, by no later 20

21 than p.m. on 30 June 2015 or such later date (if any) as Ophir and Salamander may agree and the Panel and the Court may allow; * the passing of the Resolution by Ophir Shareholders at the Ophir General Meeting; and * the UK Listing Authority having acknowledged to Ophir or its agent (and such acknowledgement not having been withdrawn) that the application for the admission of the New Ophir Shares to listing on the premium segment of the Official List has been approved and (subject to satisfaction of any conditions to which such approval is expressed) will become effective as soon as a dealing notice has been issued by the UK Listing Authority and the London Stock Exchange having acknowledged to Ophir or its agent (and such acknowledgement not having been withdrawn) that the New Ophir Shares will be admitted to trading on the London Stock Exchange s main market for listed securities. The Transaction is also conditional upon: (a) the SONA SPA being terminated by SEPT and SONA or, with the prior consent of Ophir, by Salamander and SEBHL, in each case in accordance with the relevant provisions of the SONA SPA; (b) with the prior consent of Ophir, the SONA SPA being terminated by agreement of the parties to the SONA SPA otherwise than in accordance with the relevant provisions of the SONA SPA; or (c) Salamander Shareholders not passing any SONA Disposal Shareholder Approval Resolution and the proposed SONA Disposal subsequently being terminated. Ophir has the right to waive this Condition. On 14 January 2015, Salamander and SONA announced their intention to terminate the SONA SPA on mutually acceptable terms (subject to finalisation of the documentation to effect such termination and, in Salamander s case, the consent of Ophir). The formal agreement to terminate the SONA SPA (and related transaction documentation) is expected to be finalised after the latest practicable date prior to the posting of this document and a public announcement by Salamander will be made when such agreement is concluded. Once terminated with the consent of Ophir, such termination will satisfy the SONA Condition. In circumstances where the termination agreement in respect of the SONA SPA is not concluded, and in light of the unanimous recommendation of the Salamander Directors to Salamander Shareholders to vote in favour of the Transaction, Salamander would defer any further action seeking Salamander Shareholder approval of the SONA Disposal until after the results of the Ophir General Meeting, expected to be held at 11:00 a.m. on Friday 6 February Assuming the respective shareholders of Ophir and Salamander both vote in favour of the Transaction, in conjunction with Ophir, Salamander would then decide the most appropriate means by which the SONA Condition would be satisfied. The Transaction can only become Effective if all Conditions, including those described above, have been satisfied or, if capable of waiver, waived (including any waiver of the condition in respect of the termination of the SONA Disposal). If any Condition is not capable of being satisfied by the date specified therein, Ophir shall make an announcement through a Regulatory Information Service as soon as practicable and, in any event, by no later than 8.00 a.m. on the Business Day following the date so specified, stating whether Ophir has invoked that Condition, waived that Condition or, with the agreement of Salamander, specified a new date by which that Condition must be satisfied. Once the necessary approvals from Salamander Shareholders have been obtained and the other Conditions have been satisfied or (where applicable) waived, the Scheme will only become effective if approved by 21

22 the Court and upon delivery of the Court Order(s) to the Registrar of Companies. Subject to satisfaction (or waiver) of the Conditions, the Scheme is expected to become effective before 31 March E.4 Material interests Not applicable. There is no interest, including any conflicting interest, which is material to the Transaction. E.5 Selling shareholders and lock-up agreements Not applicable. No person is offering to sell any Ophir Shares as part of the Transaction and as such there are no selling shareholders. E.6 Dilution Assuming the issue of 153,163,173 New Ophir Shares pursuant to the Transaction, no other issues of new Ophir Shares by Ophir between the Latest Practicable Date and Admission and no further buybacks of Ophir Shares by Ophir between the Latest Practicable Date and Admission, the Existing Ophir Shares will represent 79.0 per cent. of the total issued Ophir Shares immediately following Admission. E.7 Estimated expenses charged to investor Not applicable. No expenses will be charged to investors by the Company. 22

23 RISK FACTORS Investing in and holding Ophir Shares involves financial and other risks. Prior to investing in Ophir Shares, investors should carefully consider all of the information contained in this Prospectus (including any information incorporated by reference), paying particular attention to the risks factors set out below. Investors should note that the risk factors set out below do not purport to be a complete list or explanation of all risk factors that may affect Ophir, Ophir Shares or the Transaction. Additional risks and uncertainties not currently known to Ophir or which Ophir currently deems immaterial may arise or become material in the future. Due to the fact that the Ophir Group s and the Salamander Group s respective operations are of a similar nature in many respects, some of the risks set out below (other than those relating to the Transaction itself) will not be new risks for Ophir which arise only on completion of the Transaction. Rather, the potential impact of these existing risk factors will be materially increased (in absolute terms) from Completion, as a result of the enhanced scale of the operations of the Combined Group. Some risk factors will be new to Ophir, following Completion, due to the diversified nature of the Combined Group. The occurrence of any of these risks may have a material adverse effect on Ophir s and, following the Scheme becoming effective, the Combined Group s business, results of operations, financial condition and/or prospects and/or the price of the Ophir Shares to the detriment of Ophir and/or Ophir Shareholders and investors could lose all of their investment. Investors should consider carefully whether an investment in Ophir Shares is suitable for them in light of the information contained in this Prospectus and their personal circumstances. Prospective investors should note that the risks relating to Ophir, Salamander, the Combined Group, its industry and the Ophir Shares summarised in the section of this Prospectus headed Summary are the risks that the Company and the Ophir Directors and the Proposed Director believe to be the most essential to an assessment by a prospective investor of whether to consider an investment in the Ophir Shares. However, as the risks which the Ophir, Salamander and the Combined Group face relate to events and depend on circumstances that may or may not occur in the future, prospective investors should consider not only the information on the key risks summarised in the section of this Prospectus headed Summary but also, among other things, the risks and uncertainties described below. You should consult a legal adviser, an independent financial adviser duly authorised under the FSMA or a tax adviser for legal, financial or tax advice if you do not understand this Prospectus. Part A: Risks relating to the Transaction Conditions to the Transaction The Transaction is subject to the satisfaction of a number of Conditions (which are set out in Part 3 of the Scheme Document) and further terms which are summarised below: * the approval of the Scheme and related resolutions by Salamander Shareholders at the Court Meeting and the Salamander General Meeting; * the Scheme becoming unconditional and effective and being sanctioned by the Court subject to the Takeover Code, by no later than p.m. on 30 June 2015 or such later date (if any) as Ophir and Salamander may agree and the Panel and the Court may allow; * the passing of the Resolution by Ophir Shareholders at the Ophir General Meeting; and * the UK Listing Authority having acknowledged to Ophir or its agent (and such acknowledgement not having been withdrawn) that the application for the admission of the New Ophir Shares to listing on the premium segment of the Official List has been approved and (subject to satisfaction of any conditions to which such approval is expressed) will become effective as soon as a dealing notice has been issued by the UK Listing Authority and the London Stock Exchange having acknowledged to Ophir or its agent (and such acknowledgement not having been withdrawn) that the New Ophir Shares will be admitted to trading on the London Stock Exchange s main market for listed securities. The Transaction is also conditional upon: (a) the SONA SPA being terminated by SEPT and SONA or, with the prior consent of Ophir, by Salamander and SEBHL, in each case in accordance with the relevant provisions of the SONA SPA; (b) with the prior consent of Ophir, the SONA SPA being terminated by agreement of the parties to the SONA SPA otherwise than in accordance with the relevant provisions of the SONA SPA; or (c) Salamander Shareholders not passing any SONA Disposal Shareholder Approval Resolution and the proposed SONA Disposal subsequently being terminated. Ophir has the right to waive this Condition. 23

24 The Transaction can only become Effective if all Conditions, including those described above, have been satisfied or, if capable of waiver, waived (including any waiver of the condition in respect of the termination of the SONA Disposal). If any Condition is not capable of being satisfied by the date specified therein, Ophir shall make an announcement through a Regulatory Information Service as soon as practicable and, in any event, by no later than 8.00 a.m. on the Business Day following the date so specified, stating whether Ophir has invoked that Condition, waived that Condition or, with the agreement of Salamander, specified a new date by which that Condition must be satisfied. There is no guarantee that these (or any other) Conditions will be satisfied (or waived, if applicable). Failure to satisfy any of the Conditions may result in the Transaction not being completed, which would mean that costs of between 6,380,000 and 7,700,000 million (excluding VAT, the Takeover Panel fee and the UK Listing Authority listing fee) in relation to the issue of this Prospectus, the Circular and to the negotiation, preparation and implementation of the Transaction will have been incurred by the Company with none of the potential benefits of the Transaction having been achieved. It would also mean that management s time spent in connection with the Transaction, which could have otherwise been spent in connection with other aspects of the Ophir Group s business, will not have been spent productively. Even if a material adverse change to the Salamander Group s business or prospects was to occur, in certain circumstances, Ophir may not be able to invoke the Conditions and terminate the Transaction, which could reduce the value of Ophir Shares Completion of the Transaction is also subject to there being no material adverse change affecting the Salamander Group before the Scheme is sanctioned by the Court. However, under the Takeover Code, except in limited circumstances, Ophir may only invoke a condition to the Transaction to cause the Transaction not to proceed if the Panel is satisfied that the circumstances giving rise to that condition not being satisfied are of material significance to Ophir in the context of the Transaction. If a material adverse change affecting the Salamander Group were to occur and the Panel did not allow Ophir to invoke a condition to cause the Transaction not to proceed, and the other Conditions are satisfied (including the Ophir Shareholders passing the Resolution at the Ophir General Meeting) the market price of Ophir Shares or the Combined Group s business or financial condition may be materially adversely affected. Business growth opportunities, cost savings and synergies achieved may differ from those anticipated While Ophir believes that the business growth opportunities, cost savings and synergies expected to arise from the Transaction have been reasonably estimated, unanticipated events or liabilities may arise which result in a delay or reduction in the benefits derived from the Transaction, or in costs significantly in excess of those estimated. The Combined Group may also face challenges with the following: redeploying resources in different areas of operations to improve efficiency; minimising the diversion of management attention from ongoing business concerns; and addressing possible differences between the Ophir Group s business culture, processes, controls, procedures and systems and those of the Salamander Group. Additionally, the Transaction might affect the relationship that the Ophir Group and/or the Salamander Group have with suppliers, third party service providers and joint venture partners, and affect the performance and/or potential growth opportunities. Under any of these circumstances, the business growth opportunities, cost savings and other synergies anticipated by the Ophir Group to result from the Transaction may not be achieved as expected, or at all, or may be delayed materially. To the extent that the Combined Group incurs higher integration costs or achieves lower synergy benefits than expected, its and the Combined Group s results of operations, financial condition and/or prospects, and the price of New Ophir Shares, may be adversely affected. The Combined Group s future prospects may, in part, be dependent on effective integration of the Ophir Group and the Salamander Group, including with respect to key employees and operational systems The Combined Group s future prospects may, in part, be dependent upon the Combined Group s ability to integrate the Ophir Group and the Salamander Group successfully and any other businesses that it may acquire in the future without material disruption to the existing business including as a result of the integration of operational systems. The performance of the Combined Group in the future will, amongst other things, also depend on the successful integration and motivation of key employees from both the Ophir Group and the Salamander Group. It is possible that failure to retain 24

25 certain individuals during the integration period will affect the ability to integrate the Ophir Group and the Salamander Group successfully into the Combined Group and could have a material adverse effect on the Combined Group s results of operations, financial conditions and/or prospects. This risk factor should not, however, be interpreted as suggesting in any way that the Combined Group will not have in place adequate systems and controls with respect to the monitoring of its financial position and prospects. Part B: Risks related to the Ophir Group, the Salamander Group and, following Completion, the Combined Group The Ophir Group does not currently produce oil or gas or have any reserves and, if the Transaction does not complete, may never produce oil or gas or have any earnings The Ophir Group does not currently produce any oil or gas and, although the Ophir Group has made some discoveries, it does not currently have any oil or gas reserves. Furthermore, the Ophir Group has a track record of portfolio management and monetising assets, and therefore may dispose of all or part of an asset in which discoveries have been made. If the Transaction does not complete and if the Ophir Group should make no discoveries from which it is able to produce oil or gas commercially, or if appraisal and development of discoveries should prove unsuccessful, the Ophir Group may never produce any oil or gas and never have any earnings. This would have a material and adverse impact on the business, prospects, financial condition and results of operations of the Ophir Group. The Ophir Group s operations are currently at an early stage and have experienced operating losses in each year since its incorporation The Ophir Group has experienced operating losses in each full year it has reported on since its incorporation (however, Ophir did not experience operating losses in the six month period ending 30 June 2014 and 30 June 2011) and, as at 31 December 2013, the Company had incurred operating losses of approximately US$307.5 million (as calculated in accordance with IFRS). If the Transaction does not complete, the Ophir Group does not expect to earn operating revenues in the current and medium-term future financial years as its exploration, development and appraisal activities continue. If the Transaction does not complete there can be no assurance that the Ophir Group will ever earn significant revenues or any revenues from operations at all, or achieve profitability, which could impact the Ophir Group s ability to sustain operations or obtain any further additional funds it may require in the future to satisfy requirements beyond the Ophir Group s current committed capital expenditure for the next 12 months. Exploration activities may not result in the discovery of commercially recoverable oil and/or gas Although the Salamander Group currently has two producing assets, following Completion the Combined Group s total reserves and resources will also consist of contingent resources, which have not been determined to be commercially recoverable and prospective resources, which have not been discovered or determined to be commercially recoverable. Accordingly, the success of the Combined Group following Completion will still depend on its ability to acquire, find, develop and/or commercially exploit resources and reserves. Exploration and development activities are capital intensive and their successful outcome cannot be assured. Following Completion, the Combined Group will undertake exploration activities with no guarantee that such expenditure will result in the discovery of commercially recoverable oil or gas. There is a long lead time between discovery and production of oil and gas, particularly for gas. During this long lead time, the Ophir Group, the Salamander Group and, following Completion, the Combined Group may incur significant costs at a level which may be difficult to predict. It will also have exposure to many of the risk factors described below, and may become exposed to additional risks not currently envisaged. These risks may individually or collectively diminish the returns obtainable by the Ophir Group, the Salamander Group and, following Completion, the Combined Group in relation to any discovery or even the ability to realise any value from the discovery at all, which may have a material adverse effect on the business, prospects, financial position and results of operations of the Ophir Group, the Salamander Group and, following Completion, the Combined Group. 25

26 The Salamander Group s revenues, profitability and cash flows are, and following Completion, the Combined Group s revenues, profitability and cash flows will be, concentrated in a small number of producing assets The large majority of the Salamander Group s existing production capabilities are linked to the Bualuang field. As a result, the Salamander Group is, and following completion the Combined Group will be, exposed disproportionately to the impact of localised events or circumstances. Such adverse conditions could include delays or interruptions to production from wells caused by transportation capacity constraints, scarcity of equipment, facilities, personnel or services, political or social unrest, significant adverse governmental regulation, natural disasters, adverse weather conditions, wars or terrorist attacks. The concentrated nature of this asset portfolio results in such conditions having a relatively greater impact on the Combined Group s results of operations than they might have if the Combined Group had a more diversified portfolio of production assets with wider geographic exposure. Oil and gas prices have recently declined considerably, which has had, and may continue to have, a significant impact on the Ophir Group, the Salamander Group and, following Completion, the Combined Group Oil and gas prices are subject to volatility due to a variety of factors beyond the Ophir Group s and the Salamander Group s control. Factors affecting crude oil prices include supply and demand fundamentals, economic outlooks and production quotas set by the Organization of Petroleum Exporting Countries ( OPEC ) and political events. Over the past six months, as a result of factors including weaker outlook for global demand growth combined with excess supply, oil prices worldwide have been subject to significant volatility and have fallen significantly and there can be no assurance that a recovery in oil prices will be forthcoming. Lower oil prices may reduce the economic viability of the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s operations and proposed operations and materially adversely affect their prospects, financial condition and results of operations. In particular, the Salamander Group s revenues, profitability, cash flows and rate of growth depend substantially on the prices at which it sells its natural gas, crude oil and condensate. Prices for substantially all of the Salamander Group s crude oil and condensate are set by reference to international benchmark oil prices, in particular the Dubai Crude (Fateh) benchmark ( Dubai Crude Price ), which has fallen 54 per cent. from US$102 to US$47 since the beginning of September 2014 to the Latest Practicable Date. Consequently, the decline in the Dubai Crude Price has adversely impacted the Salamander Group s revenue and cash generated from operating activities and, following Completion, may similarly impact the Combined Group. Similarly, all of the Salamander Group s natural gas that is sold in Thailand and Indonesia, is and will be sold respectively into the domestic markets pursuant to existing long-term contracts. These existing natural gas contracts either provide for a fixed price with a 3.0 per cent. increase every three years or set prices based on a formula linked to the Singapore price for high sulphur fuel oil 180 CST ( High Sulphur Fuel Oil Price ), as published in the Price Average Supplement of Platts Oilgram Price Report, which generally moves in line with global spot oil prices. Consequently, the prices at which, following Completion, the Combined Group will sell natural gas under the Salamander Group s existing natural gas contracts will not reflect any subsequent increases in the market price of natural gas in South East Asia. The Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s ability to produce economically from a field will be determined, in large part, by the difference between the revenue received for natural gas, crude oil and condensate produced by the Ophir Group, the Salamander Group or, following Completion, the Combined Group or at fields in which it holds an interest and the Ophir Group s, the Salamander Group s or, following Completion, the Combined Group s operating costs, taxation costs, royalties and costs incurred in transporting and selling its natural gas, crude oil and condensate. Therefore, lower natural gas or crude oil prices may reduce the amount of natural gas, crude oil and condensate that the Ophir Group, the Salamander Group or, following Completion, the Combined Group or operators of the fields where it holds an interest are able to produce economically or may reduce the economic viability of the production levels of specific wells or of projects planned or in development to the extent that production costs exceed anticipated revenue from such production. This could, in turn, result in a reduction in the reserves and resources to the extent certain fields are no longer economically viable to develop. Any reduction in reserves and resources and/or any curtailment in the overall production volumes of the Ophir Group, the Salamander Group or, following Completion, the Combined Group or at fields in which the Ophir Group, the Salamander Group or, following Completion, the Combined Group holds an interest due 26

27 to a decline in natural gas, crude oil prices could result in a reduction in the Ophir Group s, the Salamander Group s or, following Completion, the Combined Group s net profit or increase in net losses, and impair its ability to make planned capital expenditures in the longer term and to incur costs that are necessary for the development of the Ophir Group s, the Salamander Group s or, following Completion, the Combined Group s fields, any of which could materially adversely affect the Ophir Group s, Salamander Group s or, following Completion, the Combined Group s business, results of operations, financial condition and prospects. Many of the Ophir Group s, and a small number of the Salamander Group s, existing contracts (including the long term contracts described above) were entered into during a period when oil and gas prices were high, and the commercial terms required by national governments and contractors reflected elevated price expectations, therefore these contracts may have been entered into on more favourable terms than may be available in future licence rounds. In order to partially mitigate the risks inherent in fluctuations in oil prices, the Salamander Group has, at times, entered into hedging arrangements and the Ophir Directors intend to continue such arrangements where appropriate. The Salamander Group s hedging programme only covers a portion of its oil and condensate production for a limited period of time, and there can be no assurance that the Salamander Group or, following Completion, the Combined Group will continue to receive the same prices for crude oil and/or condensate as it currently receives or historically has received. If prices for the Salamander Group s or, following Completion, the Combined Group s crude oil or condensate fall below current levels and/or if the Combined Group s overall production volumes are curtailed as a result of a decline in oil prices, this could materially adversely affect the Combined Group s business, results of operations, financial condition and prospects. Should oil or gas prices significantly increase in the longer term a national government or third party contractor may want to change its commercial terms with the Ophir Group or the Salamander Group or, following Completion, the Combined Group. As a result of the jurisdictions in which the Ophir Group and the Salamander Group operate, this may result in the cancellation or termination of or a unilateral change or a series of unilateral changes (such as a change in oil and/or gas pricing policy or the renegotiation or nullification of existing concession contracts) to contracts by a national government or third party contractor which could materially and adversely affect the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business, prospects, financial condition and results of operations. The oil and gas reserves and contingent and prospective resources data contained in this Prospectus are estimates only and are inherently uncertain The reserves and contingent and prospective resources data contained in this Prospectus are estimates only and should not be construed as representing exact quantities. Reserves and resources estimates contained in this Prospectus are based on production data, prices, costs, ownership, geophysical, geological and engineering data, the interpretation of seismic data and other information assembled by the Ophir Group and the Salamander Group (with assistance from other operators), including drilling results. Such interpretation and estimates of the amounts of oil and gas resources are subjective and the results of drilling, testing and production subsequent to the date of any particular estimate may result in substantial upward or downward revisions to the original interpretation and estimates. Furthermore, different reservoir engineers may make different estimates of reserves, resources and cash flows based on the same available data. Estimating the value and quantity of economically recoverable crude oil and natural gas reserves and resources, and consequently the rates of production, net present value of future cash flows realised from those reserves and resources and the timing and amount of capital expenditure, necessarily depend upon a number of variables and assumptions, such as ultimate reserves recovery, interpretation of geological and geophysical data marketability of oil and gas, royalty rates, continuity of current fiscal policies and regulatory regimes, future oil and gas prices, operating costs, development and production costs and work over and remedial costs, all of which may vary from actual results. In addition, these factors are more uncertain in areas where there has been limited historic hydrocarbon exploration, which is the case for certain of the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s assets. The estimates also assume that the future development of the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s fields and the future marketability of their crude oil, condensate and natural gas will be similar to past development and marketability, that the assumptions as to capital expenditure and operating costs are accurate and that the capital 27

28 expenditure strategy of the Ophir Group, the Salamander Group and, following Completion, the Combined Group is successfully implemented by it. Any production profiles and development plans are based on a number of assumptions which, together with the estimates, may prove to be materially incorrect. Unless otherwise indicated, the definitions and guidelines set out by the 2007 SPE/AAPG/WPC/SPEE Petroleum Resources Management System ( PRMS ) which defines prospective and contingent resources as undiscovered and/or undeveloped mineral resources, respectively have been used. PRMS recognises that contingent resources are by their nature uncertain in respect of the inferred volume range and may not be considered commercially recoverable for a variety of reasons, including the high costs involved in recovering contingent resources, the price of oil and gas at the time, the availability of personnel, equipment and funding, and other development plans that the Ophir Group, the Salamander Group and, following Completion, the Combined Group may have. Prospective resources are those deposits that are estimated, on a given date, to be potentially recoverable from accumulations yet to be discovered, and are therefore speculative in respect of their inferred presence and uncertain in respect of their inferred volume range. Prospective resources may fail to be discovered and even if discovered may not be commercially recoverable. In addition, such data is based on assumptions which, together with the estimates, may prove to be materially incorrect. As a result, potential investors should not place undue reliance on the forward-looking statements contained in this Prospectus concerning the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s resources, reserves, production profiles and development plans. In addition, nothing in this Prospectus should be interpreted as assurances of the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s oil and gas resources, reserves, the production profiles of the assets or the development plans of the Ophir Group, the Salamander Group and, following Completion, the Combined Group. If the estimates of the Ophir Group s, the Salamander Group s or, following Completion, the Combined Group s oil and gas resources, reserves, production profiles and development plans and the assumptions on which they have been based prove to be incorrect, the Ophir Group, the Salamander Group and, following Completion, the Combined Group may be unable to produce the estimated levels or quality of oil and gas set out in this Prospectus (or any oil and gas at all), actual production, revenues and expenditures with respect to reserves and resources will vary from estimates, and the variances may be material, and the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business, prospects, financial condition and results of operations could be materially and adversely affected. Dry wells or wells discovering less oil and/or gas than expected may lead to a downgrading of the potential value of the underlying Petroleum Agreements or require further funds to continue exploration work Exploration activities are inherently uncertain in their outcome. When exploring an area for oil and gas the Ophir Group and the Salamander Group investigate a number of prospects. Should the Ophir Group, the Salamander Group or, following Completion, the Combined Group undertake drilling in a particular geographic area but discover no oil and gas (a dry well ) or discover less oil and/or gas than expected, this may lead to a downgrading of the potential value of the Petroleum Agreement concerned and perhaps to other Petroleum Agreements within the same geological basin which may lead the Ophir Directors to believe that the other prospects within that geographic area would be less likely to yield exploration success, potentially decreasing the value of such assets. If this is the case, once the minimum work obligations under the relevant Petroleum Agreement have been satisfied, the Ophir Group, the Salamander Group or, following Completion, the Combined Group may decide to relinquish or reduce its interests in that Petroleum Agreement, in which case it would have no further exploration rights, even though it may have identified a number of additional prospects. Dry wells, or wells in which less oil and/or gas has been discovered than expected, may also result in the Ophir Group, the Salamander Group and, following Completion, the Combined Group requiring substantially more funds if it chooses to continue exploration work and drill further wells beyond the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s existing minimum work commitments. Such funding may be unavailable or may have to be obtained on unfavourable terms, leading to a potential deterioration in Ophir s, Salamander s or, following Completion, the Combined Group s financial position. Drilling a dry well or discovering less oil and/ or gas than expected would also mean that the Ophir Group, the Salamander Group and, following Completion, the Combined Group may not be able to recover the costs incurred in drilling that well or make a return on its investment resulting in significant exploration expenditure being written off. 28

