30 Oct 2019 07:00
30 October 2019
Eland Oil & Gas PLC
("Eland" or the "Company")
Operations Update
Eland Oil & Gas PLC (AIM: ELA), an oil & gas production and development company operating in West Africa with an initial focus on Nigeria, announces that through its joint-venture subsidiary, Elcrest Exploration and Production Nigeria Ltd ("Elcrest"), it has suspended completion operations on its Gbetiokun-4 production well due to technical issues.
Gbetiokun-4
The Gbetiokun-4 development well drilled through 345 net feet true vertical depth ('TVD') of oil-bearing sand, successfully recovered 60ft of core in the E5.0 reservoir and encountered each of its three target reservoirs (E3.0, E5.0 and E7.0) oil filled and close to or better than prognosed in terms of depth and quality. The well reached a Total Depth of 10,083 ft TVD and following a successful open-hole logging campaign, the 9-5/8" casing was successfully installed.
After cementing the 9-5/8" casing and perforating the E3.0, E5.0 and E7.0 sands, the dual 3.5" completion, comprising a single packer and two dual packers, was installed. After setting the packer in the long string to isolate the E7.0 sand, attempts were made to set the two dual packers via the short string, to isolate the E3.0 and E5.0 sands. This was unsuccessful and during further attempts to set the dual packers one, or more, components in the short string failed and the required packer setting pressure could not be achieved. After completing diagnostic tests, it was determined the completion had to be retrieved to replace the failed component(s).
Operations to retrieve the completion have been ongoing. However, so far, only partial retrieval has been achieved. To complete the operation additional equipment and resources are required that are not currently available in-country and therefore the decision has been taken to suspend operations while they are sourced.
Moving forward, the OES Teamwork rig will suspend the Gbetiokun-4 well to make it safe and move to an adjacent slot to commence operations on the next planned development well, Gbetiokun-5. This is expected to be spudded in the next 2 weeks.
Once the identified equipment and personnel are obtained, a decision on the timing of re-entering Gbetiokun-4 will be finalised. The re-entry may involve use of a dedicated hydraulic workover unit ('HWU') rather than a drill rig. Once the remaining completion equipment is recovered, it is anticipated that a new completion will be installed and the well brought into production shortly thereafter.
Ubima Marginal Field
The planned Extended Well Tested ('EWT') of the E1.0/E2.0 reservoirs in the Ubima-1 well has experienced delays due to various permitting issues that the field Operator is working to resolve. Currently this EWT is still anticipated to commence in Q4 2019, but likely not before mid-November.
Revised 2019 Production Guidance
Despite a successful intervention on the Opuama-9 short string during Q3, the extended drilling operations and current non-completion of Gbetiokun-4, the associated delay to the Gbetiokun-5 production well and the delayed start of the Ubima EWT have a cumulative negative impact on the previous 2019 production guidance (12,000-13,500 bopd net). Based on current assumptions for both Gbetiokun drilling operations and the Ubima EWT we expect full year production to be approximately 10,500 bopd net.
George Maxwell, CEO of Eland, commented:
"The challenges on Gbetiokun-4 highlight the complexities that can occur in the drilling and completion sequence. Over the past three years we have successfully overcome these types of equipment challenges during our ongoing drilling campaign and we are confident that when the required equipment arrives in country, we will move forward with the completion of Gbetiokun-4 and bring further production online as planned.
The production delay is clearly disappointing. However, with the excellent reservoir results witnessed while drilling we anticipate strong production performance from Gbetiokun-4 once online. Moving the rig on to Gbetiokun-5 while awaiting the arrival of required Gbetiokun-4 completion equipment is the most efficient move at this time and continues the drive towards increased production on Gbetiokun."
For further information:
Eland Oil & Gas PLC (+44 (0)1224 737300)
www.elandoilandgas.com
George Maxwell, CEO
Ronald Bain, CFO
Finlay Thomson, IR
Peel Hunt LLP, Nominated Adviser & Joint Broker (+44 (0)20 7418 8900)
Richard Crichton
David McKeown
Stifel Nicolaus Europe Limited, Joint Broker (+44 (0)20 7710 7600)
Callum Stewart
Nicholas Rhodes
Ashton Clanfield
Camarco (+44 (0) 203 757 4980)
Billy Clegg
Tom Huddart
Monique Perks
In accordance with the guidelines of the AIM Market of the London Stock Exchange, Yannis Korakakis, MSc of Leoben University, with 32 years of experience in the oil and gas sector, is a Petroleum Engineer and member of the Society of Petroleum Engineers who meets the criteria of qualified persons under the AIM guidance note for mining and oil and gas companies, has reviewed and approved the technical information contained in this announcement.
This announcement contains inside information as defined in Article 7 of the Market Abuse Regulation No. 596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.
This announcement is available on Eland's website at www.elandoilandgas.com/investors/regulatory-news/. The content of Eland's website is not incorporated into, nor does it form part of, this announcement.