1 Jun 2017 07:00
1 June 2017
Eland Oil & Gas PLC
("Eland" or the "Company")
Operations, 2016 Accounts and OML 40 Resources Update
Eland Oil & Gas PLC (AIM: ELA), an oil and gas production and development company operating in West Africa with an initial focus on Nigeria, is pleased to announce the following update:
Recommencement of Production from Opuama and Shipping
Further to the Company's announcement on 25 May 2017, production from the Opuama-1 well has now been restarted. The Opuama Field is now producing from both the Opuama-1 and Opuama-3 wells with current gross production of over 11,500 bopd recorded*.
The export of crude through shipping has now been concluded and the final vessel of three goes off-hire tomorrow. During the operation, nearly 520,000 barrels of crude were transported through shipping and injected into the FPSO terminal offshore Nigeria.
Currently Elcrest Exploration and Production Nigeria Ltd ("Elcrest"), Eland's joint venture company, has a further receivable of approximately $9.2million from Elcrest's shipping offtake partner. Approximately $2.0million of this is expected to be paid in the next 7 days to Elcrest with the balance of $7.2million expected upon completion of the final lifting from the FPSO. This is anticipated to be no later than the beginning of July.
The Company expects liftings using the current export route to commence in June.
The Company's current cash position is $5.2 million. With transportation of production now re-started down the pre-existing export facility working capital management continues as crude oil receipts continue to build to allow further development of the OML 40 license.
Elcrest Shareholder Agreement Update
Subsequent to the year-end, Starcrest, Eland's partner in Elcrest, issued a fee invoice under the Shareholders agreement. This fee relates to charges agreed at the onset of the joint venture in 2011 of $3 million per annum for each shareholder. Accordingly, to end 2016 $17.25 million is due to each shareholder. Eland has also invoiced the corresponding amount due under the same clause of the agreement and Elcrest will discharge these liabilities to each shareholder as free cash is generated through increasing production of OML 40. Accordingly, Eland's consolidated 2016 accounts (the "2016 Accounts"), will be reporting a one-off charge of $17.25 million for amounts owed by Elcrest to Starcrest, however 55% of this charge ($9.5 million) is attributable to the non-controlling interest holder, as to be disclosed in our forthcoming annual report.
Although 2016 had the positives of a very successful workover of Ouama-3, due to Elcrest only producing for one and a half months in the year, Elcrest still made a significant operating loss. Therefore, Eland, through its subsidiary Westport, now has an amount to recover from Elcrest of $380.2 million in principal and interest as at 31 December 2016 and remains the sole secured creditor.
Further details will be available in the 2016 Accounts which are expected to be released shortly.
OML 40 Contingent and Prospective Resources
Following work conducted in conjunction with Eland's successful Capital Market's Day in April, the Company provides a current summary of its assessment of gross Contingent Resources and Prospective Resources in OML 40, unrisked and risked, in six undeveloped discoveries*, 19 prospects and 11 leads is as tabulated below:
Gross MMstbo | Un-risked | Risked | ||||
Low | Mid | High | Low | Mid | High | |
Contingent | 45 | 78 | 107 | 34 | 58 | 80 |
Prospective | 152 | 734 | 1740 | 48 | 231 | 536 |
* Abiala South, Abiala North, Polobo, Tongarafa, Adagbassa and Ugbo.
END
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
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
In accordance with the guidelines of the AIM Market of the London Stock Exchange, John Downey, a geologist and Eland's Chief Technical Officer, who has a BSc from Nottingham University, an MSc from Leeds University and has over 30 years of relevant experience in the upstream oil and gas industry and who is a member of the Society of Petroleum Engineers and meets the criteria of qualified person under the AIM guidance note for mining and oil and gas companies, has reviewed and approved the technical information contained in this announcement.
In compiling the announcement the Company has used the definitions and guidelines as set forth in the 2007 Petroleum Resources Management System ('PRMS') approved by the Society of Petroleum Engineers (SPE)
*Oil production rates are as measured at the Opuama PD meter. Rates stated are subject to reconciliation and will differ from sales volumes.
Glossary
Contingent Resources | Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent Resources are a class of discovered Recoverable Resources.
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Lead | A subsurface structural or stratigraphic feature with the potential to have entrapped oil or natural gas.
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MMstbo | Million Stock (or Standard) Tank Barrels of Oil.
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Prospect | An area of exploration in which hydrocarbons have been predicted to exist in economic quantity.
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Prospective Resources | Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of recovery and a chance of development. Prospective Resources are further subdivided in accordance with the level of certainty associated with the recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity |
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.