29 Any of these circumstances may have a material adverse effect on the business, prospects, financial position and results of operations of the Ophir Group, the Salamander Group and, following Completion, the Combined Group. Any appraisal and development activities which are typically carried out following the discovery of oil and/or gas may require further funding and may not result in economically viable production The results of any appraisal of oil and gas discoveries are uncertain and may lead to the conclusion that efforts are unprofitable, either due to wells being dry or not economically viable to develop. Appraisal and development activities involving the drilling of wells may be unpredictable and not result in the outcome planned, targeted or predicted, as extensive testing is required to understand the properties of a discovery. In addition, appraisal and development activities of the Ophir Group, the Salamander Group, and, following Completion, the Combined Group (beyond the current minimum work commitments for the next 12 months) may require further additional funding and significant infrastructure, including storage, transportation or processing capacity which Ophir will not have if the Transaction does not complete. These requirements may be beyond the amount of funding currently expected and the infrastructure currently used by the Ophir Group or intended to be used by the Combined Group following Completion. Ophir cannot provide any guarantee that such expenditure will result in the production of commercially recoverable oil or gas. Any of the above may have a material adverse effect on the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business, prospects, financial condition and results of operations. The Ophir Group and, following Completion, the Combined Group may not be able to identify appropriate expansion opportunities or may not be able to manage such expansion effectively Future increases in the Ophir Group s and, following Completion, the Combined Group s reserves will depend not only on the Combined Group s ability to develop the Ophir Group s and the Salamander Group s present assets, but also on their ability to select, develop and/or acquire additional suitable producing assets or prospects which may require it to acquire land on which to locate pipelines, LNG plants and other equipment in a timely and cost-effective manner. Following Completion, the Combined Group will need to acquire or find and develop additional reserves in order to maintain the Salamander Group s current production levels in the long term. There can be no assurance that the Combined Group will be able to identify appropriate acquisition or development opportunities or that it will be able to make such acquisitions on appropriate terms as and when they become available. If the Combined Group does identify such acquisition or development opportunities, there can be no assurance that the Combined Group will be able to manage effectively such expansion. The Combined Group may encounter numerous integration challenges arising on the acquisition of businesses and/or assets, including challenges that are not currently foreseeable and inheriting undisclosed liabilities. Any failure of the Ophir Group and, following Completion, the Combined Group to manage effectively its growth and development could have a material adverse effect on its business, prospects, financial condition or results of operations. There is no certainty that all, or indeed any, of the elements of the Ophir Group s and, following Completion, the Combined Group s current strategy will develop as anticipated or that the Ophir Group will become profitable. In the event that the Ophir Group s and, following Completion, the Combined Group s operations are successful, the Ophir Group s and, following Completion, the Combined Group s current systems, procedures and controls will need to be expanded and strengthened to support the Ophir Group s and, following Completion, the Combined Group s future operations. The Ophir Group, the Salamander Group and, following Completion, the Combined Group may be subject to the risk of exploration and appraisal periods not being extended Whilst the Ophir Group and the Salamander Group negotiate, and, following Completion, the Combined Group will negotiate renewals of its exploration or appraisal periods and term contracts prior to their expiry, there can be no assurance that the Ophir Group, the Salamander Group and, following Completion, the Combined Group will be able to enter into a new phase or obtain extensions to contracts with governments, suppliers, service providers or joint venture partners on 29

30 commercially reasonable terms, prior to the end of an exploration period, following the end of the period or at all. Under its relevant Petroleum Agreements, the Ophir Group and the Salamander Group are obligated to carry out certain minimum work obligations within designated exploration or appraisal periods. In the event the Ophir Group, the Salamander Group or, following Completion, the Combined Group fails to satisfy its agreed minimum work programme commitments within the requisite time period and it is unable to secure an extension, the Ophir Group s, the Salamander Group s or, following Completion, the Combined Group s interest in the Petroleum Agreement may be terminated by the government, or the Ophir Group, the Salamander Group or, following Completion, the Combined Group may be required to relinquish all or part of the contract area or pay a specified sum to the government. It is also possible that an exploration or appraisal period set out in a Petroleum Agreement may be insufficient to perform the necessary seismic, drilling or other exploration or appraisal activities required to determine whether it is appropriate for the Ophir Group, the Salamander Group or, following Completion, the Combined Group to elect to move into the next phase of the Petroleum Agreement and commit to additional work obligations. The Ophir Group, the Salamander Group or, following Completion, the Combined Group may therefore seek to secure the necessary amendments, renewals, extensions or waivers prior to making an election to move into the next phase of exploration or appraisal, and could miss the deadline for election to the next phase, whilst discussions with the government are pending. The necessary amendments, renewals, extensions or waivers may not be forthcoming from the relevant government on terms commercially acceptable to the Ophir Group, the Salamander Group or, following Completion, the Combined Group, giving rise to the risk that the Ophir Group s, the Salamander Group s or, following Completion, the Combined Group s interest in the relevant Petroleum Agreement may be terminated by the government or the Ophir Group, the Salamander Group or, following Completion, the Combined Group may be required to relinquish all or part the contract area. If the Ophir Group, the Salamander Group or, following Completion, the Combined Group is not able to obtain such amendments, renewals, extensions or waivers to a Petroleum Agreement, this could materially and adversely affect its business, prospects, financial condition and results of operations. Oil and gas exploration, development and production can be dangerous and involve numerous risks and hazards, including health, safety and environmental risks, particularly in the case of deepwater operations, as was seen in the Gulf of Mexico in 2010 Following Completion, the Combined Group s future success will depend, in part, on its ability to develop crude oil and natural gas reserves in a timely and cost-effective manner and achieve its production targets. Developing oil and gas resources and reserves into commercial production involves a high degree of risk. The Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s exploration operations will be subject to all the risks common in its industry. These hazards and risks include encountering unusual or unexpected rock formations or geological pressures, fires, explosions or power shortages, equipment failures or accidents, premature declines in reservoirs, blowouts, uncontrollable flows of crude oil, natural gas or well fluids, or water cut levels, pollution and other environmental risks, shortages or delays in the availability of drilling rigs and other equipment and transport and the delivery of equipment. Consequent exploration, development and/or production delays and/or declines and deterioration in normal field operating conditions may adversely affect revenue and cash flow levels, result in significant additional costs to replace or repair the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s assets, and result in expected production targets not being achieved. Given the nature of its offshore, deepwater operations, the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s exploration and drilling facilities, and in particular its rigs, will also be subject to the hazards inherent in marine operations, such as capsizing, sinking, grounding, damage from severe storms or other severe weather conditions, damage to pipelines, platforms, facilities and sub-sea facilities from trawlers, anchors and vessels, storms, strong currents, and risks and hazards resulting from navigational difficulties. The offshore drilling conducted by the Ophir Group, the Salamander Group and, following Completion, the Combined Group involves 30

31 drilling risks including high pressures and mechanical difficulties, which increase the risk of delays in drilling and of operational issues arising. Such dangers were evidenced by the blowout of the Macondo well in the Gulf of Mexico in Such events may result in environmental damage, injury to persons and loss of life and a failure to produce oil or gas in commercial quantities. They could also result in significant delays to drilling programmes, a partial or total shutdown of operations, significant damage to equipment owned by the Ophir Group, the Salamander Group or, following Completion, the Combined Group and equipment owned by third parties and personal injury or wrongful death claims being brought against Ophir, Salamander or, following Completion, the Combined Group. These events can also put at risk some or all of the Combined Group s licences or Petroleum Agreements which enable it to explore, and could result in Ophir, Salamander or, following Completion, the Combined Group incurring significant civil liability claims (as BP plc incurred following the Macondo well blowout), significant fines or penalties as well as criminal sanctions potentially being enforced against Ophir, Salamander or, following Completion, the Combined Group and/or its officers. The Ophir Group, the Salamander Group and, following Completion, the Combined Group may also be required to curtail or cancel any operations on the occurrence of such events. Any of the above could materially and adversely affect the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business, prospects, financial condition and results of operations. The Ophir Group, the Salamander Group and, following Completion, the Combined Group may be adversely affected by natural disasters and climatic conditions The Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s operations (particularly offshore), including the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s drilling programmes and other exploration activities and the transport and other logistics on which the Ophir Group, the Salamander Group and, following Completion, the Combined Group are dependent, may be adversely affected and severely disrupted by climatic conditions. Natural disasters, regular climatic events (such as monsoons) or adverse conditions may occur in those geographical areas in which the Ophir Group, the Salamander Group and, following Completion, the Combined Group operate, including severe weather, cyclones, oceanic currents, tsunamis, excessive rainfall, tropical storms or droughts. The occurrence of any of the above could cause delays in the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s exploration, appraisal and development activities which could adversely affect the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business, prospects, financial condition and results of operations. The Ophir Group, the Salamander Group and, following Completion, the Combined Group is subject to significant environmental, health and safety laws and regulations and may be subject to additional regulation and restrictions over time The Ophir Group, the Salamander Group and, following Completion, the Combined Group are subject to environmental laws and regulations in connection with its operations. There are certain risks inherent in the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s activities, such as accidental spills, leakages, explosions, fires or other unforeseen circumstances that could expose Ophir and, following Completion, the Combined Group to significant liability. The Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s operations are subject to laws and regulations relating to the protection of human health and safety as well as the environment. The Ophir Group and the Salamander Group each have health, safety and environment policies are to observe local legal requirements as well as to apply recognised international industry standards in its operations. Failure by the Ophir Group or the Salamander Group to comply with applicable legal requirements or recognised international industry standards may give rise to significant liabilities. The Ophir Group, the Salamander Group or, following Completion, the Combined Group may become subject to further extensive laws, regulations, licence conditions and scrutiny on deepwater drilling or become subject to more stringent application of existing regulations on deepwater drilling, particularly in areas that are environmentally sensitive and/or have not yet been open to drilling. The terms of future Petroleum Agreements or licences may include more stringent environmental and/or health and safety requirements. The obtaining of requisite licences and permits may also become more 31

32 difficult or be the subject of delay by reason of governmental, regional or local consultation, approvals or other considerations or requirements. In the long term, the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s ability to carry out deepwater exploration may be affected by such increased regulation and the terms of licences. The obtaining of exploration, development or production licences for deepwater oil and gas exploration may become more difficult or be the subject of delay due to governmental, regional or local consultation, approvals or other considerations or requirements. Furthermore, insurance for such operations may not be available on economically viable terms in the event of such increased regulation. In addition, the Ophir Group, the Salamander Group and, following Completion, the Combined Group may be required to incur additional expenditure or could be required to hire or purchase additional equipment to comply with any new operational, environmental and/or health and safety regulations. The impact of any such additional regulations or requirements could be a constraint on long-term oil and gas development and production of the Ophir Group, the Salamander Group and, following Completion, the Combined Group and restrict the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s control over the nature and timing of its exploration, appraisal, development, production and other activities or its ability to undertake these activities at all may be materially and adversely affected, including by substantial delays or material increases in costs. Such additional costs, interruptions or delays could have an adverse impact on the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business, prospects, financial condition and results of operations. The Salamander Group is, and, following Completion, the Combined Group will be, subject to counterparty risk relating to the sales of the Salamander Group s and, following Completion, the Combined Group s crude oil, condensate and natural gas The Salamander Group has entered into agreements with a number of counterparties in relation to the sale and supply of its crude oil, condensate and natural gas (albeit all crude oil is sold to PTT, the state owned oil company) and is therefore subject to the risk of delayed offtakes or payment for delivered production volumes or counterparty default. In certain cases, the Salamander Group s and, following Completion, the Combined Group s counterparty, either pursuant to contractual arrangements or as a result of political, geographic, infrastructure or other constraints or factors, is in practice the sole potential purchaser of the Salamander Group s production output. This is particularly the case for sales of natural gas, as sales and transportation of natural gas are dependent on the availability of transmission and other infrastructure facilities enabling the supply of natural gas produced by the Salamander Group to end users. In particular, at present the sole purchaser for the Salamander Group s natural gas in Central Kalimantan in Indonesia is PLN, the Indonesian state power company; the sole purchaser of gas from Sinphuhorm is PTT. Similarly, following the recent political changes in Thailand, all crude oil is now required, in practice, to be sold to PTT. The absence of alternative purchasers for the transmission or purchase of natural gas produced by the Salamander Group or, following Completion, the Combined Group and the practical restrictions on sales of crude oil produced by the Salamander Group, or following Completion, the Combined Group to persons other than PTT may expose it to offtake and production delays, adverse pricing or other adverse contractual terms, which could have a material adverse effect on the Salamander Group s or, following Completion, the Combined Group s business, results of operations, financial condition and prospects. The Ophir Group and the Salamander Group face and, following Completion, the Combined Group will face strong competition for exploration licences The oil and gas exploration industry is highly competitive. There is significant competition in almost every public round of bidding for exploration licences throughout Africa and South East Asia. The Ophir Group, the Salamander Group and, following Completion, the Combined Group will compete with other industry participants in the search for, and acquisition of, oil and gas assets and licences. Competitors include companies with, in many cases, greater financial resources, technical resources, local contacts, staff and facilities than those of the Ophir Group and the Salamander Group. Many of these companies have strong market power as a result of several factors, including greater diversification and reduction of risk than the Ophir Group, the Salamander Group and, following Completion, the Combined Group, greater financial strength facilitating major capital expenditures, greater integration and exploitation of economies of scale in technology and organisation, strong 32

33 technical experience, greater infrastructure and reserves, and strong brand recognition. Increased competition may lead to higher costs and reduced available growth opportunities for the Ophir Group, the Salamander Group and, following Completion, the Combined Group. The Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s ability to remain competitive will require, among other things, management s continued focus on reducing unit costs, improving efficiency and maintaining long-term growth in the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s reserves and production. There can be no assurance that the Ophir Group, the Salamander Group and, following Completion, the Combined Group will succeed in obtaining any additional oil and/or gas assets or prospects, or, if it does so, that it will be able to acquire such assets or prospects on economically viable terms. This may lead to increased costs in the carrying on of the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s activities and reduced available growth opportunities, which could materially adversely affect its business, prospects, financial condition and results of operation. Gas discoveries may require the Ophir Group and, following Completion, the Combined Group, to invest in or have access to LNG development projects which require long lead times and material investment in receipt, processing and transportation infrastructure and the marketing of LNG Although many of the Ophir Group s assets have prospectivity for oil, the Ophir Group has only discovered gas to-date and may need to monetise gas reserves through several LNG development projects which require long lead times and material investment in the receipt, processing and transportation infrastructure and the marketing of LNG. Delays and differences between estimated and actual timing of critical events and the completion of these projects may adversely affect the Ophir Group s development projects and the Ophir Group s ability to participate in large-scale development projects in the future. In addition, LNG projects usually require long-term offtake contracts which the Ophir Group may not be able to secure on economically viable terms or at all. Furthermore, in order to monetise gas reserves through LNG development projects Ophir may be dependent on its joint venture partner (such as BG and Pavilion Energy in Blocks 1 and 4 in Tanzania and Petrobras in Mbeli Marin and Ntsina Marin, Gabon) for the timing, management and funding of such development (see further the risks identified under Ophir and Salamander are typically required to consult with third party operators and other joint venture partners in relation to significant matters below). If the Ophir Group is unable to fund any necessary LNG development projects (which are not part of the planned capital expenditure for the next 12 months) or find partners to provide full or partial funding for such projects, or if the Ophir Group s projects are delayed or if the Ophir Group is not able to secure economically viable offtake agreements, this could have a material adverse effect on Ophir s business, prospects, financial condition and results of operation. In certain circumstances, the Ophir Group may need to rely on access to third party infrastructure to monetise its gas or its oil. If such access is unavailable or unavailable at an economically justifiable cost then this could have a material adverse effect on Ophir s business, prospects, financial condition and results of operation. In particular, the Ophir Group has an 80 per cent. interest in offshore Block R, Equatorial Guinea, with the remaining 20 per cent. interest held by the national oil company of Equatorial Guinea, GEPetrol. On 6 November 2014, Ophir announced that it had entered into an agreement with Excelerate Energy L.P. ( Excelerate ) and the Government of Equatorial Guinea for the provision by Excelerate of a Floating Liquefaction Storage and Offloading vessel, with first gas expected in Such a facility is the first of its kind in Africa and it is not possible to predict whether any of the issues mentioned above will arise. If any such issues do arise, they may have a material adverse effect on the business, prospects, financial position and results of operations of Ophir and, following Completion, the Combined Group. Salamander has, and, following Completion, the Combined Group will have material outstanding indebtedness As at 31 December 2014 (on an unaudited basis), Salamander had US$380 million of net external debt outstanding. Salamander s and, following Completion, the Combined Group s obligation to make scheduled payments on its indebtedness and to maintain its covenants could limit its financial and operational flexibility. The RBL Facility and the NOK Bonds each contain covenants requiring the Salamander Group to maintain certain specified financial ratios. If market conditions deteriorate significantly, there is a risk that existing financial covenants could be breached. Breach of such 33

34 covenants could, subject to any applicable waiver or agreement, result in the RBL Facility and the NOK Bonds becoming immediately payable, potentially requiring the Salamander Group and, following Completion, the Combined Group to dispose of assets at significantly less than full value. In addition, should the RBL Facility be terminated or suspended, or be in default, this could limit the Salamander Group s and, following Completion, the Combined Group s access to capital in the longer term and, consequently, its ability to implement its capital expenditure programme. However, following Completion, the Combined Group expects to be able to maintain the relevant financial ratios for at least the next 12 months. In the event that there is any such breach, withdrawal, repayment, remedy or restriction, it could have an adverse impact on the Salamander Group s and, following Completion, the Combined Group s business, financial condition and/or results of operations in the longer term. Furthermore, the borrowing amounts available to the Salamander Group under the RBL Facility depend on forecasted net revenues from some of the Salamander Group s assets. If the Salamander Group s and, following Completion, the Combined Group s assets become impaired, the amounts available to the Salamander Group and, following Completion, the Combined Group under the RBL Facility would decrease. The RBL Facility is also made on a secured basis. Such secured borrowings will rank ahead of the unsecured borrowings of the Salamander Group and on an insolvent distribution of the Salamander Group s assets. If the lenders force a sale of any of the secured assets of the Salamander Group, there is a risk that the value received may be lower than the value at which the investment was previously recorded. If the value received is less than the amount of the indebtedness, the Salamander Group s other assets would be available to the lender. In addition, Salamander and, following Completion, the Combined Group will likely suffer reputational damage which could result in lender unwillingness to extend additional finance and significantly raise the Salamander Group s and, following Completion, the Combined Group s future borrowing costs. The Ophir Group s and the Salamander Group s businesses require and, following Completion, the Combined Group s business will require significant capital expenditure and the future expansion and development of their businesses could require future debt and equity financing. The future availability of such funding is not certain Ophir anticipates that it and, following Completion, the Combined Group, will need to make substantial capital investments for its operations, exploration, appraisal, development and/or production plans. For capital expenditure beyond the Ophir Group s and the Salamander Group s current committed capital expenditure for the next 12 months, the Ophir Group, the Salamander Group and, following Completion, the Combined Group may enter into significant borrowing arrangements (in addition to the RBL Facility and the NOK Bonds) or raise further equity financing for its operations. Various forms of debt are available, ranging from equipment credits from various export agencies through infrastructure development agency supported debt to bank debt. However, the Ophir Group and, following Completion, the Combined Group, may be unable to obtain non-equity financing (in addition to the RBL Facility and the NOK Bonds) or additional equity financing in the amounts required for any expenditures beyond its current committed capital expenditure for the next 12 months and thereafter, on favourable terms or at all. Moreover, the global credit environment then existing may pose additional challenges to the Combined Group, securing necessary bank loans or securing acceptable rates of interest. Alternatively, the Ophir Group and, following Completion, the Combined Group, may in the future seek funds for such activities by selling part of its operations and/or by farming out its assets. There is no certainty that counterparties may enter into such transactions in the future or that the terms proposed by counterparties would be acceptable to the Ophir Group and, following Completion, the Combined Group. To the extent the Combined Group does take out additional bank loans or other forms of debt financing, the Ophir Group and, following Completion, the Combined Group, would be subject to increased interest expenses, and may also be subject to covenants requiring that the Ophir Group and, following Completion, the Combined Group, maintain prescribed financial ratios and covenants restricting certain aspects of its business, including, for example, restrictions on additional future borrowings and indebtedness levels and permitted future acquisition or disposal activity, as well as security interests placed over certain of its assets. In addition, future debt financings may limit the Ophir Group s and, following Completion, the Combined Group s, ability to withstand competitive pressures, as the Ophir Group and, following Completion, the Combined Group may become illiquid or less liquid in cash as a result of interest payments on its debt due to increases in interest rates. This could hinder the Ophir Group s and, following Completion, the Combined Group s, ability to 34

35 raise, renew and service its future indebtedness, reduce the funding options available to the Ophir Group and, following Completion, the Combined Group, and render it more vulnerable to economic downturns. In addition, if the Ophir Group and, following Completion, the Combined Group, requires debt but is unable to secure sufficient bank borrowings, it is highly likely that, other than in respect of its current committed capital expenditure, this would pose challenges to the Ophir Group s and, following Completion, the Combined Group s, planned development of its assets and the timeline for development. Ophir, and following Completion, the Combined Group may, in addition, need to raise further additional equity at a future date (for expenditure beyond its current committed capital expenditure for the next 12 months). If the market conditions are not supportive, this may not be possible. If Ophir and, following Completion, the Combined Group is unable to generate or obtain additional funding (for expenditure beyond its current committed capital expenditure for the next 12 months) it is likely to be limited in its ability to undertake any additional operations, exploration, appraisal, development or production plans. This could have a material adverse effect on the Ophir Group s and, following Completion, the Combined Group s business, prospects, financial condition, results of operations and cash flows and on the Ophir Group s and, following Completion, the Combined Group s ability to fund the expansion or development of the business in the longer term. Interruptions or delay to exploration, appraisal, development and production could significantly impact the Ophir Group, the Salamander Group and, following Completion, the Combined Group If the Ophir Group, the Salamander Group and, following Completion, the Combined Group (or the operator of assets in which the Ophir Group, the Salamander Group and, following Completion, the Combined Group has an interest) is unable to explore, appraise or develop petroleum operations or produce oil and/or gas or is delayed in such matters as a result of matters such as failure to obtain equipment, equipment failure, natural disasters, political, economic, taxation, legal, regulatory and social uncertainties, piracy, terrorism, visa issues, non-governmental organisation activity or protests or labour disputes, the Ophir Group, the Salamander Group and, following Completion, the Combined Group may experience loss of income from delayed or decreased (or zero) production and significant budget overruns. For example, on 8 January 2014, Salamander announced that due to a damaged production riser, production from the Bualuang oil field had been temporarily shut-in. The situation was contained and all oil was successfully dispersed within a five hour period. Salamander subsequently announced on 13 February 2014 that the damaged risers had been repaired and production from the Bualuang field recommenced. Furthermore, the Ophir Group, the Salamander Group and, following Completion, the Combined Group operate in jurisdictions that have developing transportation, telecommunications and financial services infrastructures which may present substantial obstacles and cause material delays to the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s proposed activities. As a result of any of these or other issues, the Ophir Group, the Salamander Group and, following Completion, the Combined Group may be unable to satisfy the minimum work commitments under one or more of its Petroleum Agreements and may as a result experience difficulty in extending or renewing such Petroleum Agreements. Such interruptions or delays could result in disruptions to the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s assets, increased costs, delayed or decreased incomes and may therefore have a material adverse impact on the Ophir Group s, the Salamander Group and, following Completion, the Combined Group s business, prospects, financial condition and results of operations. The Ophir Group and the Salamander Group rely on and, following Completion, the Combined Group will rely on third party contractors and providers of capital equipment. The future availability, quality and costs of services and equipment is not certain In common with other exploration and production companies, the Ophir Group and the Salamander Group (or the relevant operator of assets in which they have an interest) contract services and procure capital equipment, rigs, well casing and other drilling materials, storage tanks and other equipment from third party providers on which exploration, appraisal and development and production activities are dependent. Following Completion, the Combined Group will continue to do the same. 35

36 Such equipment, materials and services can be highly specific and scarce, may not be of the required quality and/or may face interruptions or delays in availability at the times and places required. With respect to rigs and drilling materials and equipment in particular, if there were a problem with a rig, or with a component of a rig, it may be difficult to find a suitable replacement in a short time frame. Failure to perform drilling within the expiry date of a Petroleum Agreement may lead to liability towards the authorities, loss of the Petroleum Agreement or might adversely affect the Salamander Group s and, following Completion, the Combined Group s standing as an energy company operating in Thailand, Indonesia, Malaysia or any other country in which the Combined Group will have oil and gas assets, which may negatively impact the Combined Group s prospects in future licensing rounds. The costs of third party services, materials and equipment have increased significantly over recent years and may continue to rise, including as a result of cost inflation or scarcity of such services, materials and equipment. The scarcity of such equipment, materials and services, as well as their potentially high costs, could delay, restrict or lower the profitability and viability of the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s assets and therefore could adversely affect its business, prospects, financial condition and results of operation. Conversely, should there be a sudden increase in availability of equipment, materials and services in the market, and a resulting fall in prices for such services, materials and equipment, then due to the necessity of contracting certain long lend items in avoidance of commencement of certain activities, the Ophir Group, the Salamander Group and, following Completion, the Combined Group may have contracted at prices which would not be competitive with the then prevailing rates which could materially adversely affect the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business, prospects, financial condition and results of operation. The Ophir Group and the Salamander Group are typically required to consult with third party operators and other joint venture partners in relation to significant matters The Ophir Group and the Salamander Group operate a number of their assets within various joint ventures. For those assets where the Ophir Group or the Salamander Group is the operator and has a joint venture partner, the relevant operating agreement typically provides that the joint venture partner must be consulted or that it must provide its consent in relation to significant matters. Accordingly, while the Ophir Group or the Salamander Group generally has control over day-to-day management and operations of those assets, it may be unable to undertake certain activities because of opposition from a joint venture partner, or it may experience delays in undertaking activities due to time taken to obtain the consent of the relevant joint venture partner. Any such opposition or delay could result in losses or increased costs to the Ophir Group or the Salamander Group. Where the Ophir Group or the Salamander Group are not the operator of an asset (such as in Blocks 1 and 4 in Tanzania in the case of the Ophir Group or the Khorat Plateau in the case of the Salamander Group), although it may have consultation rights or the right to withhold consent in relation to significant operational matters (depending on the level of the Ophir Group s or the Salamander Group s interest in such asset), it has limited control over day-to-day management so that mismanagement of an asset by the operator or disagreements with the operator as to the most appropriate course of action may result in significant delays, losses or increased costs to the Ophir Group or the Salamander Group. The terms of the relevant operating agreement generally impose standards and requirements in relation to the operator s activities. The Ophir Group or the Salamander Group transfers operatorship to a third party or acquires interests in assets operated by third party operators only if it believes such third party is reputable and financially and technically able to perform the role of operator. Any transfer of operatorship is usually also subject to the consent of the relevant government. Governments generally require certain criteria to be satisfied by the proposed new operator before they will approve any transfer in the role of operator. However, there can be no assurance that such operators will observe such standards or requirements and this could result in a breach of the relevant operating agreement. There is a risk that other parties with interests in the Ophir Group s or the Salamander Group s assets may not be able to fund or may elect not to participate in, or consent to, certain activities relating to those assets which require that party s consent (including decisions relating to drilling programmes, including the number, identity and sequencing of wells, appraisal and development decisions and decisions relating to production). In these circumstances, it may not be possible for 36

