21 Feb 2017 07:00
21 February 2017
Eland Oil & Gas PLC
("Eland" or the "Company")
Operational Update
Eland Oil & Gas PLC (AIM: ELA), an oil & gas development and exploration company operating in West Africa with an initial focus on Nigeria, is pleased to announce that since the last announcement made by the Company on 31 January 2017, OML 40 has produced over 150,000 barrels of oil, currently only producing from the Opuama-3 well.
Furthermore, the implementation of crude export from the Opuama Field through shipping continues to ramp up successfully. The first shuttle vessel arrived at the terminal last week and injected around 39,000 barrels of crude. The second shuttle vessel, being utilised as part of Elcrest's crude export through shipping, has arrived at the terminal, having also loaded with around 40,000 barrels of crude and is preparing to inject into the terminal. The first vessel has since returned to the storage tanker and has loaded a further 40,000 barrels of crude and is on course back to the terminal. The Company anticipates this cycle being repeated on an ongoing basis and although the Company is initially producing from Opuama-3, the system is proving it has the capacity to handle greater quantities of production as other wells are brought online.
Following a significant upfront investment into the operating costs of the crude export through shipping, the current cash balance is $5.9 million (versus $11.1million 31 December 2016), of which $4.3m is in a reserve account whilst the Company finalises its borrowing base with its lenders. The majority of this investment covers the operating expense for the first 40 days of shipping operations. The Company therefore expects its cash balances to grow substantially as further export cycles are completed. Sales and cash will follow the delivery cycle in a timely manner with minimal working capital implications as the export cycle matures.
Amounts drawn under the Company's borrowing facilities are unchanged with the Borrowing Base review of end 2016 due to be completed in Q1 2017 as to reflect the resumption of production and the initiation of export of crude through shipping.
George Maxwell, CEO of Eland, commented:
"As previously announced we have designed and engineered a unique and dedicated alternative export route via shipping due to the prolonged shut-in at Forcados Terminal. This has involved significant capital and operational challenges and it is of enormous credit to our staff and all our partners that we are able to report that we have completed a full export cycle with one vessel, which it now en route to the export terminal for the second time carrying our third cargo. Since we started loading the first vessel we have shipped nearly 120,000 barrels in under 2 weeks; which is an enormous achievement and a huge success for all our stakeholders."
This announcement is inside information for the purposes of article 7 of Regulation 596/2014
-ENDS-
For further information:
Eland Oil & Gas PLC (+44 (0)1224 737300)
www.elandoilandgas.com
George Maxwell, CEO
Olivier Serra, CFO
Finlay Thomson, IR
Canaccord Genuity Limited (+44 (0)20 7 523 8000)
Henry Fitzgerald O'Connor
Nilesh Patel
Panmure Gordon (UK) Limited (+44 (0)20 7 886 2500)
Adam James / Atholl Tweedie
Tom Salvesen
Camarco (+44 (0) 203 757 4980)
Billy Clegg / Georgia Edmonds
Notes to editors:
Eland Oil & Gas is an AIM-listed independent oil and gas company focused on production and development in West Africa, particularly the highly prolific Niger Delta region of Nigeria.
Through its joint venture company Elcrest, Eland's core asset is OML 40 which is located in the Northwest Niger Delta approximately 75km northwest of Warri and has an area of 498km². In addition, the Company has a 40% interest in the Ubima Field, onshore Niger Delta, in the northern part of Rivers State.
The OML 40 licence holds gross 2P reserves of 83.2 mmbbls, gross 2C contingent resources of 41.2 mmbbls and a best estimate of 254.5 mmbbls of gross unrisked prospective resources. The Ubima field holds gross 2P reserves of 2.4 mmbbl of oil and gross 2C resource estimates of 31.1 mmbbl.