37 such activities to be undertaken by the Ophir Group or the Salamander Group alone or in conjunction with other participants at the desired time or sequence or at all. Other participants in the Ophir Group s or the Salamander Group s assets may default on their obligations to fund capital or other funding obligations in relation to the assets. In such circumstances, the Ophir Group or the Salamander Group may be required under the terms of the relevant operating agreement or otherwise to contribute all or part of such funding shortfall itself and, beyond completion of the current minimum work commitments for the next 12 months, the Ophir Group or the Salamander Group may not have the resources to meet these obligations. Any disagreement, absence of consent, delay, opposition, breach of agreement, or inability to undertake activities or failure to provide funding of the kind identified above could adversely affect the Ophir Group s or the Salamander Group s business, prospects, financial condition and results of operation. Fluctuations in currency exchange rates may materially adversely affect the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s results of operations and financial condition The Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s revenue, finance costs and indebtedness are predominantly denominated in, or linked to, the US Dollar. The Ophir Group s and the Salamander Group s consolidated financial statements are, and, following Completion, the Combined Group s consolidated financial statements will be presented in US Dollars and the functional currency of Ophir and all of its subsidiaries is the US Dollar. However, a substantial portion of the Salamander Group s operating and other expenses (including operating costs and capital expenditures) are denominated in Thai baht, Indonesian rupiah, Singapore dollar and pounds sterling. A significant appreciation of Thai baht, Indonesian rupiah, Singapore dollar or pounds sterling against the US Dollar would have a negative impact on the Salamander Group s operating and other expenses. The Salamander Group holds, from time to time, cash balances in currencies other than the US Dollar, such as UK Pounds Sterling, Indonesian rupiah and Thai baht, to meet short-term commitments in those currencies. It also receives monies from oil sales, calculated in US Dollars, in Thai Bhat. Monetary assets and liabilities are translated into US Dollars at the exchange rates prevailing at the balance sheet date, with a corresponding charge or credit to the income statement. Accordingly fluctuations in the exchanges rate between the US Dollar and other currencies, principally Indonesian rupiah and Thai baht, could adversely affect the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s reported results of operations. As a result, fluctuations in currency exchange rates may materially adversely affect the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business, results of operations, financial condition and prospects. The Ophir Group and the Salamander Group are and, following Completion, the Combined Group will be dependent on a limited team of key personnel for its success The Ophir Group and the Salamander Group are, and, following Completion, the Combined Group will be dependent on a growing, but limited team of individuals with relevant experience, knowledge and skill in exploration and development operations for their success. The departure of any of these individuals or any impediment to any of them performing his or her duties may cause the Ophir Group, the Salamander Group and, following Completion, the Combined Group serious operational difficulties, and the Ophir Group, the Salamander Group and, following Completion, the Combined Group may not be able to locate suitable replacement personnel in a timely manner, or at all. In addition, the personal connections and relationships of the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s Senior Management are important to the conduct of its business. There is no guarantee that the Ophir Group, the Salamander Group and, following Completion, the Combined Group will retain key individuals, and if the Ophir Group, the Salamander Group and, following Completion, the Combined Group were to lose a member of their Senior Management teams unexpectedly, the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business, prospects, financial condition and results of operations may be adversely affected. The Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s long-term success depends on attracting and retaining skilled personnel The Ophir Group s and the Salamander Group s businesses require and, following Completion, the Combined Group s business will require skilled personnel and professional staff in the areas of 37

38 exploration and development, operations, engineering, business development, oil and gas marketing, finance and accounting. There is competition for such personnel in the African region and also in the United Kingdom and Australia where the Ophir Group has offices and in the countries in which the Salamander Group operates. Limitations on the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s ability to engage, train and retain the required number of suitably qualified personnel would reduce its capacity to undertake further projects and may have a material adverse effect on its business, prospects, financial condition and results of operations. The Ophir Group and the Salamander Group face, and, following Completion, the Combined Group will face the possibility of future decommissioning cost that it cannot anticipate Upon the cessation of petroleum production and/or expiry or termination of Petroleum Agreements, contractors are commonly required, under the terms of relevant agreements or local law, to dismantle and remove equipment, cap or seal wells and generally make good production sites. Ophir s accounts do not make provision for such decommissioning since either local laws or relevant Petroleum Agreements do not specifically provide for decommissioning cost or Ophir does not consider it appropriate at this stage of its activities to make provision for the possibility of incurring decommissioning cost. There can be no assurance that the Ophir Group or following Completion, the Combined Group will not in the future incur decommissioning cost since local or national governments may require decommissioning to be carried out in circumstances where there currently is no express obligation to do so, particularly in the case of future licence renewals. The costs associated with decommissioning or penalties for failure to decommission a facility may have an adverse effect on the Ophir Group s or following Completion, the Combined Group s business, prospects, financial condition and results of operations. The Salamander Group, through its interests under Petroleum Agreements, has assumed certain obligations in respect of the decommissioning of its fields and related infrastructure. These liabilities are derived from legislative and regulatory requirements concerning the decommissioning of wells and production facilities and require the Salamander Group to make provision for and/or underwrite the liabilities relating to such decommissioning. Although the Salamander Group s accounts make a provision for such decommissioning costs (such provisions amounted to US$48.4 million as at 31 December 2013), there can be no assurances that the costs of decommissioning will not exceed the amount of the long-term provision set aside to cover such decommissioning costs. In addition, local or national governments may require decommissioning to be carried out in circumstances where there is no express obligation to do so, which may result in higher decommissioning costs than the Salamander Group expected at the time when provisions were made, and it may be required to provide cash-back guarantees, blocked cash deposits or similar upfront relating to future decommissioning costs. The oil and gas industry currently has little experience of decommissioning petroleum exploration and production infrastructure in South East Asia as few such structures have been decommissioned in these regions. It is therefore difficult to forecast accurately the costs that the Salamander Group or following Completion, the Combined Group s will incur in satisfying its decommissioning obligations and the Salamander Group or following Completion, the Combined Group s may have to draw on funds from other sources to bear such costs. Any significant increase in the actual or estimated decommissioning costs that the Salamander Group or following Completion, the Combined Group s incurs could have a material adverse effect on the Salamander Group s business, results of operation, financial condition and prospects. The Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s insurance and indemnities may not adequately cover all risks or expenses The insurance industry is not yet fully developed in some of the countries where the Ophir Group and the Salamander Group operate and, following Completion, the Combined Group will operate. Some forms of insurance protection common in other more developed countries are not yet available in these countries and insurance cover is typically provided by the international reinsurance markets with local fronting where required. This applies to both operational and employee risks that would typically be sourced by oil companies. The Salamander Group s insurance (including that of operators of assets in which the Salamander Group has interests) currently includes cover for damage to or loss of its production facilities, loss of production income (to a limited extent) in respect of the Salamander Group s production assets in Thailand, insurance for out-of-control wells (including coverage of pollution and environmental damage caused thereby), third-party liability coverage (including employer s liability insurance), and 38

39 directors and officers liability insurance. In each case, the insurances are subject to deductibles, exclusions and limitations. The Salamander Group s upstream and midstream activities are covered under its insurance programme. The Ophir Group does not currently engage in any midstream or downstream activities. The Ophir Group s insurance currently includes cover for out-of-control wells (including coverage of pollution caused and re-drill costs), third-party liability coverage and directors and officers liability insurance, in each case subject to deductibles, exclusions and limitations. The Salamander Group, the Ophir Group and following Completion, the Combined Group will not carry key-person, onshore terrorism or sabotage insurance however where relevant in territories of operation, statutory insurance coverages will be purchased. The Ophir Group, the Salamander Group and, following Completion, the Combined Group may be subject to substantial liability claims due to the inherently hazardous nature of its business or for the acts or omissions of third party contractors, operators or joint venture partners. Any indemnities the Ophir Group, the Salamander Group and, following Completion, the Combined Group may receive from such parties may be difficult to enforce if such third party contractors, operators or joint venture partners lack adequate financial resources. The Ophir Group s and the Salamander Group s operations are, and, following Completion, the Combined Group s operations will be subject to the risks normally associated with exploration, appraisal and development activities and, in particular, deepwater operations. The Ophir Directors believe that its existing insurance and indemnity coverage is reasonable to cover all general material risks associated with the Ophir Group s operations (and that of the operators of assets in which it has an interest) and, following Completion, the Combined Group s operations. However, Ophir, Salamander and, following Completion, the Combined Group can give no assurance that its existing insurance and indemnity cover is reasonable or sufficient to cover all of the risks to which it may be subject at any time or that the proceeds of insurance applicable to covered risks or recovery under indemnities will be adequate to cover expenses relating to losses or liabilities. Accordingly, the Ophir Group, the Salamander Group and, following Completion, the Combined Group may suffer material losses from uninsurable or uninsured risks or insufficient insurance and indemnity coverage. The Ophir Group and the Salamander Group are, and, following Completion, the Combined Group will be also subject to the risk of unavailability of insurance, increased premiums or deductibles, reduced coverage and additional or expanded exclusions in connection with its insurance policies and those of operators of assets it does not itself operate. In the event of any occurrence which results in losses or other adverse effects on the Ophir Group, the Salamander Group and, following Completion, the Combined Group for which it does not have adequate insurance or indemnity cover, this may have a material adverse effect on the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group business, prospects, financial condition and results of operations. The Salamander Group and, following Completion, the Combined Group, may be subject to tax liabilities in connection with the acquisition of SOCO Thailand LLC in 2010 In 2010, the Salamander Group acquired the membership interests of SOCO Thailand LLC from SOCO International Operations LLC ( SOCO ). As part of the transaction, the parties entered into a tax deed whereby SOCO agreed to indemnify the Salamander Group for up to US$75 million of tax liabilities relation to the transaction or the pre-acquisition period. If any such tax liabilities arise, a current tax liability may need to be recognised on the Salamander Group or, following Completion, the Combined Group balance sheet in respect of the potential tax exposures, while the corresponding asset in respect of the protection offered by the tax deed may not be recognised at the same time if the relevant recognition criteria for accounting purposes are not met. Furthermore, should any tax exposure crystallise then it would be the responsibility of the Salamander Group or, following Completion, the Combined Group to pay the tax before any claim can be made under the tax deed. If it takes some time to recover these amounts under the tax deed, or the Salamander Group, or following Completion, the Combined Group is unable to recover under the tax deed, or the tax exposure is greater than US$75 million, it may have material adverse effect on the Salamander Group s, or following Completion, the Combined Group s business. 39

40 Litigation against Ophir, Salamander and, following Completion, the Combined Group could materially impact Ophir s, Salamander s and, following Completion, the Combined Group s business Ophir and Salamander currently have no material outstanding litigation or disputes (save as disclosed in paragraph 11 of Part XI (Additional Information) of this Prospectus). However, there can be no guarantee that the past, current or future actions of the Ophir Group, the Salamander Group and, following Completion, the Combined Group will not result in litigation. Damages claimed under such litigation may be material or may be indeterminate, and the outcome of such litigation may materially impact on Ophir s, Salamander s and, following Completion, the Combined Group s business, prospects, financial condition and results of operations. Defence and settlement costs can be significant, even in respect of claims that have no merit. In addition, the adverse publicity surrounding such claims may have a material adverse effect of Ophir s, Salamander s and, following Completion, the Combined Group s business. The Ophir Group and the Salamander Group rely and, following Completion, the Combined Group will rely on technology systems, the failure of which could significantly impact its operations and business The Ophir Group and the Salamander Group are, and, following Completion, the Combined Group will be reliant on its technology systems, in particular its specialist exploration applications. The Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s technology systems could be exposed to, amongst other things, damage or interruption from telecommunications failure, unauthorised entry and malicious computer code, fire, natural disaster, power loss, industrial action, human error and acts of sabotage, war or terrorism. The occurrence of any of the above may also significantly disrupt the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s technology systems and may lead to important data (such as the geophysical and geological data) being irretrievably lost or damaged. Such damage or interruption may adversely affect Ophir s, Salamander s and, following Completion, the Combined Group s business, prospects, financial condition and results of operations. The Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s operations may be subject to delays or disruption due to actions by environmental or other stakeholder groups The Ophir Group s and the Salamander Group s operations have been and, following Completion, the Combined Group s operations may in the future be subject to delays or disruption as a result of actions by environmental or other stakeholder groups. For example, in November 2010 a nongovernmental organisation Anti Global Warming Association & Co. filed a claim with the Central Administration Court of Thailand against certain Thai governmental authorities, including the Department of Mineral Fuels and the Office of Natural Resources and Environmental Policy and Planning of the Ministry of Energy, seeking an order to revoke concessions covering some areas of the Western Gulf of Thailand. The concessions that the claimant is seeking to have revoked include the concession held by the Salamander Group in respect of Block B8/38, which includes the Salamander Group s oil producing asset Bualuang and may include the concession in respect of Block G4/50. As of the date of this Prospectus, no decision has been rendered in respect of this claim though a decision is expected over the course of If a decision is made to revoke, or alter in a manner adverse to the Salamander Group s interests, the Salamander Group s concession in respect of Block B8/38 or Block G4/50, this would have a material adverse effect on the Salamander Group s business, results of operations, financial condition and prospects. There can be no assurance that actions by non-governmental organisations or other stakeholder or community groups in the future will not result in the revocation of the Salamander Group s Petroleum Agreements and/or delays or disruption in the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s exploration, appraisal, development or production activities, which could have a material adverse effect on the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business, results of operations, financial condition and prospects. Actual or perceived failure by the Ophir Group, the Salamander Group and, following Completion, the Combined Group, to address social and environmental issues or corporate responsibility matters may adversely affect the Ophir Group, the Salamander Group and, following Completion, the Combined Group Following the oil spill in the Gulf of Mexico, increasing oil prices in recent years and large profits posted by some oil companies, oil and gas companies are facing increasing demands to conduct their operations in a manner consistent with environmental and social goals. Investors, customers and 40

41 governments are more actively following the oil and gas industry s performance on environmental responsibility and human rights, including performance with respect to the development of alternative and renewable fuel resources. If the Ophir Group, the Salamander Group and, following Completion, the Combined Group become subject to adverse publicity or perception as a result of actual or perceived failure to address social and environmental issues or corporate responsibility matters, its reputation may be adversely affected, which could have a material adverse effect on the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business, results of operations, financial condition and prospects. Part C: Risks Relating to Ophir s, Salamander s and, Following Completion, the Combined Group s Jurisdictions of Operations The expected levels of energy demand in South East Asia may not materialise The growth of South East Asian economies and, as a result, the region s energy requirements may be lower than anticipated. If the economic growth of the South East Asia region does not continue or declines, or if all or part of the region enters into a recession, demand for crude oil, condensate and natural gas in the region and the prices of crude oil, condensate and natural gas in the region are likely to decline. As most of the Salamander Group s and, following Completion, the Combined Group s hydrocarbon sales will be made in South East Asia, the Salamander Group and the Combined Group s revenues and profitability would be materially adversely affected if the Salamander Group, and following Completion, the Combined Group were unable to find alternative markets. Even if the Salamander Group or, following Completion, the Combined Group were successful in finding alternative markets outside South East Asia, they could incur higher costs of sales and additional import/export tariffs and taxes, and they could also receive lower prices outside of South East Asia. Consequently, a decline in the actual or anticipated levels of energy demand in South East Asia may have a material adverse effect on the Salamander Group s or, following Completion, the Combined Group s business, results of operations, financial condition and prospects. The Ophir Group and the Salamander Group operate and, following Completion, the Combined Group will operate, in jurisdictions that are subject to significant political, economic, legal, regulatory and social uncertainties The Ophir Group and the Salamander Group have and, following Completion, the Combined Group will have, licence interests in, inter alia, Equatorial Guinea, Tanzania, Kenya, Gabon, Seychelles, Myanmar, Thailand, Indonesia and Malaysia. The Ophir Group s and the Salamander Group s operations are and, following Completion, the Combined Group s operations will be exposed to the significant political, economic, legal, regulatory and social risks of the jurisdictions in which they operate. These risks potentially include adverse changes to law, rules and regulations on fiscal policy, expropriation (which could, among others, take the form of the cancellation, invalidation, or termination of, a unilateral change or a series of unilateral changes to, Petroleum Agreements or other contracts, licences, permits, authorisations or approvals), difficulties and delays in obtaining new permits or licences or in renewing existing ones, nationalisation of property, the unilateral imposition of onerous obligations on the Ophir Group, the Salamander Group or the Combined Group, instability in political, economic or financial systems, uncertainty arising from underdeveloped legal and regulatory systems, bribery and corruption, civil strife or labour unrest, war, hostilities, armed conflict, guerrilla activities or military repression, terrorism, piracy, organised crime, HIV-AIDS and outbreaks of other infectious diseases, prohibitions, restrictions on production, price controls, inability to repatriate profits and/or dividends, material fluctuations in currency exchange rates and high inflation, limitations or the imposition of tariffs or duties on imports of certain goods or exchange controls. In some of the jurisdictions in which the Ophir Group and the Salamander Group operate and following Completion, where the Combined Group will operate, there is a history of civil and political conflict including civil war and government change by coup d état. For example, Thailand has experienced increasing political and social instability in recent years, as a series of coups, changes in government and mass demonstrations took place between 2005 and Any future political uncertainty or social unrest in the jurisdictions where the Ophir Group and the Salamander Group operate and, following Completion, where the Combined Group will operate could disrupt operations and otherwise have a material adverse effect on the Ophir Group s, the Salamander Group s and the Combined Group s business, results of operations, financial condition and prospects. 41

42 Any political or governmental instability could have a particularly significant impact on the Ophir Group, the Salamander Group and the Combined Group because their principal assets are Petroleum Agreements granted by the governments in the jurisdictions in which it operates. The Ophir Group and the Salamander Group are and, following Completion, the Combined Group will be required to negotiate the terms of its exploration and development projects with these governments and enter into Petroleum Agreements with the relevant authorities. However, such governments may impose conditions that could affect the viability of any given project such as providing the government with free carried interests, requiring local company participation or providing subsidies for the development of the local infrastructure or other social assistance. Additionally, if significant political changes occur, whether at the local, national or international level, there can be no assurance that the relevant governments will not seek to revise the terms of such Petroleum Agreements in a manner adverse to the Ophir Group, the Salamander Group and the Combined Group. In addition, the governments of the countries in which the Ophir Group and the Salamander Group currently operate, or where the Combined Group may operate in the future, have exercised and continue to exercise significant influence over the oil and gas industry. Some of the governments actions aimed at the oil and gas industry, such as a change in oil or gas pricing policies or taxation regime, or renegotiation or nullification of existing Petroleum Agreements, could have a material adverse effect on the Ophir Group s, the Salamander Group s and the Combined Group s business, results of operations, financial condition and prospects. The occurrence of any of the factors listed above could have a material and adverse effect on the Ophir Group s, the Salamander Group s and the Combined Group s business, prospects and results of operations. The Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s businesses depend on permits and consents granted by the authorities of the countries where the Ophir Group, the Salamander Group and, following Completion, the Combined Group operate and may experience substantial delays or increased costs in obtaining all necessary permits In order to conduct its exploration, appraisal, development and production activities, the Combined Group will be required to obtain various permits and approvals issued by the relevant governmental authorities in the countries where the Combined Group will operate (namely licences, permits, authorisations, consents and approvals from and registrations and filings with and ratifications by governmental and regulatory authorities including those relating to the exploration, appraisal, development, procurement and importation of assets and equipment, operation, production, marketing, pricing, transportation and storage of oil and gas, taxation and environmental and health and safety matters). In common with other operators, the Combined Group may experience delays in obtaining some of the permits that it requires. The Ophir Group, the Salamander Group and, following Completion, the Combined Group have and will have limited control over whether or not necessary licences (or renewals thereof) are granted, the timing of obtaining (or renewing) such licences, the terms on which they are granted or the tax regime to which it or assets in which it has interests will be subject. In addition, the Ophir Group, the Salamander Group and, following Completion, the Combined Group, or operators under Petroleum Agreements in which the Ophir Group, the Salamander Group and, following Completion, the Combined Group has an interest, may be unable or unwilling to comply with the terms or requirements of a licence including the meeting of specified deadlines for prescribed tasks and other obligations set out in the work programmes attached to the licence, which may entitle the relevant authority to suspend or withdraw the terms of the licence or approval. Non-compliance with these obligations may also give rise to enforcement action by the relevant authorities. In a number of jurisdictions the laws and regulations which govern such licences and other regulatory requirements are undeveloped, untested and subject to change. In addition, administration and interpretation of these laws and regulations by the tribunals vary considerably and may be subject to change. Furthermore, changes in governmental policy may have a negative impact on foreign investment and the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business. The Ophir Group and the Salamander Group therefore have, and, following Completion, the Combined Group will have limited control over whether or not such licences and other regulatory requirements (or renewals thereof) are granted, the timing of obtaining (or renewing) them, the terms on which they are granted or renewed, any fees, levies, taxes, duties or other imposts payable in connection therewith or the general tax regime to which it or the assets in which it has interests in the relevant jurisdiction will be subject. Further, the licensing authorities have 42

43 a high degree of discretion in determining the validity of a licence and whether or not licence holders are in compliance with their legal obligations. Moreover, vague and inconsistent regulatory and other legal requirements can make it difficult to conclude that any given licence has been issued in full compliance with applicable law. Therefore, there can be no assurance that the Ophir Group, the Salamander Group and, following Completion, the Combined Group licences will not be challenged or revoked for prior or future breaches. If the Ophir Group, the Salamander Group and, following Completion, the Combined Group are unable to receive necessary licences in the future, or current licences are terminated or not renewed, the Ophir Group, the Salamander Group and, following Completion, the Combined Group may have to delay or cancel investment or development programmes. Any failure to obtain or maintain required licences or any loss of or challenge to a material licence could materially adversely affect the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business, results of operations, financial condition and prospects. As some of the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s assets are operated by third party operators, an act or omission by a third party operator could result in a revocation, suspension or non-renewal of a licence relating to a field where the Ophir Group, the Salamander Group and, following Completion, the Combined Group holds an interest but which the Ophir Group, the Salamander Group and, following Completion, the Combined Group does not operate. While operating agreements in respect of the assets not operated by the Ophir Group, the Salamander Group and, following Completion, the Combined Group often provide for a right of consultation or consent in relation to significant matters, the Ophir Group, the Salamander Group and, following Completion, the Combined Group generally has limited control over the day-to-day management or operations of those assets and will often be dependent upon the operator with respect to matters relating to compliance with licence terms and renewal of licences. Failure to obtain, or delays or additional costs associated with obtaining, the necessary permits and approvals required by the Ophir Group, the Salamander Group and, following Completion, the Combined Group to conduct its production, development, appraisal and exploration activities may delay the Combined Group s operations and the execution of the Ophir Group s, the Salamander s Group and, following Completion, the Combined Group s strategy, which could have a material adverse effect on the Combined Group s business, results of operations, financial condition and prospects. Uncertainties in the interpretation and application of laws and regulations in the jurisdictions in which the Ophir Group and the Salamander Group operate and, following Completion, where the Combined Group will operate could have an adverse effect on the Ophir Group s, the Salamander Group s or the Combined Group s business In several jurisdictions in which the Ophir Group and the Salamander Group have and, following Completion, where the Combined Group will have assets, decisions of the courts are not published and there are no public registers of property interests (including rights under Petroleum Agreements). In some of these jurisdictions there is little legislation regulating the oil and gas exploration, development, production or other activities which the Ophir Group may undertake. It may accordingly not be possible to establish, assert, protect or defend legal rights or title to assets (and, in particular rights to explore for, develop and produce petroleum) in the jurisdictions in which the Ophir Group and the Salamander Group operate and, following Completion, where the Combined Group will operate or propose to operate with any certainty. The courts in the jurisdictions in which the Ophir Group and the Salamander Group operate and, following Completion, where the Combined Group will operate, may offer less certainty as to the judicial outcome or a more protracted judicial process than is the case in more established and developed jurisdictions. Accordingly, the Ophir Group, the Salamander Group or the Combined Group could face risks such as: (i) effective legal redress in the courts of such jurisdictions being more difficult to obtain, whether in respect of a breach of law or regulation, or, in an ownership or contract dispute; (ii) a higher degree of discretion on the part of governmental authorities and therefore less certainty; (iii) a lack of judicial or administrative guidance on interpreting applicable rules and regulations; (iv) inconsistencies or conflicts between and within various laws, regulations, decrees, orders and resolutions; (v) relative inexperience of the judiciary and courts in such matters or (vi) a more protracted judicial process resulting in delays and higher costs in reaching a judicial outcome. In certain jurisdictions, the commitment of local business people, government officials and agencies and the judicial system to abide by legal requirements and negotiated agreements may be 43

44 more uncertain, creating particular concerns with respect to Petroleum Agreements and business agreements. Some or all of such Petroleum Agreements and business agreements may be susceptible to revision or cancellation and legal redress may be uncertain, unavailable or delayed. Equally, there can be no assurance that Petroleum Agreements, joint ventures, licences, licence applications or other legal arrangements the Ophir Group, the Salamander Group or the Combined Group enter into will not be adversely affected by the actions of government authorities or others and the effectiveness of and enforcement of such arrangements in these jurisdictions cannot be assured. Any contracts, Petroleum Agreements, joint ventures or other legal agreements that contain governing law and/or jurisdiction clauses of a jurisdiction other than that in which the Ophir Group, the Salamander Group or the Combined Group wishes to seek enforcement may not be enforceable under local laws, in particular where the jurisdiction does not have bilateral enforcement treaties with the jurisdiction of such agreement or is not a party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards There are risks and limitations in the title registration systems in certain of the regions in which the Ophir Group and the Salamander Group operate, and following Completion, where the Combined Group will operate Whilst the Ophir Group and the Salamander Group have investigated their title to, rights over and interests in, their Petroleum Agreements and other assets, this should not be construed as a guarantee of their title to such assets. The Ophir Group s and the Salamander Group s rights under its Petroleum Agreements and other assets, in particular those Petroleum Agreements in which the Ophir Group or the Salamander Group have acquired their interests from a third party rather than directly from the relevant government, may be subject to prior unregistered agreements or transfers that have not been recorded or detected through title research and title may be affected by such undetected defects. There can be no assurance that the Ophir Group s or the Salamander Group s title to some of their licence interests or other assets, including those interests which the Ophir Group or the Salamander Group have acquired from a third party rather than directly from the relevant government, will not be challenged or impugned. Any such challenge could have a material adverse effect on the Ophir Group s, the Salamander Group s or the Combined Group s business, prospects, financial condition and results of operations. The success of the Ophir Group s, Salamander Group s and, following Completion, the Combined Group s exploration and production operations depends on its Petroleum Agreements and similar arrangements with governmental entities; the Salamander Group s interests in or title under the Petroleum Agreements could be challenged The Ophir Group and the Salamander Group have entered into Petroleum Agreements with governments or government-controlled entities in the jurisdictions in which the Ophir Group and the Salamander Group operate (collectively, the Government Counterparties ). The Petroleum Agreements are subject to the influence of governmental agencies and to the regulatory structure in the jurisdictions of the Government Counterparties, which are subject to change. There can be no assurance that any such changes would not adversely affect the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s ability to perform, or its rights, under the Petroleum Agreements. Furthermore, the Ophir Group, the Salamander Group and, following Completion, the Combined Group must comply with certain procedural requirements in order to obtain the reimbursement of costs incurred under the Petroleum Agreements and to deduct such costs for income tax purposes under the Concession Agreements. The Ophir Group, the Salamander Group and, following Completion, the Combined Group may not be able to recover reimbursement or obtain tax deductibility, respectively of all such costs. The Ophir Group, the Salamander Group and, following Completion, the Combined Group may also be hindered or prevented from enforcing its rights under certain Petroleum Agreements, and Concession Agreements due to the doctrine of sovereign immunity. If the Ophir Group, the Salamander Group and, following Completion, the Combined Group are unable to comply with rules or regulations to which its Petroleum Agreements are subject or if any of the Government Counterparties take any actions adverse to the interests of the Ophir Group, the Salamander Group and, following Completion, the Combined Group, this could have a material adverse effect on the Salamander Group s and, following Completion, the Combined Group s business, results of operation, financial condition and prospects. 44

45 If it is determined that any Petroleum Agreements held by the Ophir Group or the Salamander Group was issued, re-issued, amended, transferred, assigned and/or entered into in violation of applicable laws or regulations, such Petroleum Agreement could be subject to revocation. A loss of any such Petroleum Agreement could have a material adverse effect on the Salamander Group s, the Ophir Group s and, following Completion, the Combined Group s business, results of operations, financial condition and prospects. Moreover, the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s ownership interests in or title to licences may be challenged, and if these challenges are successful, the Salamander Group and, following Completion, the Combined Group could lose all or a portion of its ownership interest in or title to the underlying licence. While the Salamander Group is the owner of record of all oil and gas licences in which the Salamander Group has a participating interest and is the shareholder of record in APICO in respect of licences held by APICO or its direct or indirect subsidiaries, certain of the Salamander Group s and, following Completion, the Combined Group s ownership interests in licences may be subject to prior claims or unregistered agreements, and title may be affected by undetected defects or incomplete or missing documentation. Other documentary gaps may exist in the chain of ownership of certain of the Salamander Group s Concessions and licences (including certain Concessions in the Salamander Group s core areas). However, the Salamander Group has not experienced or been exposed to any adverse consequences of or disputes relating to these gaps in the documentary record and believes that it is the full and undisputed owner of the concessions and licences described in this Prospectus as being owned by the Salamander Group and that the risk of loss of any such licence as a result of such gaps in documentation is remote. Militant activity, terrorism and piracy in certain of the regions in which the Ophir Group and the Salamander Group operate and, following Completion, where the Combined Group will operate, may impact their business Militant activity, terrorism and piracy are major problems in certain of the regions in which the Ophir Group and the Salamander Group operate and, following Completion, where the Combined Group will operate, and in particular, the Indian Ocean has seen an upsurge in marine criminal activity. There is a risk that companies such as the Ophir Group or the Salamander Group and their employees and third party contractors may be singled out. While there have been no direct incidents involving the Ophir Group s or the Salamander Group s operations, there have been incidents involving pirate and terrorist activity, including attempted hijackings, in the vicinity of areas in which the Ophir Group operates. Such attacks and kidnappings could severely disrupt exploration, appraisal, development and production across a broad geographical area. The security environment in such regions is likely to remain volatile as a result of continuing terrorism and piracy. The Ophir Group has operated an extensive security operation in Tanzania, Kenya and Equatorial Guinea in conjunction with respective naval forces of these countries to provide support and assistance in case of an incident. However, if the Ophir Group, the Salamander Group or the Combined Group or their employees and third party contractors are the subject of any attacks, kidnappings or other security threats, they may be required to incur additional expenditure through increased insurance premiums, hiring additional security or equipment, replacement of assets and additional safety protections. Furthermore, any such event could have an adverse effect on the Ophir Group s or the Salamander Group s ability to staff its operations adequately and could affect their reputation. The occurrence of any of the above could result in a long-term delay to the petroleum exploration, appraisal, development and production by the Ophir Group, the Salamander Group or the Combined Group in the affected region and could restrict their control over the nature and timing of its exploration, appraisal, development, production and other activities. Such interruptions, expenditure or delays could have a material and adverse effect on the Ophir Group s, the Salamander Group s or the Combined Group s business, prospects, financial condition and results of operations. The Ophir Group and the Salamander Group conduct and following Completion, the Combined Group will conduct business in jurisdictions with inherent risks relating to fraud, bribery and corruption The Ophir Group and the Salamander Group currently conduct business in a number of jurisdictions that have been allocated low scores on Transparency International s Corruption Perceptions Index. Doing business in developing countries brings with it inherent risks associated with enforcement of the Ophir Group s and the Salamander Group s legal and contractual rights and third party obligations, fraud, bribery and corruption. Fraud, bribery and corruption are more common in some 45

46 jurisdictions than in others. In addition, the oil and gas industries have historically been shown to be vulnerable to corrupt or unethical practices. While the Ophir Group and the Salamander Group maintain anti-corruption training programmes, codes of conduct and other safeguards designed to prevent the occurrence of fraud, bribery and corruption, it may not be possible for them to detect or prevent every instance of fraud, bribery or corruption in every jurisdiction in which its employees, agents, sub-contractors or joint venture partners are located. The Ophir Group, the Salamander Group and, following Completion, the Combined Group may therefore be subject to civil and criminal penalties and to reputational damage. Instances of fraud, bribery and corruption, and violations of laws and regulations in the jurisdictions in which the Ophir Group and the Salamander Group operate, including the UK Bribery Act 2010, could have a material adverse effect on its results of operations and financial conditions. In addition, as a result of the Ophir Group s and the Salamander Group s anti-corruption training programmes, codes of conduct and other safeguards, there is a risk that the Ophir Group and the Salamander Group could be at a commercial disadvantage and may fail to secure contracts and licences to the advantage of other companies who may not have or comply with such anticorruption safeguards. Changes in government policy could have a negative impact on the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business Governments of oil and gas producing jurisdictions typically exercise significant influence over their domestic oil and gas industries, as well as many other aspects of their respective economies. Any government action concerning the economy, including the oil and gas industry (such as a change in oil or gas pricing policy, domestic supply obligation or taxation rules or practice (see further the risks identified under Tax regimes in certain jurisdictions are subject to differing interpretations and are subject to change below), or renegotiation or nullification of existing concession contracts or oil and gas exploration policy, laws or practice), could have a material adverse effect on the Ophir Group, the Salamander Group or the Combined Group. Sovereign or regional governments could also require the Ophir Group, the Salamander Group or the Combined Group to grant to them larger shares of oil and gas or revenues than previously agreed to, or postpone or review projects, nationalise assets, or make changes to laws, rules, regulations or policies, in each case, which could adversely affect the Ophir Group s, the Salamander Group s or the Combined Group s business, prospects, financial condition and results of operations. Tax regimes in certain jurisdictions are subject to differing interpretations and are subject to change Tax regimes in certain jurisdictions in which the Ophir Group, the Salamander Group and, following Completion, the Combined Group will have a presence may be subject to differing interpretations and are often subject to legislative change and changes in administrative interpretation in those jurisdictions. Such changes can be prompted by, inter alia, transactions (including those that may require governmental consent) and may be implemented with retrospective effect. The interpretation by the Ophir Group, the Salamander Group, and, following Completion, the Combined Group of relevant tax law as applied to their transactions and activities (including farm ins and farm outs) may not coincide with that of the relevant tax authorities now or at a future date. As a result, transactions may be challenged by tax authorities and any profits from activities in those jurisdictions may be assessed to additional tax or additional transactional taxes (e.g. stamp duty or VAT), which, in each case, could result in significant additional taxes, penalties and interest, any of which could have a material adverse impact on the Ophir Group s, the Salamander Group s and, following Completion, the Combined Group s business, prospects, financial condition or results of operations. The Salamander Group is subject to taxation in the United Kingdom, Thailand, Indonesia, Canada, Singapore, Malaysia and Laos and is faced with increasingly complex tax laws. The amount of tax the Salamander Group pays could increase substantially as a result of changes in, or new interpretations of, these laws, which could have a material adverse effect on its liquidity and results of operations. During periods of high profitability in the oil and gas industry, there are often calls for increased or windfall taxes on oil and gas revenue. Taxes have increased or been imposed in the past and may increase or be imposed again in the future. In addition, taxing authorities could review and question the Salamander Group s or the Ophir Group s tax returns leading to additional taxes and penalties which could be material. 46

47 Part D: Risks Relating to Ophir Shares The value of ordinary shares of the Company may fluctuate significantly as a result of a large number of factors The value of the Ophir Shares may, in addition to being affected by Ophir s and, following Completion, the Combined Group s actual or forecast operating results, fluctuate significantly as a result of a large number of factors, some specific to Ophir, the Combined Group and their operations and some which may affect oil and gas companies generally and which are outside Ophir s and the Combined Group s control, including, among others: (a) fluctuations in the prices of oil, gas and other petroleum products; (b) the results of exploration, development and appraisal programmes and production operations; (c) changes in the financial performance of Ophir, the Combined Group, their peers or the industry; (d) changes in laws, rules and regulations applicable to Ophir, the Combined Group, and their operations; (e) general economic, political and other conditions, in particular, in the African region; and (f) fluctuations in the capital markets. Future issues of Ophir Shares could dilute Shareholders holdings of Existing Ophir Shares and could materially affect the market price of the Ophir Shares Further to the proposed issue of New Ophir Shares, Ophir has no current plans for an offering of ordinary shares. However, it is possible that Ophir may decide to offer additional Ophir Shares in the future either to raise capital or for other purposes. An additional offering could have an adverse effect on the market price of the Ophir Shares as a whole. US Shareholders may be unable to exercise pre-emptive rights if the Company allots Ophir Shares for cash in the future If the share capital of Ophir is increased and new Ophir Shares are issued for cash, existing holders of Ophir Shares are, under Ophir s constitutional documents, entitled to pre-emptive rights in respect of those Ophir Shares unless such rights are waived by a shareholders resolution. If Ophir allots Ophir Shares for cash in the future, even in circumstances where pre-emptive rights are not waived, holders of the Ophir Shares outside the UK may not be able to exercise their pre-emptive rights for Ophir Shares unless Ophir decides to comply with applicable local laws and regulations. US shareholders would not be able to exercise their pre-emptive rights to acquire the new ordinary shares unless an effective registration statement was in place or an exemption from the registration requirements of the US Securities Act was available. There can be no assurance that Ophir will file any such registration statement, or that an exemption to the registration requirements of the US Securities Act will be available, which would result in the US shareholders being unable to exercise their pre-emptive rights. If Ophir were a passive foreign investment company for US federal income tax purposes for any taxable year during which a US Holder holds New Ophir Shares, the US Holder could be subject to certain material adverse US federal income tax consequences If Ophir were a passive foreign investment company (a PFIC ) within the meaning of Section 1297 of the US Internal Revenue Code of 1986, as amended, for any taxable year during which a US Holder holds New Ophir Shares, certain material adverse US federal income tax consequences may apply to the US Holder, such as taxation at the highest marginal ordinary income tax rates on capital gains and on certain actual or deemed dividends, interest charges on certain taxes treated as deferred, and additional reporting requirements. Ophir does not expect that it will be a PFIC for its current taxable year and does not expect to be a PFIC in the foreseeable future. However, PFIC status depends on the composition of a corporation s income and assets and the fair market value of its assets (including, among other things, less than 25 per cent. owned equity investments), from time to time, as well as on the application of complex and uncertain statutory and regulatory rules that are subject to potentially varying or changing interpretations. Accordingly, there can be no assurance that Ophir will not be considered a PFIC for any taxable year. Please see United States Taxation Considerations PFIC Considerations of Part IX (Taxation) for more details. US investors should consult their own tax advisors regarding the potential application of the PFIC rules. 47

48 The market price of the Ophir Shares may be affected by fluctuations in exchange rates Ophir reports and, following Completion, the Combined Group will report its results of operations and financial condition in US Dollars and Ophir s share price is quoted on the London Stock Exchange in pounds sterling. As a consequence Shareholders may experience fluctuation in the market price of the Ophir Shares as a result of, amongst other factors, movements in the exchange rate between pounds sterling and US Dollars. Ophir does not plan on making dividend payments in the near future There can be no assurance as to the level of future dividends. The declaration, payment and amount of any future dividends of Ophir are subject to the discretion of the Directors, and will depend on, among other things, Ophir s earnings, financial position, cash requirements and availability of profits. A dividend may never be paid and, at present, there is no intention to pay a dividend. United Kingdom Tax risk Any change in current tax law or practice could adversely affect holders of Ophir Shares. Statements in this Prospectus concerning the taxation of holders of Ophir Shares are based on current UK tax law and published HMRC practice as at the date of this Prospectus, both of which may be subject to change, possibly with retrospective effect. The taxation of an investment in New Ophir Shares depends on the individual circumstances of investors in New Ophir Shares. The summary of the UK taxation treatment of an investment in the New Ophir Shares set out in Part IX (United Kingdom Taxation Considerations) of this Prospectus is intended as a general guide only. It does not address the specific tax position of every investor and only deals with rules of UK taxation of general application. Therefore, any investors who are in any doubt as to their tax position regarding the New Ophir Shares and any investors subject to tax in a jurisdiction other than the UK should consult their own independent tax advisers. 48

49 PRESENTATION OF INFORMATION General Investors should only rely on the information contained in this Prospectus. No person has been authorised to give any information or make any representations other than those contained in this Prospectus and, if given or made, such information or representation must not be relied upon as having been so authorised by Ophir, the Directors, the Proposed Director or the Sponsor. No representation or warranty, express or implied, is made by the Sponsor as to the accuracy or completeness of such information, and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation by the Sponsor as to the past, present or future. Without prejudice to any legal or regulatory obligation on Ophir to publish a supplementary prospectus pursuant to Section 87G of the FSMA and Prospectus Rule 3.4, neither the delivery of this Prospectus nor Admission shall, under any circumstances, create any implication that there has been no change in the business or affairs of the Ophir Group or the Salamander Group taken as a whole since the date of this Prospectus or that the information in it is correct as of any time after the date of this Prospectus. The Company will update the information provided in this Prospectus by means of a supplementary prospectus if a significant new factor, material mistake or inaccuracy arises or is noted relating to the information included in this Prospectus. Any supplementary prospectus will be subject to approval by the FCA and will be made public in accordance with the Prospectus Rules. Ophir will comply with its obligation to publish supplementary prospectuses containing further updated information required by law or by any regulatory authority but assumes no further obligation to publish additional information. The contents of this Prospectus are not to be construed as legal, financial or tax advice. Each prospective investor should consult a legal adviser, an independent financial adviser duly authorised under the FSMA or a tax adviser for legal, financial or tax advice in relation to any investment in or holding of Ophir Shares. Each prospective investor should consult with such advisers as needed to make its investment decision and to determine whether it is legally permitted to hold shares under applicable legal investment or similar laws or regulations. Investors should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time. Investing in and holding the Ophir Shares involves financial risk. Prior to investing in the Ophir Shares, investors should carefully consider all of the information contained in this Prospectus, paying particular attention to the section entitled Risk Factors on pages 23 to 48 of this Prospectus. Investors should consider carefully whether an investment in the Ophir Shares is suitable for them in light of the information contained in this Prospectus and their personal circumstances. The Financial Advisers and their affiliates may have engaged in transactions with, and provided various investment banking, financial advisory and other services to the Company, for which they would have received customary fees. The Financial Advisers and their affiliates may provide such services to the Company and any of their affiliates in the future. Presentation of financial information The historical consolidated financial information relating to the Ophir Group included in Part VI (Historical Consolidated Financial Information Relating to the Ophir Group) of this Prospectus, including that which is incorporated by reference into this Prospectus, and the Salamander Group referred to in Part VII (Historical Consolidated Financial Information Relating to the Salamander Group) of this Prospectus and which is incorporated by reference into this Prospectus has been prepared in accordance with IFRS. Pro forma financial information In this Prospectus, any reference to pro forma financial information is to information which has been extracted without material adjustment from the unaudited pro forma financial information contained in Part VIII (Unaudited Pro Forma Financial Information of the Combined Group) of this Prospectus. The unaudited pro forma financial information contained in Part VIII (Unaudited Pro Forma Financial Information of the Combined Group) of this Prospectus has been prepared on the basis of the notes set out therein. The unaudited pro forma financial information has been prepared for illustrative purposes only and, because of its nature, addresses a hypothetical situation and, therefore, does not represent the Ophir Group s, the Salamander Group s, or the Combined Group s actual financial position or results. 49

50 Future results of operations may differ materially from those presented in the combined financial information due to various factors. Rounding Percentages and certain amounts included in this Prospectus have been rounded for ease of presentation. Accordingly, figures shown as totals in certain tables may not be the precise sum of the figures that precede them. Currencies Unless otherwise indicated in this Prospectus, all references to: * sterling, or pence are to the lawful currency of the UK; and * US Dollars, or Dollars or US$ are to the lawful currency of the United States. Unless otherwise indicated, the financial information contained in this Prospectus has been expressed in US Dollars. The Ophir Group presents its financial statements in US Dollars. Forward-looking statements Certain statements contained in this Prospectus, including those in the sections headed Summary, Risk Factors, Part II (Information on Ophir) ; Part III (Information on Salamander) ; and Part IV (Operating and Financial Review of Ophir) of this Prospectus constitute forward-looking statements. All statements other than statements of historical facts included in this Prospectus may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words targets, plans, believes, expects, aims, intends, will, may, anticipates, estimates, projects or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of Ophir s or Salamander s operations and potential synergies resulting from the Transaction; and (iii) the effects of government regulation on Ophir s or Salamander s business. Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results, performance or achievements to differ materially from those projected or implied in any forwardlooking statements. The important factors that could cause Ophir s or Salamander s actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, economic and business cycles, the terms and conditions of Ophir s or Salamander s financing arrangements, foreign currency rate fluctuations, competition in Ophir s or Salamander s principal markets, acquisitions or disposals of businesses or assets and trends in Ophir s and/or Salamander s principal industries. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Each of Ophir and Salamander and each of their respective members, directors, officers, employees, advisers and any other persons acting on their behalf disclaims any obligation to update any forward-looking or other statements contained herein, except as required by applicable law. The statements above relating to forward-looking statements should not be construed as a qualification on the opinion of Ophir as to working capital set out in paragraph 10 of Part XI (Additional Information) of this Prospectus. Prospective investors are advised to read, in particular, the following parts of this Prospectus for a more complete discussion of the factors that could affect the Ophir Group s or the Combined Group s future performance and the industry in which the Ophir Group or the Combined Group operates: the section entitled Risk Factors on pages 23 to 48 of this Prospectus, Part II (Information on Ophir), Part III (Information on Salamander), Part IV (Operating and Financial Review of Ophir), Part VI (Historical Consolidated Financial Information Relating to the Ophir Group), Part VII (Historical Consolidated Financial Information Relating to the Salamander Group) and Part VIII (Unaudited Pro Forma Financial Information of the Combined Group) of this Prospectus. In light of these risks, uncertainties and assumptions, the events described in the forwardlooking statements in this Prospectus may not occur. The forward-looking statements contained in this Prospectus speak only as of the date of this Prospectus. The Company, the Directors, the Proposed Director and the Sponsor expressly disclaim 50

51 any obligations or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable law or regulation, the Prospectus Rules, the Listing Rules or the Disclosure and Transparency Rules. No profit forecasts or estimates No statement in this Prospectus is intended as a profit forecast or estimate for any period and no statement in this Prospectus should be interpreted to mean that earnings or earnings per share for Ophir or Salamander, as appropriate, for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Ophir or Salamander, as appropriate. Market, economic and industry data This Prospectus contains information regarding the Ophir Group and the Salamander Group s businesses and the industry in which it operates and competes, which the Company has obtained from various third party sources. Where information contained in this Prospectus originates from a third party source, it is identified where it appears in this Prospectus together with the name of its source. Such third party information has been accurately reproduced and, so far as Ophir is aware and is able to ascertain from information published by the relevant third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. No incorporation of website information The contents of Ophir s and Salamander s websites or any hyperlinks accessible from those websites do not form part of this Prospectus and investors should not rely on them. Defined terms Certain terms used in this Prospectus are defined and certain technical and other terms used in this Prospectus are set out in Part XII (Definitions) and Part XIII (Glossary of Technical Terms) of this Prospectus. All times referred to in this Prospectus are, unless otherwise stated, references to London time. All references to legislation in this Prospectus are to the legislation of England and Wales unless the contrary is indicated. Any reference to any provision of any legislation or regulation shall include any amendment, modification, re-enactment or extension thereof. Words importing the singular shall include the plural and vice versa, and words importing the masculine gender shall include the feminine or neutral gender. US considerations The Company is a holding company organised as a public limited company incorporated under the laws of England and Wales with business operations conducted through various subsidiaries. The majority of the Directors, the Proposed Director and all of its officers reside outside the US. In addition, substantially all of the Company s assets and the majority of the assets of its Directors and officers and the Proposed Director are located outside of the US. As a result, it may not be possible for US investors to effect service of process within the US upon the Company or its Directors and officers or the Proposed Director located outside the US or to enforce in the US courts or outside the US judgments obtained against them in US courts or in courts outside the US, including judgments predicated upon the civil liability provisions of the US federal securities law or the securities laws of any state or territory within the US. There is also doubt as to the enforceability in England and Wales, whether by original actions or by seeking to enforce judgements of US courts, of claims based on the federal securities laws of the US. In addition, punitive damages in actions brought in the US or elsewhere may be unenforceable in England and Wales. 51

52 INDICATIVE TRANSACTION STATISTICS Number of Existing Ophir Shares (1) 575,186,914 Number of New Ophir Shares to be issued pursuant to the Scheme (2) 153,163,173 Number of Ophir Shares in issue immediately following Admission (2) 728,350,087 New Ophir Shares as a percentage of the Enlarged Issued Share Capital (2) 21.0% ISIN SEDOL GB00B24CT194 B24CT19 Notes: (1) Number of Ophir Shares as at 14 January 2015 (excludes 18,139,530 Ophir Shares held in treasury). (2) Excluding Ophir Shares held in treasury and based on 259,129,055 Salamander Shares in issue as at 14 January 2015 and assuming that: (i) all vested share options under the Salamander Share Schemes are exercised in full and the resulting 8,685,552 Salamander Shares are exchanged for New Ophir Shares under the Scheme (which excludes share options held by participants in Thailand and Indonesia which are proposed to be cash cancelled); (ii) there are no other issues of Salamander Shares or Ophir Shares (including under the Ophir Share Schemes) between 14 January 2015 and the Effective Date; and (iii) there are no buybacks of Ophir Shares between 14 January 2015 and the Effective Date. 52

53 EXPECTED TIMETABLE OF PRINCIPAL EVENTS The dates and times given in the table below in connection with the Transaction are indicative only and are based on Ophir s current expectations, may be subject to change and will depend, among other things, on the date upon which the Court sanctions the Scheme and confirms the Capital Reduction and the date on which the Conditions are satisfied or, if capable of waiver, waived. The timetable is also dependent on whether the Court Order(s) sanctioning the Scheme and confirming the Capital Reduction and, in relation to the Capital Reduction, the statement of capital are delivered to the Registrar of Companies. The timetable is also dependent on the process for implementation of the Transaction. If any of the times and/or dates below change, the revised times and/or dates will be notified by Ophir to Ophir Shareholders by announcement through a Regulatory Information Service. All times shown in this Prospectus are London times unless otherwise stated. Event Time and/or date Publication of the Scheme Document 14 January 2015 Publication of this Prospectus 16 January 2015 Publication of the Circular 16 January 2015 Latest time for receipt of Ophir Forms of Proxy/CREST a.m. on 4 February 2015 (1) Proxy instructions for the Ophir General Meeting Latest time for receipt of Salamander Forms of Proxy/ CREST Proxy instructions for the: Court Meeting for Salamander Shareholders 1.00 p.m. on 4 February 2015 (2) Salamander General Meeting 1.15p.m. on 4 February 2015 (3) Scheme Voting Record Time 6.00 p.m. on 4 February 2015 (4) Ophir General Meeting a.m. on 6 February 2015 Court Meeting 1.00 p.m. on 6 February 2015 Salamander General Meeting 1.15p.m. on 6 February 2015 (5) Scheme Court Hearing to sanction the Scheme and date of 25 February 2015 (6) the Scheme Court Order Last day of dealings in, and for registration of transfers of, 27 February 2015 (6) and disablement in CREST of, Salamander Shares Scheme Record Time 6.00 p.m. on 27 February 2015 (6) Suspension of listing and dealing in Salamander Shares 7.30 a.m on 2 March 2015 (6) Second Court Hearing to confirm the Capital Reduction 2 March 2015 (6) Effective Date 2 March 2015 (6) Delisting of Salamander Shares by no later than 8.00 a.m. on 3 March 2015 (6) Issue of New Ophir Shares by no later than 8.00 a.m. on 3 March 2015 (6) CREST accounts credited by no later than 8.00 a.m. on 3 March 2015 (6) Admission and commencement of dealings in New Ophir by no later than 8.00 a.m. on 3 March 2015 (6) Shares Latest date for despatch of cheques in respect of cash 17 March 2015 (6) consideration (where relevant), share certificates in respect of New Ophir Shares and for settlement of cash consideration (where relevant) through CREST or other form of payment Long Stop Date p.m. on 30 June 2015 (7) Notes: (1) The Ophir Forms of Proxy for the Ophir General Meeting must be returned by no later than a.m. on 4 February 2015 (or in the case of an adjourned meeting, not less than 48 hours prior to the time and date set for the adjourned meeting) to be valid. (2) It is requested that the Salamander Forms of Proxy for the Court Meeting be lodged before 1:00 p.m. on Wednesday 4 February 2015 or, if the Court Meeting is adjourned, not later than 48 hours before the time appointed for the holding of the adjourned meeting. However, Salamander Forms of Proxy for the Court Meeting not so lodged may be handed to representatives of Equiniti (on behalf of the chairman of the Court Meeting) at the commencement of the Court Meeting. 53

54 (3) The Salamander Forms of Proxy for the Salamander General Meeting must be lodged before 1:15 p.m. on Wednesday 4 February 2015 in order for it to be valid or, if the Salamander General Meeting is adjourned, not later than 48 hours (excluding any part of a day that is not a working day) before the time appointed for the holding of the adjourned meeting. The Salamander Forms of Proxy for the Salamander General Meeting cannot be handed to representatives of Equiniti or the chairman of the Salamander General Meeting at that meeting. (4) If either the Court Meeting or the Salamander General Meeting is adjourned, the Voting Record Time for the relevant adjourned meeting will be 6.00 p.m. on the date two calendar days before the date set for the adjourned meeting. (5) To commence at the fixed time or, if later, immediately after the conclusion or adjournment of the Court Meeting. (6) These times and dates are indicative only and will depend, among other things, on the date upon which the Court sanctions the Scheme and confirms the associated Capital Reduction in Salamander and the date on which the Conditions set out in the Scheme Document are satisfied or (if capable of waiver) waived. If any of the expected dates change, Ophir and/or Salamander will, unless the Panel otherwise consents, give notice of the change by issuing an announcement through a Regulatory Information Service. (7) The Long Stop Date is the latest date by which the Scheme must become effective, unless Ophir and Salamander agree, and (if required) the Court and the Panel permit, a later date. (8) In this Prospectus, where the context requires, references to 14 January 2015 should be treated as being references to the Latest Practicable Date (unless otherwise stated). 54

55 OPHIR DIRECTORS, PROPOSED DIRECTOR, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS Directors Proposed Director Company Secretary Registered and Head Office Lead Financial Adviser Sponsor, Corporate Broker and Co-Financial Adviser to the Company Corporate Broker and Co-Financial Adviser to the Company Legal Advisers to the Company Legal Advisers to the Sponsor Auditors and Reporting Accountants Registrars Nicholas Smith (Non-Executive Chairman) Dr Nicholas Cooper (Executive Director and Chief Executive Officer) Bill Higgs (Executive Director and Chief Operating Officer) Ronald Blakely (Independent Non-Executive Director) Alan Booth (Independent Non-Executive Director) Vivien Gibney (Independent Non-Executive Director) Lyndon Powell (Independent Non-Executive Director) Bill Schrader (Independent Non-Executive Director) Dr Carol Bell Chandrika Kher Level Four, 123 Victoria Street, London, SW1E 6DE Credit Suisse Morgan Stanley RBC Capital Markets Linklaters LLP Allen and Overy LLP Ernst & Young LLP Equiniti 55

56 PART I INFORMATION ON THE TRANSACTION 1 Introduction On 24 November 2014, the Boards of Ophir and Salamander announced that they had agreed the terms of a recommended offer pursuant to which Ophir, or a wholly owned subsidiary of Ophir, would acquire the entire issued and to be issued ordinary share capital of Salamander. The Transaction will be effected by means of a scheme of arrangement under Part 26 of the Companies Act. 2 Summary of the terms of the Transaction Pursuant to the terms of the Transaction, Salamander Shareholders will receive: for each Salamander Share of a New Ophir Share. On the basis of the Closing Price of pence per Ophir Share on 24 October 2014 (being the last Business Day prior to the date of the announcement by Salamander on 27 October 2014 that commenced the Offer Period), the Transaction represents an indicative value for each Salamander Share of pence per share, values the entire issued and to be issued share capital of Salamander at approximately 314 million and represents an indicative premium of approximately: * 44.5 per cent. to the Closing Price of 80.3 pence per Salamander Share on 24 October 2014 (being the last Business Day prior to the date of the commencement of the Offer Period); and * 31.6 per cent. to the volume weighted average Closing Price of 88.1 pence per Salamander Share for the one month period between 25 September 2014 and 24 October 2014 (being the last Business Day prior to the date of the commencement of the Offer Period). On the basis of the Closing Price of pence per Ophir Share on 12 January 2015 (being the latest practicable date prior to publication of the Scheme Document), the Transaction represents an indicative discount of approximately 7.4 per cent. to the Closing Price of 80.3 pence per Salamander Share on 24 October 2014 (being the last Business Day prior to commencement of the Offer Period). On the basis of the Closing Price of pence per Ophir Share on 12 January 2015 (being the latest practicable date prior to publication of the Scheme Document), the Transaction represents an indicative premium of approximately 23.9 per cent. to the Closing Price of 60.0 pence per Salamander Share on 12 January 2015 (being the latest practicable date prior to publication of the Scheme Document). In view of the size of the Transaction, it constitutes a Class 1 transaction (as defined in the Listing Rules) for Ophir, and Ophir is accordingly required to seek the approval of Ophir Shareholders for the Transaction at the Ophir General Meeting. The Transaction is therefore conditional on, among other things, the requisite resolution being passed by Ophir Shareholders at the Ophir General Meeting. Following Completion of the Transaction, Salamander Shareholders will own approximately 21.0 per cent. of the Combined Group and Ophir Shareholders will hold approximately 79.0 per cent. of the Combined Group (based on the issued ordinary share capital of Ophir and the issued ordinary share capital of Salamander as at the Latest Practicable Date and assuming the exercise of all outstanding options under the Salamander Share Schemes (taking into account the proposed cash cancellation for participants in Thailand and Indonesia)). Fractions of New Ophir Shares will not be allotted or issued pursuant to the Scheme and fractional entitlements will be rounded down to the nearest whole number of New Ophir Shares. As a result, Salamander Shareholders who hold one Salamander Share will not receive any New Ophir Shares (or any other consideration) pursuant to the Scheme unless they increase their holding of Salamander Shares prior to the Scheme Record Time. Following completion of the Transaction, Salamander will be a wholly-owned subsidiary of Ophir. 3 Background to, and reasons for, the Transaction Ophir believes that there is compelling strategic logic for a combination of the two businesses that would substantially benefit the shareholders of both companies. The Combined Group would have a 56

57 strong balance sheet, enhanced operating capability in both Africa and South East Asia, and deep expertise across key technical and commercial functions. The Combined Group has the opportunity to generate immediate operating and financial synergies across the combined portfolio. Leveraging Ophir s exploration track record and financial strength and Salamander s established Asian operating platform, the Combined Group would be well-positioned to accelerate exploration activity in Salamander s licences in offshore Thailand, and in Ophir s acquired acreage in Myanmar and Indonesia, while continuing to pursue the significant opportunity set in South East Asia. The combination would provide shareholders with a diversified exposure to 21 production, development and exploration blocks in South East Asia, as well as to Ophir s extensive footprint in Africa. Following completion of the Transaction, consistent with its strategy, Ophir will continue to actively manage the Combined Group s portfolio. Active management may, depending on circumstances that exist at the time, include licence applications, farm ins, farm outs and exchanges of interests. Platform for accelerated growth The Transaction forms the basis of Ophir s strategic entry into South East Asia, identified as a strategic priority by Ophir, providing it with an existing asset base and operating capability in South East Asia, including key commercial, legal and technical functions. The Transaction will also complement the transaction with Niko Resources in Indonesia announced on 27 October 2014 and the previously awarded exploration acreage offshore Myanmar. Salamander s team has successfully brought onstream two offshore platforms on the Bualuang oilfield offshore Thailand, as well as developing the Kerendan gas field onshore Indonesia which is expected to be ready to commence production in Salamander s employees in Singapore, Thailand and Indonesia are predominantly local nationals who bring significant operational expertise as well as depth of domestic relationships across the value chain. By leveraging this established operating platform, Ophir intends to exploit the rich opportunity set that exists in the region and accelerate the successful execution of an exploration-led strategy in South East Asia. Production and cashflow diversifies funding Salamander s full year 2014 average daily production from the Bualuang and Sinphuhorm fields in Thailand was 14,200 boepd, with further production expected to come on stream in 2015 following first gas at Kerendan. Salamander s portfolio also includes a number of opportunities to add further production through the low-cost development of discovered resources, with approximately 93 MMboe 2C contingent resources potentially convertible to 2P reserves in the near-term. Salamander s base business is highly cash generative with the portfolio breaking even (on an operating cash flow basis) at an oil price of US$15 per barrel. Over the period between 2011 and 2013 Salamander s post-tax operating cash flow averaged US$217 million on average production of 14,500 boepd. At the same time the post-tax cash margin increased from US$29 per boe to US$58 per boe in a flat oil price environment. As production is anticipated to grow towards 20,000 boepd over the coming years, Ophir plans to use its strong balance sheet position to continue generating material cash flow from the underlying assets. This cash flow can be reinvested in Ophir s proven business model, namely that of exploration/ appraisal and continued monetisation of exploration/appraisal success. This diversification of Ophir s funding strategy significantly enhances the long-term sustainability of the Combined Group s business. The Combined Group is expected to have capital expenditure of US$ million in Attractive exploration opportunities Salamander has received conditional environmental impact assessment approvals to commence drilling in the G4/50 concession in the Gulf of Thailand in This licence contains highly prospective acreage including 20 identified prospects with aggregate prospective resources of approximately 200 MMboe (gross). G4/50 is adjacent to Salamander s Bualuang oil development, implying rapid, highlyeconomic development options in the event of exploration success. Ophir currently intends to drill up to three wells on G4/50 in High-value, near-term step-out exploration opportunities also exist on the blocks surrounding Salamander s Sinphuhorm and Kerendan gas fields, with the development of Kerendan anticipated to add approximately 9,000 boepd of incremental production by The Combined Group, including the assets Ophir has agreed to acquire from Niko Resources in Indonesia, will have a diversified exploration footprint in South East Asia, with a combination of frontier and proven basins consisting of 17 exploration blocks and approximately 64,300 km 2 of net acreage. The Combined Group will have a regional exploration portfolio consisting of 41 currently 57

58 mapped prospects totalling over 3.3 bnboe of unrisked prospective resources (currently expected to consist of approximately 80 per cent. of oil), which are expected to generate at least six high quality drilling opportunities annually over the coming years. Synergies The Ophir Board estimates that, as a result of the Transaction, the Combined Group will be able to achieve recurring annual pre-tax cost synergies of approximately US$12 million which are expected to be delivered in full in the financial year ending 31 December Cost synergies have been identified in the following areas: * Duplication of corporate costs and functional overheads in London HQ (approximately US$8.5 million), including rationalisation of overlapping senior management headcount, back office functions and reduction of office costs and general overhead costs. Approximately US$5.2 million of these costs relate to rationalisation of overlapping headcount and US$3.3 million of these costs relate to other costs; and * Duplication of functional overheads in Asia (approximately US$3.5 million), including rationalisation of overlapping headcount in back office roles and reduction of office costs and general overhead costs. Approximately US$3.1 million of these costs relate to rationalisation of overlapping headcount and US$0.4 million of these costs relate to other costs. Assuming that the Transaction completes in the first quarter of 2015, the Ophir Board expects that the Combined Group will realise approximately 60 per cent. of these synergies in financial year ending 31 December 2015 and 100 per cent. in the financial year ending 31 December It is expected that the realisation of these synergies will incur one-off implementation costs of US$9 million in the financial year ending 31 December The Ophir Directors do not anticipate any material dis-synergies to arise as a consequence of the Transaction. The quantified synergies are contingent on the Transaction becoming Effective and will accrue as a direct result of the Transaction and would not be achieved on a standalone basis. * 4 Effects of the Transaction As a result of, and following completion of, the Transaction, Ophir expects to consolidate Salamander s assets and liabilities. The Transaction will, accordingly, result in an increase in earnings of Ophir as Ophir does not currently have any earnings and Salamander does. Following the Effective Date, the Combined Group is expected to have net 2C resources of 1,152mmboe (an increase to Ophir s current net 2C resources, which the Ophir Directors estimate to be 1,031 mmboe, and based on Salamander s net 2C resources as of 1 January 2014). Ophir s current portfolio does not contain any production and therefore the Combined Group s production will, following the Effective Date, be based upon Salamander s existing production, which averaged 14,200 boepd for the full year On the basis that neither Ophir nor Salamander have paid any dividends to shareholders in the 24 months preceding the date of this Prospectus, the Transaction is not expected to have any financial effect on income for a holder of one Salamander Share. The following table sets out, for illustrative purposes only and on the bases and assumptions set out in the notes below, the financial effects on the value of one Salamander Share assuming the Scheme becomes Effective: Effect on the value of one Salamander Share Note Market value of New Ophir Share 74.3p (i) Market value of one Salamander Share 60.0p (ii) Increase in capital value 14.3p (iii) This represents an increase of 23.9% (iv) Notes: (i) The value of 74.3 pence per Salamander Share implied by the terms of the Transaction is calculated based on the closing price per Ophir Share of pence per Ophir Share on 12 January 2015 (being the latest practicable date prior to the publication of the Scheme Document) multiplied by the ratio of of a New Ophir Share to every Salamander Share. * These statements of estimated cost synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost synergies referred to may not be achieved, or those achieved could be materially different from those estimated. Neither these statements nor any other statement in this Prospectus should be construed as a profit forecast or interpreted to mean that the Combined Group s earnings in the first full year following the Transaction, or in any subsequent period, would necessarily match or be greater than or be less than those of Ophir and/or Salamander for the relevant preceding financial period or any other period. 58

59 (ii) Salamander s closing share price of 60.0 pence on 12 January 2015 (being the latest practicable date prior to the publication of the Scheme Document). (iii) In assessing the financial effects of receiving New Ophir Shares no account of any potential tax liability of the Salamander Shareholders has been taken into account. (iv) (iii) as a proportion of (ii) in per cent. terms. The above statements should not be construed as a profit forecast or be interpreted to mean that the future earnings per share, profits, margins or 2C resources of Ophir or the Combined Group after the Effective Date will be necessarily greater or less than the historic published earnings per share, profits, margins or 2C resources of Ophir and Salamander prior to the Effective Date. 5 Trend information 5.1 Ophir At the date of this Prospectus, the Company has undertaken early stage exploration activities, but has not generated any revenue from oil and gas, although it has incurred costs primarily related to the acquisition and exploration of its asset portfolio. The Ophir Group has a limited operating history on which to assess its future expected performance. The Company has experienced operating losses in each full financial year since its incorporation. However, Ophir did not experience operating losses in the six months ended 30 June 2014 and 30 June Due to the general nature of oil and gas exploration and, where successful, the long lead times in developing projects, the Company expects to incur further operating losses in the current and future financial years as its exploration and development activities continue. There can be no assurance that the Company will earn significant revenues or any revenues at all, or achieve profitability, and the Company (and, following the Effective Date, the Combined Group) may be dependent on portfolio management to meet the Ophir Group s mid to longer term capital expenditure plans beyond the Ophir Group s current committed capital expenditure for the next 12 months. The key factors affecting the Company s results of operations and financial condition since 31 December 2013, and those that are expected to affect its results of operations and financial condition in the future, include the following: * acquisition, exploration and development expenditure and success rates; * rapid expansion of the Company s operations; * oil and gas prices; * foreign exchange; and * issues of Ophir Shares. Acquisition, exploration and development expenditure and success rates The Company has incurred substantial expenses related to the acquisition of assets and early stage exploration activities, and in the future expects to incur further significant exploration and development expenditure as it moves closer to oil and gas production. In particular, the level of its expenditure will depend in substantial part on whether the Company is successful in discovering and appraising oil and gas reserves and developing those reserves into oil and gasproducing assets. The Company has historically incurred substantial expenses in connection with pre-licence exploration activities or in pursuit of new ventures, which it has expensed, as well as post-licence exploration activities, which it has capitalised or written off. Rapid expansion of the Company s operations The Company has expanded its operations rapidly in recent years, which has affected its cost base. Given that the Company is not yet generating revenue from its exploration portfolio, growth in expenses related to its activities has contributed to operating losses. As the scope of the Company s business and activities has expanded, so have its administrative costs and expenses associated with its pre-licence exploration activities. In addition, expenses associated with share options to employees have also contributed to operating losses. 59

60 Oil and gas prices The Company s exploration and production strategies are and, should it begin production, its results of operations will be, influenced significantly by crude oil and natural gas prices. Crude oil prices have been volatile in the past and are likely to continue to be volatile in the future. Prices for oil are driven by world supply and demand and a number of other factors, including government regulation and social and political conditions. Natural gas is commonly sold under long term contracts at a price which is linked to that of crude oil and is therefore influenced by the same factors and uncertainties. In some markets the price of natural gas has become largely independent of crude oil, but is nevertheless governed by similar considerations and can as a result also show considerable variation. Foreign exchange Foreign exchange gains and losses have an impact on the Company s results of operations. Each entity in the Ophir Group determines its own functional currency, which for most entities is the US Dollar (given that most of the expenditure incurred by Ophir Group entities is in US Dollars). The Ophir Group has realised foreign currency gains and losses in the recent past due largely to cash and cash equivalents held in pounds sterling by Ophir Group companies with US Dollar functional currencies. The Ophir Group has also realised losses and gains due to settlement of foreign currency-denominated supplier invoices and revaluation of foreigndenominated bank accounts. The Ophir Group minimises its exposure to foreign exchange fluctuations by holding a substantial part of its financial assets in US Dollars. Issue of shares The development of the Ophir Group s exploration assets has to date been financed by multiple equity issues (carried out between 2004 and 2013), and by the issue of the Ophir Convertible Bond in 2006, which was converted into shares during the 2008 financial period. In March 2013, the Company raised funds as a result of the placing of million Ophir Shares (which raised 91.3 million) and a 2 for 5 share rights issue (which raised million). 5.2 Salamander Against the backdrop of stable oil prices, global activity and world trade started to show signs of a concerted recovery in the second half of There is evidence to suggest that cost inflation peaked during the first half of 2013 and cost pressures started to ease during the second half of With the sale of Onshore North West Java and South East Sumatra production sharing contracts in October 2011, the Salamander Group s production fell in On a Salamander Group basis, production grew by 31 per cent. in 2013 to 14,200 boepd. With continuing development and exploration in the Gulf of Thailand and the success of the West Kerendan-1 gas discovery in Indonesia, production is expected to increase to approximately 20,000 boepd by The key factors affecting Salamander s results of operations and financial condition since 31 December 2013, and those that are expected to affect its results of operations and financial condition in the future, include the following: * expansion of operations; * oil and gas prices; and * foreign exchange. Expansion of Salamander s operations Salamander continues to work on its hub business model to create sustainable shareholder value through building and exploiting its portfolio of upstream oil and gas assets. The Salamander Group s model concentrates on a small number of asset positions, or hubs, that each offer production, development and exploration opportunities to provide greater control and a more detailed understanding of the assets. Consequently, this has led to expansion into new blocks and Petroleum Agreements to expand Salamander s operations in the most effective manner. 60

61 Oil and gas prices During 2013 and through to mid-2014, the oil price continued to trade in a narrow range between US$100 and US$110 per barrel as the perception of a slowdown in demand growth, particularly in China, India and the Middle East, was offset by supply side concerns and political instability in the Middle East and North Africa. Since the middle of 2014, oil prices have steadily shifted downwards and since December, have hovered in the US$47 to US$73 range due to weaker outlook for global demand growth combined with excess supply largely attributed to increased production from US unconventional plays. Foreign exchange The Salamander Group undertakes certain transactions denominated in foreign currencies, and therefore faces exposure to exchange rate fluctuations. Exchange rate exposures are managed through maintaining the majority of the Salamander Group s cash and cash equivalent balances in US Dollars, the Salamander Group s presentational currency and the functional currency of all its subsidiaries. The Salamander Group also holds, from time to time, cash balances in pounds sterling and other currencies to meet short term commitments in those currencies. Furthermore the Salamander Group uses derivative financial instruments to manage its exposure to movements in oil and gas prices and interest rates. The Salamander Group does not use derivatives for speculative purposes. 6 Irrevocable undertakings and letters of intent As at the Latest Practicable Date, Ophir has received irrevocable undertakings from the Directors of Salamander to vote in favour of the resolutions relating to the Transaction at the Salamander General Meeting and the Court Meeting and vote against any SONA Disposal Shareholder Approval Resolution in respect of aggregate holdings of 5,244,831 Salamander Shares, representing approximately 2.0 per cent. of Salamander s existing issued share capital. Ophir has received irrevocable undertakings from other Salamander Shareholders to vote in favour of the resolutions relating to the Transaction at the Salamander General Meeting and the Court Meeting and vote against any SONA Disposal Shareholder Approval Resolution in respect of aggregate holdings of 46,538,066 Salamander Shares, representing approximately 18.0 per cent. of Salamander s existing issued share capital. Ophir has received non-binding letters of intent from other Salamander Shareholders to vote in favour of the resolutions relating to the Transaction at the Salamander General Meeting and the Court Meeting and vote against any SONA Disposal Shareholder Approval Resolution in respect of aggregate holdings of 21,693,839 Salamander Shares, representing approximately 8.4 per cent. of Salamander s existing issued share capital. For further information on the irrevocable undertakings, see the detailed summary in the Material contracts of the Ophir Group section at paragraph 7 of Part XI (Additional Information) of this Prospectus. 7 Information on Ophir and the Ophir Group Ophir is a FTSE 250 upstream oil and gas exploration company which is listed on the London Stock Exchange. Its shares were admitted to trading on 13 July Ophir is incorporated in England and Wales with headquarters in London (England) and operational offices in Perth (Australia), Dar es Salaam and Mtwara (Tanzania), Malabo (Equatorial Guinea), Libreville (Gabon) and Nairobi (Kenya). Ophir has one of the largest deep water acreage positions across East and West Africa and in addition has acquired assets in Myanmar and agreed to acquire assets in Indonesia. Since its foundation in 2004, Ophir has acquired an extensive portfolio of oil and gas interests in Africa and South East Asia. The majority of Ophir s current assets are in deepwater and the Company is a material and strategic offshore acreage holder in West and East Africa, currently with 14 blocks in five countries. Ophir has recently acquired the PSC for a deepwater asset offshore Myanmar and agreed to acquire seven assets in Indonesia from Niko Resources. Ophir has made a number of significant gas discoveries in Tanzania and Equatorial Guinea. Ophir has a track record of monetisation and portfolio management, generating significant cash proceeds to fund the Company s ongoing exploration activities. As a result, Ophir assesses on an ongoing basis whether suitably qualified parties farm in to certain of its assets. In March 2014, the 61

62 Company completed the sale of a 20 per cent. stake in Blocks 1, 3 and 4, Tanzania for US$1.25 billion, with a further US$38 million payable at final investment decision. Ophir is considering its options in respect of Blocks 1, 3 and 4, Tanzania and is currently in ongoing discussions with parties in relation to the possible disposal of all or part of the interests it holds in Blocks 1, 3 and 4, Tanzania. In line with its strategy, Ophir also intends to continue to consider further acquisitions and disposals, particularly in light of the current period of oil price volatility and the associated opportunities within the industry. For further information, see Part II (Information on Ophir) of this Prospectus. 8 Information on Salamander and the Salamander Group Salamander is listed on the Official List of the London Stock Exchange and its shares were admitted to trading on 5 December Salamander is a South East Asian-focused independent exploration and production company headquartered in London (England) and with a number of operated licences in Thailand, Indonesia and Malaysia. The Salamander Group s strategy has been to build a portfolio of hub positions in South East Asia, each with an operated anchor asset to which value can be added (either through development or commercialisation) and with both low risk exploration potential nearby, as well as opportunities to further build each position through business development in the same geological basin. Salamander typically holds operatorship and controls the scale, scope and pace of implementation of the work programme across its asset base. Since inception, Salamander has built a balanced portfolio including: * two producing blocks, both with further development opportunities; * one development asset; * four discoveries currently contemplated for appraisal and development; and * an inventory of exploration leads and prospects. As of 1 January 2014, Salamander had net proved and probable (2P) reserves of 65.3 MMboe and 121 MMboe of contingent (2C) resources. Salamander s high quality portfolio consists of four core asset hubs: * Greater Bualuang (oil, offshore Gulf of Thailand); * Greater Kerendan (gas, onshore Central Kalimantan in Indonesia); * North Kutei (oil and gas, onshore and offshore East Kalimantan in Indonesia); and * Block PM-322 (oil, offshore Malacca Strait in Malaysia). These production and development hubs are supplemented by additional assets elsewhere in the South East Asia region, such as the onshore Thailand gas producing Sinphuhorm field. The executive directors of Salamander are James Menzies (Chief Executive Officer), Michael Buck (Chief Operating Officer) and Jonathan Copus (Chief Financial Officer). Salamander achieved revenues of US$482 million in the year ended 31 December 2013, with 94 per cent. of these revenues originating from the production of oil. As of 31 December 2013, Salamander had total assets exceeding US$1.36 billion and for the 12 months ended 31 December 2013 incurred a net loss of US$120 million. As at the Latest Practicable Date, the Salamander Group directly employed 204 employees. On 28 August 2014, Salamander released its interim results for the half year ended 30 June The performance of the Salamander Group was described in the Chief Executive s statement as follows: Operational * average daily production 11,800 boepd (1H 2013: 14,900 boepd), reflecting production downtime at the start of the year which reduced output by 2,800 boepd during the period; * West Kerendan discovery takes the Kerendan field to over 1 TCF gas in place; * construction of the Kerendan gas processing facilities is now more than 70 per cent. complete; 62

63 Financial * pre-tax operating cash flow of US$115.2 million (first half of 2013: US$147.0 million); * pre-tax profit of US$66.4 million (first half of 2013: US$10.3 million); * post-tax loss of US$27.9 million (first half of 2013: US$86.1 million loss); * net debt as at 30 June of US$401.0 million (for financial year 2013: US$259.9 million) with cash and funds of US$154.1 million (for financial year 2013: US$265 million); Since the issue of Salamander s interim results for the six months ended 30 June 2014, the following developments have been announced: * on 21 July 2014, it was announced that Salamander signed the SONA SPA to dispose of an effective 40 per cent. working interest in the B8/38 concession containing the Bualuang oil field and the surrounding G4/50 concession, both located in the Gulf of Thailand (decreasing Salamander s 100 per cent. interest to 60 per cent. post completion of the transaction); * on 18 August 2014, it was announced that Salamander had completed the drilling of the North Kendang-2 exploration well ( NK-2 ) in the South East Sangatta PSC (in which Salamander has a 100 per cent. interest). The well successfully encountered two hydrocarbon bearing intervals however the volume of hydrocarbons encountered was considered to be sub-commercial and has been plugged and abandoned; * on 19 August 2014, it was announced that first oil had been received in the tanks of the newly converted Suksan Salamander FSO at the Bualuang field in the Gulf of Thailand; and * on 22 September 2014, it was announced that Salamander s Environmental Impact Assessment ( EIA ) for exploration drilling in the G4/50 concession, located in the Gulf of Thailand (in which Salamander has a 100 per cent. interest), had been granted conditional approval. Additionally, on 14 January 2015, Salamander released a corporate trading update which included the following key information: * average daily production for 2014 was 14,200 boepd, with Bualuang and Sinphuhorm oil fields producing record high annual rates; * unaudited net debt as at 31 December of US$380 million with cash and funds of US$118 million; * the completion of infrastructure upgrades at the Bualuang field had occurred in August 2014, significantly reducing costs (with Salamander on track to deliver targeted US$25 million annual reductions in operating costs) and extending the field s operating life; * further progress on the construction of the Kerendan gas processing facilities, had been made and the facility was stated to be nearing completion; * an expectation that renegotiations of the Kerendan gas sales agreement with PT PLN (Persero), the Indonesian State Power Company, would complete during the first quarter of 2015 on more favourable terms. On 14 January 2015, Salamander and SONA announced their intention to terminate the SONA SPA on mutually acceptable terms (subject to finalisation of the documentation to effect such termination and, in Salamander s case, the consent of Ophir). The formal agreement to terminate the SONA SPA (and related transaction documentation) is expected to be finalised after the latest practicable date prior to the posting of this document and a public announcement by Salamander will be made when such agreement is concluded. Once terminated with the consent of Ophir, such termination will satisfy the SONA Condition. In circumstances where the termination agreement in respect of the SONA SPA is not concluded, and in light of the unanimous recommendation of the Salamander Directors to Salamander Shareholders to vote in favour of the Transaction, Salamander would defer any further action seeking Salamander Shareholder approval of the SONA Disposal until after the results of the Ophir General Meeting, expected to be held at 11:00 a.m. on Friday 6 February Assuming the respective shareholders of Ophir and Salamander both vote in favour of the Transaction, in conjunction with Ophir, Salamander would then decide the most appropriate means by which the SONA Condition would be satisfied. Salamander s corporate trading update also noted that in SONA s press release to its shareholders on 14 January 2015, SONA stated that it remains interested in acquiring a stake in the Greater 63

64 Bualuang Area and intends to approach either Ophir or Salamander regarding a revised transaction post their respective shareholder meetings on 6 February For further information, see Part III (Information on Salamander) of this Prospectus. 9 Management, employees and locations Ophir attaches great importance to the skills and experience of the existing management and employees of Salamander and believes that they will benefit from enhanced career and business opportunities within the Combined Group. Ophir has given assurances to the Salamander Directors that, following completion of the Transaction, the existing employment rights, including pension rights, of all Salamander Group employees will be observed at least to the extent required by applicable law. Salamander Management The Salamander Executive Directors will resign as Salamander Directors with effect from completion of the Transaction and, in order to avoid duplication of roles, the chief executive officer and the chief financial officer of Salamander will be leaving upon or shortly after completion of the Transaction. Michael Buck (the current chief operating officer of Salamander) will remain with the Combined Group for a period after completion of the Transaction to help ensure a seamless and efficient integration of the two companies. Dr Carol Bell, a current non-executive Director of Salamander will join the Ophir Board as a nonexecutive director with effect from the completion of the Transaction. The other Salamander nonexecutive Directors intend to resign as Salamander Directors with effect from completion of the Transaction. Both Mr Buck and Dr Bell have considerable oil and gas industry experience, both in South East Asia and internationally. Mr Buck spent 20 years with LASMO plc, as a geophysicist in the UK and Indonesia, chief geophysicist in Colombia, Exploration Manager in Vietnam, and Exploration and General Manager in Libya; and subsequently spent four years with ENI as Country Manager for Pakistan and Managing Director for ENI, Iran. Dr Bell has been a non-executive director of Salamander since January 2012 and was previously a Managing Director of Chase Manhattan Bank s Global Oil & Gas Group and is currently a non-executive director of Petroleum Geo-Services ASA and two listed holding companies in the Fred Olsen Group, Bonheur ASA and Ganger Rolf ASA. South East Asia operating business In conjunction with the recently announced transaction with Niko Resources, the Transaction provides Ophir with an enhanced operating capability in the region and Ophir intends to achieve operational and administrative synergies but does not expect this to impact the operational effectiveness and performance of the business. A review of Salamander s operations is currently being undertaken. Although it is not anticipated that this will result in any significant restructuring, the review comprises a detailed strategic and operational evaluation of the Salamander business to identify opportunities arising from the expanded business, team alignment and other synergies with Ophir s existing business and the implications of oil price volatility. Ophir anticipates that a significant proportion of Salamander s employees in the region will be retained in the business. Ophir intends to maintain the principal locations of the Salamander Group s operating business in South East Asia. South East Asia Salamander regional head office in Singapore Following completion of the Transaction, Ophir intends to transfer some of the functions currently performed by personnel in Salamander s regional head office in Singapore to personnel in Ophir s regional office in Perth. Ophir intends to retain a smaller presence in Singapore and this is likely to involve the loss of twelve roles (including contractor roles) in the Singapore office. London Head Office Following completion of the Transaction, Ophir intends to operate one London head office for the Combined Group. This will result in the integration of the head office functions of both Salamander and Ophir into Ophir s head office in order to achieve efficiencies in respect of the Combined Group s administrative functions. 64

65 There are currently ten employees and one contractor (other than Salamander Executive Directors) employed in Salamander s head office and, subject to any necessary consultation, the process of integration is likely to result in a reduction of this headcount by nine. Enhanced Redundancy Arrangements Salamander employees operating at below board level who are made redundant within the first 12 months of completion of the Transaction will be entitled to an enhanced redundancy payment of a minimum of one month for every year of service subject to the affected individuals entering into legally binding settlement agreements. Impact on Ophir Following completion of the Transaction, Ophir intends to undertake a review of its existing structure, in light of the increased size of the organisation. This may have an impact on some roles within Ophir. 10 Salamander Share Schemes Participants in the Salamander Share Schemes will be contacted regarding the effect of the Transaction on their rights under the Salamander Share Schemes in accordance with the terms of the relevant plan rules and appropriate proposals will be made to such participants in due course in accordance with the Co-operation Agreement (as summarised in more detail in the Material contracts of the Ophir Group section at paragraph 7 of Part XI (Additional Information) of this Prospectus). 11 Salamander Convertible Bonds Holders of Salamander Convertible Bonds will be contacted regarding the effect of the Transaction on their rights in respect of the Salamander Convertible Bonds held by them. 12 New Ophir Shares The New Ophir Shares will be issued credited as fully paid and will rank pari passu in all respects with the Existing Ophir Shares, including the right to receive and retain in full all dividends and other distributions (if any) made, paid or declared after the date of the Announcement. The New Ophir Shares will, when issued, be freely transferable and there will be no restrictions on transfer in the UK. Fractions of New Ophir Shares will not be allotted or issued pursuant to the Scheme and fractional entitlements will be rounded down to the nearest whole number of New Ophir Shares. As a result, Salamander Shareholders who hold one Salamander Share will not receive any New Ophir Shares (or any other consideration) pursuant to the Salamander unless they increase their holding of Scheme Shares prior to the Scheme Record Time. 13 Structure of the Transaction The Transaction will be effected by means of a court-sanctioned scheme of arrangement between Salamander and the Salamander Shareholders under Part 26 of the Companies Act (although Ophir reserves the right to effect the Transaction by way of an Offer). The Scheme is an arrangement between Salamander and the Scheme Shareholders and is subject to the approval of the Court. The purpose of the Scheme is to provide for Ophir to become the holder of the entire issued and to be issued ordinary share capital of Salamander. This is to be achieved by the cancellation of the ordinary shares of Salamander and the application of the reserve arising from such cancellation in paying up in full a number of new Salamander Shares (which is equal to the number of ordinary shares cancelled), and issuing the same to Ophir. In consideration for this, the Salamander Shareholders will receive the New Ophir Shares on the basis set out in paragraph 2 of this Part I. To become effective, the Scheme must be approved by a majority in number of the Scheme Shareholders present and voting at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the Scheme Shares voted by those Scheme Shareholders. The Scheme also requires the passing at the Salamander General Meeting of a special resolution necessary to implement the Scheme and approve the related Capital Reduction. The Scheme must also be sanctioned by the Court and the associated Capital Reduction must be confirmed by the Court, in each case at the relevant court hearings. 65

66 The Transaction is also subject to the Conditions and further terms set out in Part 3 of the Scheme Document, including, among other things: * the approval of the Scheme and related resolutions by Salamander Shareholders at the Court Meeting and the Salamander General Meeting; * the Scheme becoming unconditional and effective and being sanctioned by the Court subject to the Takeover Code, by no later than p.m. on 30 June 2015 or such later date (if any) as Ophir and Salamander may agree and the Panel and the Court may allow; * the passing of the Resolution by Ophir Shareholders at the Ophir General Meeting; and * the UK Listing Authority having acknowledged to Ophir or its agent (and such acknowledgement not having been withdrawn) that the application for the admission of the New Ophir Shares to listing on the premium segment of the Official List has been approved and (subject to satisfaction of any conditions to which such approval is expressed) will become effective as soon as a dealing notice has been issued by the UK Listing Authority and the London Stock Exchange having acknowledged to Ophir or its agent (and such acknowledgement not having been withdrawn) that the New Ophir Shares will be admitted to trading on the London Stock Exchange s main market for listed securities. The Transaction is also conditional upon: (a) the SONA SPA being terminated by SEPT and SONA or, with the prior consent of Ophir, by Salamander and SEBHL, in each case in accordance with the relevant provisions of the SONA SPA; (b) with the prior consent of Ophir, the SONA SPA being terminated by agreement of the parties to the SONA SPA otherwise than in accordance with the relevant provisions of the SONA SPA; or (c) Salamander Shareholders not passing any SONA Disposal Shareholder Approval Resolution and the proposed SONA Disposal subsequently being terminated. Ophir also has the right to waive this Condition. On 14 January 2015, Salamander and SONA announced their intention to terminate the SONA SPA on mutually acceptable terms (subject to finalisation of the documentation to effect such termination and, in Salamander s case, the consent of Ophir). The formal agreement to terminate the SONA SPA (and related transaction documentation) is expected to be finalised after the latest practicable date prior to the posting of this document and a public announcement by Salamander will be made when such agreement is concluded. Once terminated with the consent of Ophir, such termination will satisfy the SONA Condition. In circumstances where the termination agreement in respect of the SONA SPA is not concluded, and in light of the unanimous recommendation of the Salamander Directors to Salamander Shareholders to vote in favour of the Transaction, Salamander would defer any further action seeking Salamander Shareholder approval of the SONA Disposal until after the results of the Ophir General Meeting, expected to be held at a.m. on Friday 6 February Assuming the respective shareholders of Ophir and Salamander both vote in favour of the Transaction, in conjunction with Ophir, Salamander would then decide the most appropriate means by which the SONA Condition would be satisfied. The Transaction can only become Effective if all Conditions, including those described above, have been satisfied or, if capable of waiver, waived (including any waiver of the condition in respect of the termination of the SONA Disposal). If any Condition is not capable of being satisfied by the date specified therein, Ophir shall make an announcement through a Regulatory Information Service as soon as practicable and, in any event, by no later than 8.00 a.m. on the Business Day following the date so specified, stating whether Ophir has invoked that Condition, waived that Condition or, with the agreement of Salamander, specified a new date by which that Condition must be satisfied Once the necessary approvals from Ophir Shareholders have been obtained and the other Conditions have been satisfied or (where applicable) waived, the Scheme must be approved by the Court. The Scheme will then become effective upon delivery of the Court Order(s) to the Registrar of Companies. Subject to satisfaction (or waiver) of the Conditions, the Scheme is expected to become effective before 31 March The Scheme will lapse if: * the Court Meeting and the Salamander General Meeting are not held on or before 28 February 2015 (or such later date as may be agreed between Ophir and Salamander); 66

67 * the Court hearing to approve the Scheme is not held on or before 19 March 2015 and if the Court hearing to confirm the Capital Reduction is not held on or before 24 March 2015 (or such later dates as may be agreed between Ophir and Salamander); or * the Scheme does not become effective by a Long Stop Date of 30 June 2015 (or such later date as may be agreed between Ophir and Salamander and the Panel and the Court may allow), provided, however, that the deadlines for the timing of the Court Meeting, the Salamander General Meeting and the Court hearing to approve the Scheme as set out above may be waived by Ophir, and the deadline for the Scheme to become effective may be extended by agreement between Salamander and Ophir. Ophir has agreed with Salamander that the Ophir General Meeting will be scheduled so as to be held before, but on the same date as, the Court Meeting and the Salamander General Meeting. Upon the Scheme becoming effective, it will be binding on all Salamander Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the Salamander General Meeting. Ophir has also reserved the right to elect to implement the Transaction by way of a takeover offer (as such term is defined in Section 974 of the Companies Act). In such event, the takeover offer will be implemented on substantially the same terms as those which would apply to the Scheme (subject to appropriate amendments, including (without limitation), and if agreed with the Panel, the inclusion of an acceptance condition set at 90 per cent. of the shares to which such offer relates or such lesser percentage, being more than 50 per cent., as Ophir may decide). 14 Scheme Document The Scheme Document and the Forms of Proxy accompanying the Scheme Document were published by Salamander on 14 January The Scheme Document and Forms of Proxy will be made available to all Salamander Shareholders (other than Restricted Overseas Persons) at no charge to them. Salamander Shareholders are urged to read the Scheme Document and the accompanying Forms of Proxy because they will contain important information. 15 Other Transaction-related arrangements For a more detailed summary of these arrangements, see the Material contracts of the Ophir Group section at paragraph 7 of Part XI (Additional Information) of this Prospectus. Confidentiality and Standstill Agreement On 10 December 2013, Salamander and Ophir entered into a Confidentiality and Standstill Agreement in a customary form in relation to the Transaction, pursuant to which they each undertook, subject to certain exceptions, to keep information relating to one another confidential and to not disclose it to third parties. The confidentiality obligations will remain in force for two years from the date of the agreement. The Confidentiality and Standstill Agreement also included standstill obligations, which have since expired. Co-operation Agreement On 24 November 2014, Salamander and Ophir entered into the Co-operation Agreement. In relation to the Salamander Share Schemes, the outstanding options under the Salamander Share Schemes shall vest and become exercisable for a period of one month from the Scheme being sanctioned by the Court on the basis that (a) options under the Salamander Deferred Share Plan shall vest in full; (b) options under the Salamander Performance Share Plan 2006 shall vest to the extent determined by Salamander s remuneration committee and; (c) options shall not be time prorated. Any Salamander Shares received on exercise of those options shall take part in the Scheme or will be acquired by Ophir for the same consideration per Salamander Share as any other Salamander Shareholder will receive under the Scheme (subject to the requirements of applicable overseas securities laws). 16 Listing of New Ophir Shares and de-listing of Salamander Shares An application will be made to each of the FCA and the London Stock Exchange, respectively, for the New Ophir Shares to be admitted to the Official List with a premium listing and to trading on 67

68 the London Stock Exchange s main market for listed securities, subject to the Scheme becoming Effective. It is expected that Admission will become effective and dealings for normal settlement in the New Ophir Shares will commence at 8.00 a.m. on the first Business Day following the Effective Date (currently expected to be 3 March 2015). Dealings in Salamander Shares on the London Stock Exchange are currently expected to cease at 7.30 a.m. on 2 March 2015 and no transfers of Salamander Shares will be registered after this time. After 7.30 a.m. on 2 March 2015, there will be no dealings in Salamander Shares. Prior to the Effective Date, Salamander will apply to the FCA for the listing of the Salamander Shares to be cancelled and for the Salamander Shares to cease to be admitted to trading on the London Stock Exchange s main market for listed securities. Such cancellation is expected to take effect on 3 March On that date, share certificates in respect of Salamander Shares will cease to be valid and entitlements to Salamander Shares held within the CREST system will be cancelled. If the Transaction is effected by way of a takeover offer, it is anticipated that the cancellation of Salamander s listing on the Official List and admission to trading on the London Stock Exchange s market for listed securities will take effect no earlier than 20 Business Days following the date on which the Transaction becomes or is declared unconditional in all respects provided Ophir has attained 75 per cent. or more of the voting rights of Salamander. Delisting would significantly reduce the liquidity and marketability of any Salamander Shares not assented to the offer at that time. If the Transaction is effected by way of a takeover offer and such offer becomes or is declared unconditional in all respects and sufficient acceptances are received, Ophir intends to exercise its rights to acquire compulsorily the remaining Salamander Shares in respect of which the offer has not been accepted. 17 Related party transactions Within the 12 months prior to the Latest Practicable Date, SailingStone Capital Partners LLC ( SailingStone ) held Ophir Shares representing more than 10 per cent. of the issued ordinary share capital of Ophir and currently hold 34,538,066 Salamander Shares. As a result, the acquisition of SailingStone s Salamander Shares is classified as a related party transaction under the Listing Rules. Due to the size of SailingStone s holding, the acquisition by Ophir of SailingStone s Salamander Shares is a smaller related party transaction under Listing Rule , the impact of which is that Ophir was required under the Listing Rules to make an announcement of the smaller related party transaction and to obtain a sponsor s written confirmation that the arrangements are fair and reasonable as far as Ophir s shareholders are concerned. The announcement was made on 16 January Under the Listing Rules, a separate vote of Ophir s independent shareholders will not be required in connection with the smaller related party transaction. Furthermore, as at the Latest Practicable Date, Dr Nicholas Cooper (a Director of Ophir) held or is interested in 851,600 Salamander Shares. As a result of the size of Dr Nicholas Cooper s holding, the acquisition by Ophir of Dr Nicholas Cooper s Salamander Shares is a small related party transaction and, therefore, the related party transaction rules in the Listing Rules do not apply although the acquisition of such shares pursuant to a takeover offer would constitute an acquisition from a director for the purposes of section 190 of the Companies Act 2006 and approval of such acquisition is therefore being sought in the Resolution. As at the Latest Practicable Date, Tony Rouse, the Director of Finance and a senior manager of Ophir held or was interested in 185,953 Salamander Shares and also held up to 236,654 options under the Salamander Share Schemes that vest, subject to performance criteria, in May 2015 and up to 190,903 options under the Salamander Share Schemes that vest, subject to performance criteria, in April Tony Rouse is not an Ophir Director and therefore the acquisition of Tony Rouse s Salamander Shares is not a related party transaction. 18 General The Transaction will be made on the terms and subject to the Conditions and certain further terms set out in the Scheme Document. Ophir has also reserved the right to elect to implement the Transaction by way of a takeover offer (as such term is defined in Section 974 of the Companies Act). In such event, the takeover offer will be implemented on substantially the same terms as those which would apply to the Scheme (subject to appropriate amendments, including (without limitation), and if agreed with the Panel, the inclusion 68

69 of an acceptance condition set at 90 per cent. of the shares to which such offer relates or such lesser percentage, being more than 50 per cent., as Ophir may decide). 19 Documents available on website Copies of the following documents will be made available on Ophir s website at until the Effective Date: * this Prospectus; * the Scheme Document; * the Circular; * the Form of Proxy; * the Announcement; * the irrevocable undertakings and letters of intent referred to in paragraph 6 above; * the Confidentiality and Standstill Agreement; * the Co-operation Agreement; * the unaudited interim condensed financial statements for the six months ended 30 June 2014, the Annual Report and Accounts of Ophir for each of the financial years ended 31 December 2013, 31 December 2012 and 31 December 2011; * the unaudited interim condensed financial statements for the six months ended 30 June 2014, the Annual Report and Accounts of Salamander for each of the financial years ended 31 December 2013, 31 December 2012 and 31 December 2011; * the report of Ernst & Young LLP set out Section B of Part VIII (Reporting Accountants Report on Unaudited Pro Forma Financial Information) of this Prospectus; * the report of Ernst & Young LLP set out in Appendix 1 (Quantified Financial Benefits Statement) of the Scheme Document; * the report of Credit Suisse, Morgan Stanley and RBC Capital Markets set out in Appendix 1 (Quantified Financial Benefits Statement) of the Scheme Document; and * the consent letters referred to in Part XI (Additional Information) of this Prospectus. 69

70 PART II INFORMATION ON OPHIR The following information should be read in conjunction with the information appearing elsewhere in this Prospectus, including Ophir Group s audited historical consolidated financial information for the three years ended 31 December 2011, 31 December 2012 and 31 December 2013 and unaudited interim condensed financial statements for the six months ended 30 June 2014, which are incorporated into this Prospectus by reference as explained in Part VI (Historical Consolidated Financial Information Relating to the Ophir Group) and paragraph 19 of Part XI (Additional Information) of this Prospectus and are available for inspection in accordance with paragraph 18 of Part XI (Additional Information). Unless otherwise indicated, the selected financial information included in this Part II (Information on Ophir) has been extracted without material adjustment from the Ophir Group s audited historical consolidated financial information contained in Part VI (Historical Consolidated Financial Information Relating to the Ophir Group) of this Prospectus. 1 Business overview Ophir is a FTSE 250, upstream oil and gas exploration company. The Company is incorporated in England and Wales with headquarters in London (England) and operational offices in Perth (Australia), Dar es Salaam and Mtwara (Tanzania), Malabo (Equatorial Guinea), Libreville (Gabon) and Nairobi (Kenya). Since its foundation in February 2004, Ophir has acquired an extensive portfolio of oil and gas interests in Africa and South East Asia. The majority of Ophir s current assets are in deepwater and the Company is a material and strategic offshore acreage holder in West and East Africa, with 14 blocks in five countries. In 2014, Ophir signed the PSC for a deepwater asset offshore Myanmar and agreed to acquire seven assets in Indonesia from Niko Resources. Ophir has made a number of significant gas discoveries in Tanzania and Equatorial Guinea. Ophir was listed on the main market of the London Stock Exchange on 8 July 2011 raising US$352 million and with an initial market capitalisation of approximately US$1.28 billion (the IPO ). Its shares commenced trading on 13 July As at the date of this Prospectus, Ophir is a constituent of the FTSE 250 Index and had a market capitalisation of approximately US$1,139.2 million as at the Latest Practicable Date. Following the IPO, notable transactions in the Company s history include: * the acquisition of Dominion Petroleum Limited in February 2012; * a placing and rights issue to raise US$837.6 million in March 2013; and * the sale of a 20 per cent. stake in Blocks 1, 3 and 4 in Tanzania to Pavilion Energy for approximately US$1.3 billion, which completed in March The Ophir Directors estimate that Ophir currently has net 2C contingent resources of 1,031 mmboe. As at 31 December 2014, Ophir had US$1.15 billion of cash on the balance sheet. Ophir typically holds operatorship and its portfolio of key assets is based across Tanzania, Equatorial Guinea, Gabon, Seychelles and Myanmar, along with assets Ophir has agreed to acquire in Indonesia. Through its drilling campaigns to date, the Company has made a total of 17 commercial gas discoveries: 11 in Tanzania and six in Equatorial Guinea. The Ophir Directors believe that the Company has established a strong competitive position in Africa and entry into South East Asia has been identified as a strategic priority by Ophir. The Transaction forms the basis of Ophir s entry into South East Asia, providing it with an existing asset base and operating capability in South East Asia, including key technical, commercial and legal functions. The Transaction will also complement the transaction with Niko Resources Ltd (announced on 27 October 2014) and the previously awarded exploration acreage offshore Myanmar. Leveraging Ophir s exploration track record and financial strength and Salamander s established Asian operating platform, the Combined Group would be well-positioned to accelerate exploration activity in Salamander s licences in offshore Thailand and in Ophir s recently acquired acreage in Myanmar and Indonesia, while continuing to pursue the significant opportunity set in South East Asia. Ophir intends to reinvest the cash flow from Salamander s production portfolio in Ophir s proven business model, namely that of exploration/appraisal and continued monetisation of exploration/ 70

71 appraisal success. This diversification of Ophir s funding strategy significantly enhances the long-term sustainability of the business. The Directors also expect the Company will continue to actively manage its existing portfolio (and following completion of the Transaction, the Combined Group s portfolio). Active management may, depending on circumstances that exist at the time, include licence applications, divestments, acquisitions, farm ins, farm outs and exchanges of interests. The Company s preference is to take significant initial equity interests in core assets whilst retaining the flexibility to divest in part or in full such interests by way of farm out or exchange of interests as the project matures, if deemed appropriate. The Company intends to expand its portfolio through investing in new ventures, particularly where the Company believes application of advanced geoscience technology can add significant value to an asset through the reduction of exploration risk. The Company may also evaluate opportunities to acquire further producing or near-producing assets to complement its portfolio and will look to expand the Ophir Group s portfolio through investing in new ventures in Africa and Asia. 2 Key strengths of the Company The Directors believe that Ophir has the following key strengths: Extensive exploration portfolio As at the date of this Prospectus, the Company holds gross acreage totalling approximately 81,500km 2 across 22 licences in Africa and South East Asia (subject to approval by SKKMiGas and the Government of Indonesia in relation to the acquisition of assets in Indonesia from Niko Resources). These interests are predominantly offshore in deepwater. Through a process of data acquisition and analysis, this portfolio is expected to yield a diverse range of attractive exploration opportunities over the coming years. The Directors currently expect that the Company will participate in two to six wells per year, in both frontier basins and proven areas. Track record of exploration success Since 2008, the Company has participated in 35 exploration and appraisal wells, of which 22 were operated by Ophir. These wells have discovered 3,426 MMboe of gross 2C contingent resources (1,601 MMboe net, prior to subsequent disposals), at an average finding and discovery cost of US$1.32 per boe. Track record of monetisation and portfolio management In November 2013, the Company announced the sale of 20 per cent. interests in Blocks 1, 3 and 4, Tanzania to Pavilion Energy (a subsidiary of Temasek) for maximum consideration of approximately US$1.3 billion. The Company retains further 20 per cent. interests in these licences. The transaction generated significant cash proceeds to fund the Company s ongoing exploration activities. Furthermore, for the same reason, the Company is considering, and is in ongoing discussions with parties regarding, potentially farming out all or part of the interests it holds in Blocks 1, 3 and 4, Tanzania. In addition to monetising success, the Company actively manages risk through pre-drill farm outs and regular reviews of its portfolio, which can result in the decision to relinquish acreage (for example, in Somaliland, SADR and Madagascar) rather than invest incremental capital. Furthermore, the Company seeks to add new exploration acreage to the portfolio that will be the source of potential future exploration drilling opportunities, recent examples of which include the recent addition of new acreage in Gabon, Seychelles, Myanmar and Indonesia. The size of the Company and its short decision making process makes it able to respond quickly to both opportunities and challenges. Strong geoscience and drilling expertise The Directors believe that the Company s track record of exploration success would not have been achieved without the high-quality, experienced Senior Management and staff that the Company employs. The Directors believe that the Company s Senior Management and employees represent a competitive advantage, which enables the Company to screen opportunities successfully (both for new business as well as within the existing portfolio) and to efficiently conduct its pre-drill, drilling and post-drill activities to generate superior returns for shareholders. 71

72 Control of key exploration positions through operatorship Of the Company s 15 licences, 12 are operated interests. This affords a degree of control over key decisions in the exploration process, including those related to the pace and extent of capital investment and drilling activities. The Company also has a high level of equity interests, which affords farm out or monetisation opportunities to third parties, reducing the Company s financial exposure to projects without jeopardising material equity interest, value creation potential and influence over momentum. Strong HSE record The Company s HSE record in conducting deepwater drilling and seismic programmes in frontier locations illustrates a strong commitment to operational safety and security. This commitment is led by the Senior Management, and the Directors believe that this is core to long-term shareholder value given the inherent risks of deepwater operations. The Company has experienced two lost time incidents since the commencement of its first operated deepwater well in High quality stakeholder relationships The Company enjoys a depth of contacts and fosters transparent and constructive relationships with governments and oil and gas industry participants throughout Africa and South East Asia. This has been achieved through the Company s commitment to realising value from its assets in a timely fashion by, whenever practical, accelerating exploration activities while maintaining high professional standards and good community relations. In addition to seeking to employ local people where practical, the Company has run successful corporate social responsibility programmes in parallel with its operations. The Directors believe that these attributes make the Company an attractive partner for governments and other oil and gas companies, which can be a competitive advantage in securing access to new investment opportunities. 3 Strategy of the Combined Group The key elements of Ophir s strategy for the Combined Group are set out below. Value creation through exploration * Early stage, low-cost entry to significant operated acreage positions, often in underexplored basins and with minimal work commitments. * Operate seismic and drilling phases, apply Ophir s in-house expertise to key decisions in the exploration process. * Discover material commercial oil or gas resources where value can be optimised. Optimise value proposition through active portfolio management * Highest returns generated through exploration success. * Monetise exploration success at optimal point on the value curve, according to broader industry conditions and dynamics, via sale, commercialisation or through a combination of both. In line with its strategy, Ophir also intends to continue to consider further acquisitions and disposals (particularly in light of the current period of oil price volatility and the associated opportunities within the industry) and Ophir is considering, and is in ongoing discussions with parties regarding, potentially farming out all or part of the interests that it holds in Blocks 1, 3 and 4 Tanzania. * Recycle proceeds to deliver sustained, consistent high-impact exploration activity, a cash generative production base and returns to shareholders. Development of operating capability * Flexibility to pursue the development of select projects where this creates optimal value for shareholders. * Enhance Ophir s negotiating position in potential monetisation discussions and enable Ophir to decide optimal point of exit in the context of the market conditions. * Broaden Ophir s opportunity set in focus areas of Africa and South East Asia. Diversified sources of funding * Aim to internally fund core exploration activities from operating cash flows. 72

73 * Apply prudent levels of debt financing where appropriate. * Maintain balance sheet strength and flexibility and further enhance through select asset monetisations. Capital discipline and returns * Only allocate capital to highest return opportunities following rigorous risk/reward analysis. * Manage risk profile through portfolio diversification, farm outs, exits. * Focus on cash balances and cost management. * Generate excess cash to enable capital returns to shareholders over time. 4 Summary of key assets Ophir has interests in 15 material exploration assets in six different jurisdictions in Africa and one material exploration asset in Myanmar and has agreed to acquire a further seven material exploration assets in Indonesia. The map below shows the locations of Ophir s key ownership interests. The table below summarises the details of the Ophir Group s ownership interests: Jurisdiction Block Ophir s Interest (%) JV Partners and Interest (%) Current Period Area (km 2 ) Water Depths (metres) Tanzania... Block 1 20 Tanzania... Block 3 20 Tanzania... Block 4 20 East Pande Tanzania... Block 70 Tanzania... Block 7 80 BG 60 Pavilion 20 BG 60 Pavilion 20 BG 60 Pavilion 20 RAKGas Tanzania 30 MDC Oil & Gas Second extension period (1)(2) 8,169 (3) 100 to 3,000 Currently between the first and second extension periods (2) 5,298 (5) 650 to 2,500 Second extension period (2)(6) 3,806 (7) 1,500 to 3,000 First extension Onshore to period (8) 3,250 (9) 2,100 First extension period 4, to 2,500

74 Jurisdiction Block Ophir s Interest (%) JV Partners and Interest (%) Current Period Area (km 2 ) Water Depths (metres) Kenya... Block L9 100-participating interest (90- effective interest) Equatorial Guinea... Block R 80 Government of Kenya 10 (10) GEPetrol 20 (11) Gabon... Mbeli Marin 40 (13) Petrobas 50 OMV 10 Gabon... Ntsina Marin 40 (13) Petrobas 50 OMV 10 Gabon... Manga Marin 70 (14) OMV 30 Gabon... Gabon... Gabon... Seychelles... Gnondo Marin 70 (14) OMV 30 Nkouere (Block A3) 100 (15) N/A Nkawa (Block A4) 100 (15) N/A 5B/1, 5B/2 and 5B/3 75 Myanmar... AD WHL Energy 25 Parami Energy 5 First additional exploration period (expires 15 August 2016) 3, to 1,400 Second exploration period (expires on 31 December 2016) (12) 2,051 (12) 600 to 1,950 Third exploration period (expires on 10 February 2017) 3, to 2,200 Third exploration period (expires on 10 February 2017) 3, to 2,400 Third exploration period (expires on 19 February 2017) 3, to 2,500 Third exploration period (expires on 14 February 2017) 2, to 2,500 First exploration period (expires on 22 October 2016) 675 2,000 to 2,500 First exploration period (expires on 22 October 2016) 2,085 2,000 to 2,500 Period 2 (expires on 31 December 2016) Preparation Period (expires on 4 June 2015) (16) Area 5B/1, 5B/2 and 5B/3 total area: 12, m approximately 10,000 2,000 to 2,450 The table below summarises the details of the interests that Ophir has agreed to acquire: Jurisdiction Block Ophir s Interest (%) JV Partners and Interest (%) Current Period Area (km 2 ) Water Depths (metres) Indonesia... N. Makassar Statoil 40 Strait 30 (17) Baruna 30 Indonesia... North Ganal 18.5 (17) Indonesia... NGE 18.5 Statoil 26 ENI 24 GDF 12.5 West Papua Statoil 40 IV 49.9 (17) Tately 10.1 Initial exploration period (expires on 29 November 2015) 1, to 2000 Initial exploration period (expires on 20 November 2017) 2,432 1,000 to 2,000 Initial exploration period (expires on 29 November 6, to 3,000 74

75 Jurisdiction Block Ophir s Interest (%) JV Partners and Interest (%) Current Period Area (km 2 ) Water Depths (metres) Indonesia... Aru 60 (17) Statoil 40 Indonesia... Obi 42 (17) Zimorex 18 Statoil 40 Indonesia... Kofiau 100 (17) N/A Indonesia... Halmahera- Kofiau 80 (17) Tately ) Initial exploration period (expires on 19 July 2018) 8,054 1,000 2,000 Initial exploration period (expires on 20 November 2017) 8, ,000 Initial exploration period (expires on 4 May 2015) 5, to 1,000 Initial exploration period (expires on 29 November 2015) 4,926 1,000 Notes: (1) Grant of second extension period licence regarding Block 1 to be formalised in writing. (2) Ophir is currently in ongoing discussions with parties in relation to the possible disposal of all or part of the interests it holds in Blocks 1, 3 and 4, Tanzania. (3) The acreage reflects the relinquishment of 50 per cent. of the acreage in Block 1 in accordance with the terms of the Block 1 PSA (as amended) in moving into the second extension period. (4) Following notice by BG Tanzania of its intention to withdraw from Block 3, Ophir has applied to receive transfer of BG s interest in Block 3 and takeover operatorship. The transfer from BG to Ophir remains subject to government consent, however, following consent, Ophir will hold an 80 per cent. participating interest in Block 3. (5) The acreage reflects the acreage as per the first extension period, pending government consent to move into the second extension period. (6) Grant of second extension period licence regarding Block 4 to be formalised in writing. (7) The acreage reflects the relinquishment of 50 per cent. of the acreage in Block 4 in accordance with the terms of the Block 4 PSA (as amended) in moving into the second extension period. (8) First extension period term extended by six months to June 2015, subject to confirmation of ministerial consent formalised in writing. (9) The acreage reflects the acreage as per the first extension period. (10) Carried interest. (11) GEPetrol is being carried through exploration and appraisal until the date of a declaration of commerciality for its 20 per cent. interest. (12) The Ophir Group has agreed two amendments to the Block R PSC which extend the first extension period and increase the acreage of Block R. The acreage of the Block R PSC prior to such amendment agreements was 1,674km 2, covering water depths from 1,050 to 1,950 metres. The current status of Block R is that the licence is divided into an appraisal area (899 km 2 ) and an exploration area (1152km 2 ). These areas each expire on 31 December 2016, unless they move into the development and production phase (with respect to the appraisal area) and the appraisal phase (with respect to the exploration area). (13) On 16 July 2014, OMV acquired 10 per cent. non-operated interests in the Mbeli Marin and Ntsina Marin Blocks from the Company. The Company s retained stake is 40 per cent. operated interests in the Mbeli Marin and Ntsina Marin Blocks. (14) On 16 July 2014, OMV acquired 30 per cent. non-operated interests in the Manga Marin and Gnondo Marin Blocks. The Company s retained stake is 70 per cent. operated interests in the Manga Marin and Gnondo Marin Blocks. (15) The Gabonese State has the right to acquire a 20 per cent. interest on commencement of production. The Gabon National Oil Company also has the right to acquire up to an additional 15 per cent. interest at market rates until the end of the first exploration phase and 10 per cent. at any stage thereafter. (16) The two-year study period will commence from the date that the Myanmar government informs Ophir of its approval of the EIA, social impact assessment and environmental management plan. (17) On 27 October 2014, the Company entered into an agreement with Niko Resources to acquire seven interests in seven deepwater PSCs in Indonesia. The transaction remains subject to approval by SKKMiGas and the Government of Indonesia. 75

76 5 Overview of assets The interests of the Ophir Group in oil and gas projects are summarised below: Blocks 1, 3 and 4, Tanzania Location Blocks 1, 3 and 4 offshore Tanzania are located in the Mafia Deep Basin offshore from the Rovuma and Rufiji Deltas, in water depths ranging from 100 to 3,000 metres. The following map shows the location of the blocks: Interest Ophir was awarded a 100 per cent. interest in Block 1 in 2005 and a 100 per cent. interest in Blocks 3 and 4 in The Company then subsequently farmed down a 60 per cent. stake and operatorship in all three blocks to BG Group in April 2010 (the BG Farm Out Agreement ). In November 2013, the Company announced it had sold a 20 per cent. stake in all three blocks to the Pavilion Energy Group for US$1.25 billion with a further US$38 million payable at FID. This transaction completed in March In September 2014, following BG Group s decision to withdraw from Block 3, Ophir notified TPDC of its intention to move into the next exploration phase on Block 3 with the Pavilion Energy Group on the basis of submitted relinquishment plans. The process by which consent is sought from the Government of Tanzania to the transfer of BG Group s interest in Block 3 and operatorship of Block 3 to Ophir has been initiated. The intention was to move into the second extension period on the basis of submitted relinquishment plans, with Ophir holding an 80 per cent. interest and re-assuming operatorship with effect from October 2014, and the Pavilion Energy Group retaining a 20 per cent. interest. The transfers of BG s interest and operatorship and the application for the exploration licence on the terms on which Ophir and Pavilion Energy Group have proposed to enter the next period are currently subject to Government of Tanzania approval. TPDC has a back in right of 12 per cent. in respect of Block 1 and a 15 per cent. back in right in respect of each of Blocks 3 and 4, which may be exercised at any time. If TPDC exercises its back in right the participating interest of BG Group, the Ophir Group and the Pavilion Energy Group (as applicable) will be reduced proportionately. Operatorship Pursuant to the terms of the BG Farm Out Agreement, transfer of operatorship of Blocks 1, 3 and 4 to BG Group commenced during the first half of 2011, and the formal Transfer of Operatorship Agreement was signed on 7 June 2011, with BG Group taking over operatorship from 1 July

77 As noted above, the Ophir Group intended to re-assume operatorship of Block 3 from BG Group with effect from 30 September 2014 on the basis of the submitted relinquishment plan. Government consent to the transfer of operatorship remains outstanding. On the basis of the existing Block 3 PSA requirements, there is a two well work commitment associated with the second extension period. In relation to Blocks 1 and 4, since the Ophir Group holds an interest of more than 10 per cent. but less than 35 per cent., it has a right of veto over decisions of the operating committee requiring unanimous approval. The same applies in respect of Block 3 until such time as Government of Tanzania consent is granted to the transfers of BG Group s interest and operatorship to Ophir. Exploration and Appraisal Drilling began in late Since then 16 wells have been drilled with hydrocarbons encountered in all wells across all three blocks on a mix of Tertiary and Cretaceous plays. This includes the large Mzia and Jodari discoveries in Block 1. Of the 16 wells drilled, eleven successful exploration wells and five appraisal wells have been drilled, and flow tests carried out on the Jodari, Mzia, Pweza and Taachui discoveries. The contractor parties are currently in the second extension periods for Blocks 1 and 4, with a work commitment of a single well in Block 1 and two wells in Block 4. The parties pay their own share of costs in proportion to their participating interest share. The total discovered gross 2C resource to date is estimated at over 16.3TCF across Blocks 1 and 4, which is sufficient to underpin a two train LNG development. The Ophir Directors believe that there is unrisked upside in the prospect inventory, with additional wells expected to be drilled in 2016 in Blocks 1 and 4 and if successful could provide support for a third train. The Ophir Directors estimate the total Block 1, 3 and 4 mean (2C) recoverable resources to be 17.1TCF. Infrastructure On 26 May 2010, the Ophir Group entered into a suite of agreements with the Government of Tanzania and TPDC granting it the rights to develop, build, own and operate the infrastructure required to exploit any discovery of natural gas in any of Blocks 1, 3 or 4. The agreements also grant the right to export and sell any recovered gas (converted to LNG or other gas products) into the international market. The suite of documents include an implementation agreement relating to all of Blocks 1, 3 and 4 and an addendum to each of the PSAs relating to Blocks 1, 3 and 4 which incorporate gas terms. Building on this, following the Government of Tanzania s request, in April 2014 the partners in Blocks 1, 3 and 4 and the partners in Block 2 signed a heads of agreement (the HoA ) setting out how the companies will collaborate on development of a potential joint LNG project. Under the HoA, BG Group will be the lead developer during the pre-feed phase and a contract for the LNG plant pre-feed was awarded in July A memorandum of understanding (the MoU ) between the Government of Tanzania, the partners in Blocks 1, 3 and 4 and the partners in Block 2 was signed in April The MoU covers the site selection for the joint LNG plant, the process for acquiring the site, the lease to be negotiated and how any resettlement will be managed. Forward plan An integrated project team has been formed to develop an integrated LNG project and is currently conducting pre-feed studies, leading to an expected selection of a preferred project concept in early 2015 and entry into full FEED in In parallel with the technical development, commercial discussions are underway between the existing commercial parties to develop a suite of commercial agreements to structure the integrated midstream project to allow for project FID to be undertaken by early Ophir is currently considering its options in respect of Blocks 1, 3 and 4, Tanzania and is currently in ongoing discussions with parties in relation to the possible disposal of all or part of the interests it holds in Blocks 1, 3 and 4, Tanzania. East Pande Block, Tanzania Location East Pande is located inboard from Blocks 1-4 and covers a largely unexplored part of the onshore to deepwater Mandawa Sub-basin; the lateral extension of the deepwater Mafia Deep and Rovuma Basins. The following map shows the location of the block: 77

78 Interest On 29 March 2011, the Ophir Group entered into a farm in agreement with RAKGas Tanzania for the transfer of a 70 per cent. participating interest and operatorship of a PSA relating to the East Pande Block, onshore/offshore Tanzania. The farm out transaction was completed on 22 November 2011 and the transfer of operatorship agreement was executed on 11 October 2011, with an effective transfer date of 20 September TPDC has a back in right of 20 per cent. which may be exercised at the time of approval of a development licence. If TPDC exercises its back in right the participating interest of the Ophir Group and RAKGas Tanzania will be reduced proportionately. Operatorship The Ophir Group is the current operator in East Pande. Exploration and Appraisal The Mandawa Sub-basin occupies an area to the south of the Rufiji Depression, limited to the west by the Masasi Basement Spur and to the south by the Ruvuma Saddle. The basin is typified by both northwest and north trending basement highs, which influence reservoir deposition and, with salt diapirism, create abundant structural traps. As announced on 21 November 2014, the Tende-1 well was drilled in East Pande targeting the Cretaceous-aged Tende prospect. Although gas traces were encountered in the upper strata of the primary objective, wireline logs confirmed that no moveable hydrocarbons were present in this prospect. In the secondary Tikiti objective, the Tende-1 well encountered a gas bearing sandstone. Forward plan Following TPDC support to extend the term of the first extension period by six months, the joint venture will continue with post-well analysis work on the Tende-1 well in order to evaluate the remaining prospects in East Pande, ahead of the decision whether or not to enter the second extension period, now due to be made by June Block 7, Tanzania Location Block 7 is located on the continental slope of the Indian Ocean, 80km east of Dar es Salaam and covers an area of 4,263km 2. Water depths in Block 7 range from less than 400m to more than 2,500m. The following map shows the location of the block: 78

79 Interest The Ophir Group acquired its 80 per cent. operated interest in Block 7 in February 2012 through the acquisition of Dominion Petroleum Ltd ( Dominion ). Dominion had signed a production sharing agreement with the Government of Tanzania in March 2007, taking a 100 per cent. interest in the block, before subsequently farming down a 20 per cent. interest to Mubadala Petroleum in late TPDC has a back in right of 15 per cent. which may be exercised at any time. If TPDC exercises its back in right the participating interest of the Ophir Group and Mubadala Petroleum will be reduced proportionately. Operatorship The Ophir Group is the current operator in Block 7. Exploration and Appraisal Dominion completed a 3D seismic survey in 2010 while further 2D and 3D surveys were acquired by Ophir in The first well on Block 7, Mlinzi Mbali-1, was completed at the end of 2013 and whilst it did not encounter live hydrocarbons it has provided valuable stratigraphic information from the deepest well drilled offshore Tanzania to date. Block 7 is currently in the first extension of two years, which commenced on 22 May 2013, and includes a work commitment of two firm exploration wells, one with the potential to roll into the second extension period if the contractor parties elect to enter that second extension period. Following the Tende-1 well, the Deepsea Metro I drillship moved to Block 7 where the Mkuki-1 well was drilled to a total depth of 3,204m. The well targeted a Tertiary-aged stratigraphic prospect located in water depths of 1,648m and encountered a high quality sandstone sequence, but no hydrocarbons were present, as announced by Ophir on 21 November Forward plan The joint venture is currently consulting and aligning internal and joint venture approval processes in deciding whether to enter the second extension period by May Block L9, Kenya Location Block L9 straddles the Tanzanian Coastal and Lamu Basins, offshore Kenya in water depths ranging from approximately 400-1,400m. The following map shows the location of the block: 79

80 Interest On 17 May 2011, Dominion Petroleum Kenya Limited ( Dominion Kenya ) signed a PSC with the Kenyan Ministry of Energy (the Block L9 PSC ). Dominion Kenya currently has a 100 per cent. participating interest and operatorship of Block L9 and a 90 per cent. effective interest pursuant to the carried interest of the Government of Kenya. Further details of the Block L9 PSC are set out below. Pursuant to the Block L9 PSC, Dominion Kenya is obliged to surrender 25 per cent. of the contract area (excluding any development area) at the end of the initial exploration period and a further 25 per cent. of the original contract area at the end of the first two-year additional exploration period. If a commercial discovery of crude oil is made during the exploration period, the Block L9 PSC shall be extended for such development area for a term of 25 years from the date on which the development plan for that development area is adopted pursuant to the Block L9 PSC. The Block L9 PSC also provides for the process to be followed on the discovery of economically exploitable natural gas. On such discovery, the Minister for Energy and the contractor shall follow a development plan for the exploitation of the natural gas prepared in accordance with the terms of the Block L9 PSC. Operatorship The Ophir Group is the current operator in Block L9. Exploration and Appraisal Block L9 contains two principal play systems; an inboard carbonate play which has been tested by the recent BG Sunbird well in Block L10 and an outboard clastic play which has been tested by Apache s Mbawa well. Ophir has assessed the leads and prospects identified to date in the individual play systems and recognise potential for prospects of MMbbls in the inboard carbonate play and TCF in the outboard play in the mean case. The outboard play is well covered by 3D seismic data and the prospects are moderately well defined. The primary play is a series of robust Albian structural culminations. Albian aged reservoirs are found within a thick succession of hemipelagic strata requiring charge from an outboard kitchen or vertical migration from the deeply buried Jurassic source rock. The probability of success ranges from 10 per cent to 20 per cent. Economic analysis suggests a minimum economic pool size of c. 3TCF which would require a complex clustered FLNG development in water depths of 1,400-1,500 metres. 80

81 Block L9 is currently in the first additional exploration period of three years, which commenced on 15 August 2013 and has been extended until 15 August 2016, and includes a firm commitment to drill one exploratory well to a minimum vertical depth of 3,000 metres. The initial exploration period under the Block L9 PSC was for a period of two years commencing from the date falling 90 days from 17 May 2011 (15 August 2011). The Block L9 PSC allows for a maximum of two successive additional exploration periods; the first additional exploration period, which is the current period for Block L9 (duration of three years) and the second additional exploration period (duration of one year). Both additional exploration periods were originally for a period of two years each, however such periods were amended to three years and one year respectively, at Ophir s request, by a letter from the Ministry of Energy & Petroleum dated 12 May The Block L9 PSC also permits an extension of the second additional exploration period for up to four months in order to complete the drilling and testing of an exploration well. In the event of a discovery in the last year of the second additional exploration period, the Block L9 PSC also permits an extension of 12 months in certain circumstances. Forward plan Ophir continues to assess the potential prospectivity of the Block incorporating open file information from the Sunbird-1 discovery in Block L10. In particular, work will continue to mature the Paleocene and Albian plays in the eastern area of Block L9. The Ophir Directors believe that the oil charge which has been interpreted in Sunbird-1 could provide an oil charge into the outboard plays and that the outboard clastic reservoirs will form a far more effective reservoir than the inboard carbonates. Ophir will continue to assess the commercial viability of gas in the outboard play to evaluate whether any of the currently identified prospects could form an economic target. Ophir commenced a farm out process of Block L9 in January If a farm out of Block L9 is successful, the new JV group will consider its options for the forward work programme. Block R, Equatorial Guinea Overview Block R in Equatorial Guinea ( Block R ) is located in the south-eastern part of the Niger Delta complex. There have been eight technical gas discoveries to date in Block R, six of which have been made by the Company. Block R is situated in close proximity to numerous significant oil and gas discoveries in the Nigerian sector, including Akpo (approximately 600MMbbl of condensate and 1.2TCF of gas), Usan/Ukot (approximately 600MMbbl of oil and 250Bcf of gas) and Zafiro (approximately l,200mmbbl of oil). 81

82 The following map shows the location of Block R, with the appraisal area shown in black and the exploration areas in the remainder of Block R bounded in red. Interest The state oil company, GEPetrol, holds a 20 per cent. beneficial interest in Block R, but the Ophir Group has a 100 per cent. paying interest with GEPetrol being carried through exploration and appraisal until the date of a declaration of commerciality (i.e. the Ophir Group bears the full cost of exploration during the exploration and appraisal phase but receives a reimbursement of the 20 per cent. carried amount from GEPetrol in the production period). Exploration and appraisal Ophir has conducted three drilling campaigns in Block R, consisting of nine wells (five exploration and four appraisal), resulting in six new technical discoveries and five new commercial discoveries. This is in addition to the two discoveries (Oreja Marina and Estrella Del Mar) made by Exxon in 2001 and Most recently, during the third extension period, which expired in December 2014, the Tonel-1, Silenus East-1 (Appraisal) and Fortuna-2 (Appraisal) wells were drilled during this period. The Tonel- 1 well spudded on 7 July 2012 in a water depth of 1,599m and was drilled to a total depth of 3,072m subsea, with an estimated mean in-place resource of 1.1TCF at that date. Silenus East-1 was drilled in September 2014 and encountered high quality, but water-wet, reservoirs with weak oil shows and will be further evaluated. Fortuna-2 was drilled in October 2014 and the drill stem test achieved a sustained flow rate of 60MMscfd with a drawdown of less than 20 psi at the reservoir, which was surface equipment constrained. As announced on 4 November 2014, the Directors estimate that Block R has 3.4TCF of gross mean risked prospective resources. Once the ongoing work regarding core and log analysis from the Fortuna 2 appraisal well is incorporated into the reserves calculation the Directors believe that an increase in these figures could be announced in In addition, the Ophir Directors believe that there is an additional upside potential, in respect of further leads and prospects, in the exploration area within Block R. These prospects provide an additional 7TCF of gross mean unrisked prospective resources. However, these distal low relief stratigraphic traps are considered a high risk and as such will be heavily risk weighted. Pre-Development Following Ophir s successful drilling campaigns, a concept selection process was carried out to determine the optimum development path for commercialisation of Block R. Two main options were considered: (i) development via a second onshore LNG train, to be constructed at the onshore 82

83 Marathon-operated Punta Europa plant; and (ii) a floating LNG (FLNG) system. The concept select study (carried out in 2012) showed that the FLNG system was more appropriate for Block R, largely due to the dry gas composition and generally benign sea conditions. It is currently proposed that six fields will be developed over a four phase project which will involve the drilling of up to 20 development wells. These wells will be subsea wells, tied back to manifolds and connected to the FLNG vessel through flexible risers. While the FLNG technology is relatively new, it is recognised that the simple gas composition of Block R and specifically the absence of water, liquids and contaminants, means that the topside processing equipment should be considerably more simplified than on other FLNG developments. The contracting strategy that was developed following this concept select decision, proposed an upstream EPC contract (Subsea Umbilicals Risers and Flowlines ( SURF ) and Subsea Production System ( SPS ) and a Midstream Build Own Operate Maintain contract for the FLNG vessel and associated services. Following a competitive tender process in 2013, Excelerate Energy was appointed as the provider of the midstream solution in November The vessel is likely to be capable of producing around 3.0MTPA for a current, base case, production profile of around 18 years. An amendment to the PSC was also agreed with the Ministry of Mines Industry and Energy ( MMIE ) at this time to set in place appropriate gas fiscal terms. Development and forward plan. The current schedule builds on the signature of gas fiscal terms and includes a substantial commercial workstream in This will run in parallel to a technical workstream based around the upstream and midstream FEED work which is expected to take place throughout most of The current intention is to achieve FID in 2016, for which, amongst others, the following agreements will need to be successfully negotiated: a host government agreement (with MMIE and Excelerate), a chartering and operating services agreement for the FLNG vessel (with Excelerate), an EPC agreement for the SURF and SPS and an LNG sale and purchase agreement. In terms of financing, the funding of the project is intended to be provided through a combination of debt and equity financing of the midstream by Excelerate and of the upstream by the Company. In addition, the Company intends to farm down its equity interest in Block R to suitably qualified parties during The success of these financial processes will depend on there being not only a substantial degree of certainty around both the commercial and technical workstreams, but also volume assurance, through the provision of a competent person report in mid The Government of Equatorial Guinea s legal, fiscal and administrative support for the project will be confirmed through a project or host government agreement, with signed heads of agreement expected in the first quarter of Formal declaration of commerciality, the submission of the development and production plan and the finalisation of the project agreement ahead of FID will in turn provide further assurance to potential buyers that the project has the appropriate validation from the Government of Equatorial Guinea. The current total CAPEX estimation for the project is around US$6 billion. This is divided broadly between the upstream and midstream contracts. 83

84 Mbeli Marin, Ntsina Marin, Manga Marin, Gnondo Marin, Nkouere and Nkawa Blocks, Gabon Location The Mbeli Marin, Ntsina Marin, Manga Marin, Gnondo Marin, Nkouere and Nkawa Blocks are situated to the west and north of the proven oil and gas Ogooué Delta province. The following maps show the location of the blocks: Interest The Ophir Group was awarded a 100 per cent. interest in four deepwater blocks (Mbeli Marin, Ntsina Marin, Manga Marin and Gnondo Marin) on 16 March 2005 each of which is governed by its own PSC. On 16 June 2011, the Ophir Group entered into a farm out agreement with Petrobras Participaciones S.L. ( Petrobras Participaciones ) which granted Petrobras Participaciones a 50 per cent. participating interest in each of the Mbeli Marin and Ntsina Marin Blocks (the Petrobras Farm Out Agreement ). Under the terms of the Petrobras Farm Out Agreement, Petrobras Participaciones committed to pay a promoted contribution towards the following stages: (a) certain costs and expenses incurred between the effective date and completion of the agreement; (b) the costs and expenses of certain geophysical surveys in the second exploration period; (c) subject to certain withdrawal rights, the costs and expenses of the first pre-salt exploration well to be drilled in either the Ntsina Marin or the Mbeli Marin Blocks; and (d) subject to certain withdrawal rights, the costs and expenses of a second pre-salt well to be drilled in either the Ntsina Marin or the Mbeli Marin Blocks. The extent of the promoted contribution at each of stages (b), (c) and (d) are subject to financial caps which may, in respect of (c), vary depending on which party has operatorship at that point. The Company was fully carried for the cost of the geophysical surveys in stage (b) and, subject to Petrobras Participaciones withdrawal right, based on current estimates of cost, the Company was substantially carried for the cost of the first and second exploration wells in stages (c) and (d). On 12 February 2014, Ophir Gabon (Gnondo) Limited ( Ophir Gnondo ) and Ophir Gabon (Manga) Limited ( Ophir Manga ) entered into an additional farm out agreement with OMV (Gnondo) Exploration GmbH ( OMV Gnondo ) and OMV (Manga) Exploration GmbH ( OMV Manga ), under which OMV Gnondo and OMV Manga acquired 30 per cent. interests in the Manga Marin and Gnondo Marin Blocks respectively. On the same date, Ophir Gabon (Mbeli) Limited ( Ophir Mbeli ) and Ophir Gabon (Ntsina) Limited ( Ophir Ntsina ) entered into an additional farm out agreement with OMV (Mbeli) Exploration GmbH ( OMV Mbeli ) and OMV (Ntsina) 84

85 Exploration Gmbh ( OMV Ntsina ), under which OMV Mbeli and OMV Ntsina acquired ten per cent. interests in the Mbeli Marin and Ntsina Marin Blocks respectively. As a result, Ophir Gnondo and Ophir Manga retained 70 per cent. operated interests in the Manga Marin and Gnondo Marin Blocks respectively and Ophir Mbeli and Ophir Ntsina retained 40 per cent. operated interests in the Mbeli Marin and Ntsina Marin Blocks respectively. Under the terms of these farm out agreements, OMV Gnondo, OMV Manga, OMV Mbeli and OMV Nitsina have paid historic costs in respect of the interests acquired by them respectively and a share of the well costs on the Padouck Deep, Affanga Deep and Okala wells and will pay the cost of 3D seismic surveys which are planned across the blocks. On the 23 October 2014, the Ophir Group was awarded a 100 per cent. interest in two additional blocks in the North Gabon basin, Nkouere and Nkawa, both of which is governed by its own PSC. Upon the commencement of production from the first field within each of the blocks, the Government of Gabon will automatically receive a participating interest in the relevant block. Such participating interest is ten per cent. in relation to the Gnondo Marin, Ntsina Marin and Mbeli Marin Blocks, 15 per cent. in relation to the Manga Marin Block and 20 per cent. in relation to the Nkouere and Nkawa Blocks. If the Government of Gabon exercises its back in rights upon the commencement of production, they will be met by the parties pro rata to their participating interests at that time. In addition, the National Hydrocarbon Company of Gabon also has a right to acquire up to an additional 15 per cent. interest at market rates in relation to each of the Nkouere and Nkawa Blocks. Operatorship The Ophir Group is the current operator in the Mbeli Marin, Ntsina Marin, Manga Marin, Gnondo Marin, Nkouere and Nkawa Blocks. Exploration and Appraisal Across the Mbeli Marin, Ntsina Marin, Manga Marin, Gnondo Marin, Nkouere and Nkawa Blocks, Ophir has identified three play fairways: the northern pre- and post- salt Ogooué delta extension and the cretaceous/structural stratigraphic play. Pre-salt prospectively exists primarily in the Mbeli and Ntsina Blocks, but has also been identified in the Manga Block. Based on the relative immaturity of the pre-salt play in the North Gabon Basin, Ophir elected to form a joint venture partnership with Petrobras in each of the Mbeli and Ntsina Blocks in Petrobras is a world class partner with extensive pre-salt experience and understanding developed in Brazil. Across the Manga and Gnondo Blocks, the Ophir Group is focusing principally on the upper cretaceous structural/stratigraphic. Similarities in the deepwater play exist with the conjugate Sergipe Alagoas basin where recent significant discoveries have been made by Petrobras recently in large stratigraphic traps: Barra, Boita Monita, FarFan. Outboard of the salt basin in Mbeli, Ntsina, Gnondo and Manga Ophir has recognised the potential for similar styled stratigraphic traps. Mbeli Marin and Ntsina Marin are each currently in the third extension period of three years, which commenced on 10 February 2014, and each include a work commitment of one pre-salt exploration well. Gnondo Marin and Manga Marin are each currently in the third extension period of three years, which commenced on 14 February 2014, and each include a work commitment of one exploration well and 1,250 km 2 of 3D seismic. Nkawa Marin and Nkouere Marin are each currently in the first exploration period of two years, which commenced on 23 October Nkawa Marin includes a work commitment of 1,300 km 2 of 3D seismic data acquisition. Nkouere Marin includes a work commitment of 600 km 2 of 3D seismic data acquisition. In accordance with the provisions of the Petrobras Farm Out Agreement, the Ophir Group acquired approximately 2,200km 2 of 3D seismic data over the Mbeli Marin and Ntsina Marin Blocks during This new 3D seismic data substantially improved Ophir s understanding of the area and provided future prospects for drilling. In addition, in 2012, the Ophir Group acquired the 220km 2 Pachg Liba 3D seismic survey in the Gnondo Marin Block and the 628km 2 Afo 3D seismic survey in the Manga Marin Block. On 19 March 2014, the Company announced that it had drilled the Padouck-Deep 1 well in the Ntsina Block. Whilst the well encountered thicker than expected, good-quality reservoir sands, there were no significant hydrocarbon shows. On 27 May 2014, the Company announced that it had 85

86 completed drilling of the Affanga Deep-1 well in the Gnondo Block. The well encountered thinner than expected sandstone sections with poor reservoir characteristics. Gas and indications of liquids were encountered during drilling but significant hydrocarbon shows were not encountered in the target formations. On 26 June 2014, the Company announced that it had completed drilling operations on the Okala-1 well, which encountered a thick section of Aptian salt as prognosed and well developed sandstones in the Gamba and Dentale formations, but there were no significant hydrocarbon shows in the target reservoirs. The costs of the Padouck Deep-1 and Okala wells were largely carried by Petrobras and OMV, and costs relating to the Affanga Deep-1 well were partially carried by OMV. The Ophir Group s analysis of its 2014 North Gabon drill campaign has enhanced the understanding of the deepwater distal margin of the North Gabon basin. The Company has acquired the Olumi Rouge survey, an 8,521.83km 2 3D seismic data programme, on this play in the Mbeli Marin, Ntsina Marin, Manga Marin and Gnondo Marin Blocks and a similar survey is ongoing in the Nkouere and Nkawa Blocks. The Ophir Directors believe that this seismic data set will illuminate the deepwater in this material acreage holding. Although the well results have been unencouraging, data acquired during these campaigns indicate the presence of an oil-prone source rocks and has the potential to be an important oil province in the future. Forward plan Over the next 12 months, the Company will be integrating well results from the 2014 campaign and updating the portfolio with the re-processed Stenella and the fast track Olumi Rouge 3D seismic data sets. Following this interpretation, the Company will decide on whether to conduct further drilling operations in Gabon. Blocks 5B/1, 5B/2 and 5B/3, Seychelles Location Areas 5B/1, 5B/2 and 5B/3 represent a total area of 12,855 km 2 off the coast of the Seychelles. Two key areas, Junon and Beau Vallon, were high graded for the acquisition of further seismic data prior to selecting a suitable location for an exploration well during exploratory activities by the joint venture partners in 2012 and 2013 before the Company s farm in. The following map shows the location of the blocks: Interest On 4 March 2014, the Ophir Group announced that it had entered into an agreement with WHL Energy Ltd ( WHL ), an Australian listed exploration and production company, to acquire a 75 per cent. operated interest in Blocks 5B/1, 5B/2 and 5B/3, located offshore to the south of the Seychelles Islands in the Indian Ocean. 86

87 In exchange for the acquired interest, the Ophir Group repaid back costs to WHL of US$4 million and funded the acquisition of 1,500 km 2 of 3D seismic data up to a total amount of US$17 million. Block 5B/2 has been broken out into Blocks 5B/2 and 5B/3 since the Company s entry into the farm in agreement. Operatorship The Ophir Group is the operator in each of Blocks 5B/1, 5B/2 and 5B/3. Exploration and Appraisal The interest is within a frontier basin with a large number of potential structural oil targets. Following the acquisition and evaluation of the initial seismic investigation, and on or before 31 December 2015, the Company may either withdraw from the farm in or exercise the option to both: (i) fully fund the acquisition of a further 1,000km 2 of 3D seismic, up to a total amount of US$12 million; and (ii) fund 90 per cent. of the costs of the first exploration well, up to a total amount of US$30 million. If the Company exercises its option to retain its interests, the Company will also pay WHL a further US$2 million in cash for further partial recovery of past costs. During 2012 and 2013 WHL accomplished a series of technical advances in the Seychelles exploration acreage. Substantially improved seismic data enabled WHL to complete a detailed tectnostratigraphic analysis, complete the re-interpretation of the available seismic data set and a bottom-up reconstructed basin model and mature several potential drilling opportunities within a revised exploration prospect and lead inventory. Two key areas, Junon and Beau Vallon, were high graded for the acquisition of further seismic data prior to selecting a suitable location for an exploration well. As part of the March 2014 farm in agreement the Company agreed to fund the acquisition of 1,500 km 2 of 3D seismic data over the Junon South trend. The 3D marine seismic survey programme known as Junon commenced on 25 June 2014 and was completed on 29 July 2014 covering 1,528 km 2. The interpretation of the fast-track volume commenced in September The interim PSTM volume was delivered in November Forward plan To further develop the Junon South lead, a full PSDM model building and update of the newly acquired Junon 3D Marine Seismic Survey was commenced in December 2014 and is expected to be delivered in April In addition, a PSDM reprocessing project of the 2D data over the Beau Vallon and North East Junon leads was tendered in late December for an early 2015 start. Delivery of this data is expected by end April The maturation of these additional prospects will create a full-risked portfolio of drillable opportunities in the blocks ahead of the drill/drop decision deadline in 2015, and with a view to potentially drilling in

88 Recently acquired assets Myanmar On 4 December 2014, Ophir Myanmar (Block AD-3) Limited ( Ophir Myanmar ) signed a PSC with Myanma Oil and Gas Enterprise, Parami Energy Development Co., Ltd ( Parami ) and the Myanmar Ministry of Energy. Ophir Myanmar currently has a 95 per cent. operated participating interest in partnership with a Myanmar company, Parami, who has a five per cent. participating interest, in deepwater Block AD-03 offshore Myanmar ( Block AD-03 ). The following map shows the location of Block AD-03: Block AD-03 is approximately 10,000 km 2 in size and is located in the Rakhine basin, on trend with the 9+ TCF Shwe gas field which is in production and exporting volumes to China. The preparation period and the study period of two years will see Ophir re-process existing 2D seismic and acquire 3D seismic data. This represented the Company s first exploration licence outside of Africa and the Company was the only independent exploration and production company to be awarded a licence in the offshore round. The licensing process was competitive, with awards to several major oil companies. Forward Plan In line with the Company s active management of its portfolio, the Company may seek to acquire further interests in Myanmar in the future and, subject to all necessary governmental consents, pursue farm-in opportunities with suitably qualified parties in relation to Block AD-03. Indonesian Exploration Licences On 27 October 2014, the Company announced it had entered into an agreement with Niko Resources ( Niko ) to acquire interests in seven deepwater PSCs in Indonesia. The transaction provides Ophir with a series of large acreage positions in several highly prospective basins. 88

89 The following maps show the location of the blocks: The Company is acquiring seven PSCs with equity interests ranging from 18.5 to 100 per cent., six of which will be operated positions, with partners including Statoil and ENI. In total, the acreage covered by the PSCs is approximately 21,500km 2 with significant 2D and 3D seismic data already acquired by Niko. Multiple leads and prospects have been identified across the portfolio across a mix of clastic and carbonate play types in both proven and frontier basins. The acreage covered by the PSCs contains identified unrisked prospective resource of more than 3.0 billion boe and has considerable further exploration potential. Broadly, the licences are split into three core areas West Papua, Western Birds Head and the Makassar Strait. The West Papua area is frontier and potentially high-impact, primarily prospective for oil within a carbonate play where reservoir quality has been partially de-risked by drilling to date. The Western Birds Head area, prospective for both oil and gas in clastic and carbonate plays, has been de-risked by existing discoveries on the Kofiau PSC. The Makassar Strait area is a proven, world class hydrocarbon province in which several large fields feed the multi-train, but now underutilised, Bontang LNG plant located onshore East Kalimantan. The acquired acreage has already seen some 3D seismic acquisition and the maturing of several leads and prospects that could be commercialised via this route with the threshold for commercial volumes as low as c.200bcf. The initial focus of activity will be to re-interpret the existing 3D seismic data and to commission new 3D surveys on several blocks. It is expected that the first drilling campaigns are likely to start early The Company may decide to reduce its cost exposure to some of these wells prior to drilling. Total net remaining liabilities and minimum spend commitments under the current terms of the PSCs are estimated at US$1.3 million. The Company also expects a number of key Niko personnel based in country to transition across with the assets on completion. The Company will pay Niko Resources US$31.28 million on completion of the transaction, with further success payments payable on the declaration of commerciality of up to four discoveries, and consequently first production from up to four future developments. In aggregate, the total further consideration payable on success is capped at US$56 million. This further consideration is deferred on the declaration of commerciality of up to four discoveries, and consequently first production from up to four future developments. The transaction is subject to approval by SKKMiGas and the Government of Indonesia. 89

90 Recently relinquished and divested assets Block Marine IX, Congo (Brazzaville) The Company elected not to proceed into the next period of the Marine IX PSC and consequently the contract terminated on 31 December Marovoay Block 2102, Madagascar The Company relinquished its 80 per cent. interest in the Maravoay 2102 PSC effective on 31 October Block L15, Kenya Ophir elected not to enter into the first additional exploration period and therefore Ophir relinquished all its interests and rights in Block L15 on 4 January Offshore Accra, Ghana Ophir received approval from the Ministry of Energy and Petroleum for the assignment of its entire participating interest to AFEX Oil (Ghana) Limited and Azonto Petroleum (Ghana) Limited ( Azonto ) and transfer of operatorship under the Petroleum Agreement in relation to offshore Accra contract area (within the Accra-Keta Basin) to Azonto. The transfer of interest and operatorship was effective as of 23 March AGC Profond, AGC The Company relinquished its 44.2 per cent. interest in the AGC Profond PSA on 18 September 2014 when the Production Sharing Agreement expired. Daora, Haouza, Mahbes and Mijek Blocks, Saharawi Arab Democratic Republic The Company divested its 50 per cent. interests in the Daora, Haouza, Mahbes and Mijek PSCs and related assurance agreements to Calima Energy Limited on 25 November As consideration for the transfer of these interests the Company entered into a net profit interest agreement with Calima Energy Limited in respect of future production on the blocks. Somaliland The Company divested its remaining 25 per cent. interest in the SL12, SL9 East and SL9 West Blocks, Onshore/Offshore in the Republic of Somaliland to Independent Energy Group Capital Corp on 13 January HSE policy The Ophir Group has adopted Health, Safety and Security ( HSS ) policies with which all of its employees are required to conform. The Company has a dedicated commitment to corporate responsibility; Ophir s approach is underlined with the same principles as those of its core activities which are determination, innovation and excellence. As an integral part of Ophir s corporate responsibility commitments, the Company is dedicated to the implementation, review and continuous improvement of its HSS performance and to minimising risks related to its operations for people. To meet these objectives the Company operates in accordance with the following principles; Ophir: * Complies with all applicable HSS laws, regulations and standards applying responsible standards in line with industry best practice; * Implements a systematic framework of hazard identification and risk assessment through which safe operations can be managed; * Implements an HSS management system that focuses on the minimising of risks associated with its activities. This system includes the appropriate protective measures to control risks and to respond to any emergency resulting from our operations, including contracting with maritime safety and security risk management specialists and onshore HSS liaison coordinator services in the countries in which it plans to conduct exploration drilling operations in line with international practice and guidance; * Promotes a culture within the Company whereby all employees have a commitment to, and are involved in, the implementation of HSS management systems and establish a transparent line of accountability and responsibility within the organisation management line; 90

91 * Recognises that all activities on its behalf can impact Ophir s operations. The Company subsequently ensures that its partners, contractors and business relations share a common responsibility for HSS and are compliant with its standards; * Ensures that employees, contractors and any individuals under our duty of care are adequately trained and aware of the importance of the HSS aspects of their jobs. All Ophir employees and contractors are guided by our Medical and Fitness to Work and Travel standards, which must be adhered to at all times; and * Monitors and reviews all aspects of its HSS policy on a regular basis to ensure suitability and effectiveness. Responsibility for the compliance of the HSS policies lies with the Executive Directors. 7 Anti-corruption policies Doing business in international developing markets brings with it inherent risks associated with fraud, bribery and corruption. The Company has rigorous due diligence procedures when entering into agreements with new agents for ensuring compliance with applicable anti-corruption legislation and has adopted internal policies for ensuring compliance with the UK Bribery Act Insurance The Company s operations are subject to numerous operating risks normally associated with exploration activities. The Ophir Directors believe that its existing insurance coverage is reasonable to cover all general material risks associated with the Company s operations (and that of the operators of assets in which it has an interest). 9 Corporate social responsibility The Company s corporate social responsibility programmes focus on taking an active and influential part in the development of the jurisdictions in which it operates. The Company s commitment is to conducting its operations in an ethical, responsible, apolitical, independent and transparent way. The Company s long-term involvement with host jurisdictions and local partners, as well as its multicultural team, are instrumental in ensuring that the Company maintains an effective dialogue in line with its business strategies. The Company focuses its efforts in community development in improving the following areas: education, environment and health. In addition, the Company partakes in the sustainable support of local initiatives via charitable donations programmes, including its own Staff Charity Fund which accumulates collective employee donations towards The Egmont Trust, a charity operating across several African countries. In Equatorial Guinea, the Ophir Group provided the funding for the construction of a nursery school in the village of Ebein Yenkeng which became operational in In addition, the Ophir Group has acquired and installed four electricity generators into rural hospitals and contributes to the ITNHGE Programme, a collaborative educational initiative run for the benefit of adult students. More recently, the Ophir Group has invested in the renovation of the De Oveng Okas primary school in Mongomo and the provision of water well to be used by the local villages. In Tanzania, the Ophir Group has supported schemes in Mtwara, for example the provision of three donations to a local maternity clinic to purchase essential drugs and baby equipment, the provision of maize, flour and cement to flood victims, as well as the complete reconstruction of the Lilungu primary school, including new classrooms, a water tower and a brand new toilet block. The Ophir Group continues to work with the local communities of Mtwara. In Kenya, the Ophir Group has started the reconstruction of the Rima Ra Pera primary school in the Kilifi region, due to be completed in January In Gabon, the Ophir Group has funded a cultural exchange programme between Gabon and South Africa under the auspices of the South African Embassy for the Nelson Mandela School in Libreville. Additionally Ophir has sponsored a Marine Mammal Observer Programme, including English language training for eight Gabonese locals. After the recent acquisition of blocks in Seychelles, the Company has begun a needs assessment in order to identify the most effective way to invest in the local communities there and expects to provide social investment by January In addition to Ophir s community development projects, the Company has initiated structured development programmes for graduates and educational sponsorships, including: 91

92 * a scholarship programme, which will provide sponsorship for two Tanzanian students to attend the 4 year BA Hons undergraduate course in Petroleum Engineering/Geoscience at the University of Dar Es Salaam. This programme compliments the Tanzanian government s commitment to improving access to higher education for Tanzanians; * the launch of the Early Career Training and Development Programme, as part of which it is intended that one candidate will be recruited into the Geoscience team in September Applications open in January 2015; and * a sponsorship scheme to support two UK students on the MSc Petroleum Geoscience courses at Imperial College London and Royal Holloway University. 10 Employees The number of employees of the Ophir Group for each of the financial years ended 31 December 2011, 2012 and 2013 is set out below. As of the Latest Practicable Date, the number of employees of the Ophir Group in administration and exploration/operations was 91 and 46 respectively. Category of Activity As of 31 December Administration Exploration/operations For the purposes of these numbers, exploration/operations includes geoscience, HSE, drilling, new ventures and operations. Administration captures all other support functions and executive. Employee share plans The Company operates the Ophir Energy Long Term Incentive Plan 2011, the Ophir Energy Company Limited 2006 Share Option Plan and the Ophir Energy Deferred Share Plan 2012 for the benefit of its Executive Directors and employees. The principal features of these are set out in paragraph 11 of Part X (Directors, Responsible Persons, Corporate Governance and Employees) of this Prospectus. The Company has also operated a fourth Plan, the Foundation Incentive Plan but this Plan is no longer used. 11 Tax The Company is incorporated and has its head office in the United Kingdom, and is resident for tax purposes in the United Kingdom. It is intended that a majority of the Ophir Group companies are and will be managed in such a way that they are resident for tax purposes in the jurisdiction in which they are incorporated. Further details relating to taxation are set out in Part IX (United Kingdom Taxation Considerations) of this Prospectus. 92

93 PART III INFORMATION ON SALAMANDER The following information should be read in conjunction with the information appearing elsewhere in this Prospectus, including the Salamander Group s audited historical consolidated financial information for the three years ended 31 December 2011, 31 December 2012 and 31 December 2013 which are incorporated into this Prospectus by reference as explained in Part VII (Historical Consolidated Financial Information Relating to the Salamander Group) and paragraph 19 of Part XI (Additional Information) of this Prospectus and are available for inspection in accordance with paragraph 18 of Part XI (Additional Information) of this Prospectus and Salamander s unaudited consolidated financial information for the 24 weeks ended 30 June 2014, which is set out in Part VII (Historical Consolidated Financial Information Relating to the Salamander Group) of this Prospectus. Unless otherwise indicated, the selected financial information included in this Part III (Information on Salamander) has been extracted without material adjustment from the Salamander Group s audited historical consolidated financial information contained in Part VII (Historical Consolidated Financial Information Relating to the Salamander Group) of this Prospectus. 1 Business Overview Salamander is one of the largest independent Asian oil and gas exploration and production companies. Salamander Energy plc was incorporated and registered in England and Wales on 13 September 2006 as a public limited company under the Companies Act 1985 with registered number Salamander was formed to explore, develop, produce, distribute and market hydrocarbons including natural gas. Salamander was listed on the main market of the London Stock Exchange on 30 November 2006 raising 106 million and with an initial market capitalisation of approximately 208 million. Its shares commenced trading on 5 December As at the date of this Prospectus, Salamander is a constituent of the FTSE SmallCap Index and had a market capitalisation of approximately US$231 million as at the Latest Practicable Date. Salamander s registered office, which is also its head office, is 4 th Floor, 25 Great Pulteney Street, London W1F 9LT, United Kingdom. In addition, the Salamander Group has regional offices in Singapore, Bangkok, Jakarta and Kuala Lumpur. As at the Latest Practicable Date, Salamander directly employed 204 employees, located across its offices. In addition to the registered office in London (4 th Floor, 25 Great Pulteney Street, London W1F 9LT), Salamander has representative offices in Singapore (80 Raffles Place, #34-02 UOB Plaza 1, Singapore ), Jakarta (15 th Floor, Indonesia Stock Exchange Building, #15-02 Tower II, Jl Jenderal Sudirman Kav 52-53, Jakarta 12190, Indonesia), Bangkok (No. 1 Q House Lumpini Building, 28 th Floor, Unit 2802, South Sathorn Road, Tungmahamek, Sathorn District, Bangkok 10120, Thailand) and Kuala Lumpur (Level 11, Tower 1, Etiqa Twins, 11 Jalan Pinang, Kuala Lumpur, Malaysia). Salamander is the holding company of the Salamander Group. With one exception, all of the oil and gas interests are held by direct or indirect subsidiaries of Salamander Energy Group Limited, Salamander s UK-incorporated subsidiary. All of these oil and gas interests are wholly owned, other than the onshore North East Thailand assets, which are held through Salamander s membership interest in APICO LLC, a Delaware limited liability company. The Salamander Group has principally been funded through a mix of operating cash flow, bank debt and equity. In May 2012 the Salamander Group completed an approximately US$201 million rights issue and has in total raised over US$700 million in cash equity since its foundation in Salamander s principal debt financing tool is its RBL Facility. This facility, initially entered into in December 2012, was amended to an up to US$350 million facility in December 2013 of which US$254 million was drawn as at 31 December The RBL Facility matures in December Through the refinanced RBL Facility, the Salamander Group accessed additional capacity at lower cost and under a simpler structure than its previous RBL Facility. In addition, the Salamander Group has US$94 million outstanding on the Salamander Convertible Bonds which are due in March 2015 and the unsecured US$150 million NOK Bonds bond which were issued on 6 December 2013 and are due in January

94 2 Summary of key assets Salamander has operations across South East Asia, with the principal assets located in Indonesia and Thailand. The portfolio has been established through a series of asset and company transactions, as well as organic license round entries. In Thailand, a Salamander Group company is operator of the producing Bualuang offshore oil field and has, through its holding in APICO, a non-operated interest in the producing Sinphuhorm gas field and the Dong Mun gas field development. In Indonesia, a Salamander Group company is operator of the Kerendan gas field development. The Salamander Group has further operated and non-operated interests in a number of exploration licences throughout Thailand, Indonesia, Malaysia and Laos. The map below shows the location of Salamander s key partnership interests. Khorat Plateau, Onshore NE Thailand Sinphuhorm (9.5%), PTTEP operator Dong Mun (27.2%), APICO operator Gas Production, Development & Exploration Greater Bualuang, Gulf of Thailand B8/38 (100%), operator G4/50 (100%)*, operator *Subject to 50% MOECO back-in Oil Production, Development & Exploration Greater Kerendan, Indonesia Bangkanai PSC (70%), operator NE Bangkanai PSC (100%), operator West Bangkanai PSC (70%), operator Gas Development & Exploration Melaka Strait, Malaysia PM322 PSC (85%), operator Oil Appraisal & Exploration Source: Salamander 94