Eland Oil & Gas Regulatory News (ELA)

20 April 2016

Eland Oil & Gas PLC

 ("Eland" or the "Company")

Ubima Reserves & Resources Update

1P, 2P and 3P Reserves

Gross 2P Net Present Value of US$ 25.5 million

Gross 2C Net Present Value of US$ 144.2 million

Eland Oil & Gas PLC (AIM: ELA), an oil & gas production and development company operating in West Africa with an initial focus on Nigeria, is today pleased to announce the results of a Reserves and Resources evaluation on Ubima Field, OML 17, ("Ubima" or the "Asset"), provided by AGR TRACS International Limited ("TRACS") as at April 2016 (collectively, the "TRACS Report" or the "Report").

Eland has carried out a complete re-evaluation of the Ubima Field. This work has increased our confidence in initiating production towards the end of this year by means of an Early Production System ("EPS"). This is anticipated to comprise the re-entry and completion of existing well Ubima-1 and perforating and producing oil from five reservoirs. Eland, through its wholly owned subsidiary Wester Ord Oil & Gas Limited ("Wester Ord"), holds a 40 per cent. working interest in Ubima which is located onshore in the northern part of Rivers State, within OML 17. Allgrace Energy Limited ("Allgrace") hold the balance of the equity in Ubima Field.

The objectives of the EPS are to establish early production at relatively low cost while simultaneously gathering important information on oil characteristics and reservoir performance. The EPS development thereby acquires significant subsurface data, enabling the future Full Field Development ("FFD") to be carried out in an optimal manner, including the potential for a commercial gas development, while also delivering significant positive cash flows to the Company and its partner.

Eland's Ubima re-evaluation work has enabled AGR TRACS to categorise the oil to be produced during the EPS as Reserves. Previously all Ubima oil was categorised as Contingent Resources. The results of the TRACS Report, details of which are set out below, demonstrate both near-term accessible 1P, 2P and 3P oil Reserves and material value to Eland from both the Reserves and Contingent Resources of Ubima.

Highlights:

· Gross Mid-Case STOIIP of in the range of 99-118 MMbbls

· Oil Reserves associated with the Ubima Early Production System under PPT New Entrant tax status

*Net Reserves and Present Value after Government Royalty and Overriding Royalty Interest

· Unrisked Contingent Resources associated with the Ubima Full Field Development under PPT New Entrant tax status

*Net Contingent Resources and Present Value after removal of gross Reserves from EPS, Government Royalty and Overriding Royalty Interest

George Maxwell, CEO of Eland, commented:

"We are pleased to announce the results of this Ubima CPR, which we believe moves the asset significantly closer to monetisation. It is particularly encouraging that AGR TRACS classify oil associated with the Early Production System as Reserves in contrast to the previous Contingent Resources classification. We are confident that a successful EPS later this year would move us quickly to a Full Field Development, which will deliver material value for Eland and its Partner, Allgrace Energy. Ubima once again highlights the prolific reserves of the Niger Delta and the EPS demonstrates our ability to build meaningful production from our asset base at relatively low cost.

Our development of OML 40 is gathering pace and we look forward shortly to receiving the flow test results from Opuama-3, which as previously indicated we expect to materially increase our reported production rates.

With plans to increase Eland production from Opuama-3, Gbetiokun-1 and Ubima in the near term; attractive timeframes for returns on investment, even at these lower oil prices; and an operating environment that is increasingly favourable, we look forward to the coming months with significant confidence."

For further information:

Eland Oil & Gas PLC (+44 (0)1224 737300)

www.elandoilandgas.com

George Maxwell, CEO

Louis Castro, CFO

Finlay Thomson, IR

Canaccord Genuity Limited (+44 (0)20 7 523 8000)

Henry Fitzgerald O'Connor

Nilesh Patel

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.

All volumetric calculations are based on independent mapping undertaken by AGR TRACS using data provided to AGR TRACS. The reservoir properties input to the volumetric calculations and the associated volume uncertainty ranges are based on AGR TRACS experience over more than 20 years of performing evaluations, and the statement on risking in this report represents the independent view of AGR TRACS.

The resource estimates presented in this report have been prepared in accordance with reserves definitions presented in the Society of Petroleum Engineers' Petroleum Resources Management System.

SUMMARY OF OIL RESERVES AS AT APRIL 2016*

*Classified as reserves category Justifiable for Development

**Net Reserves and Present Value after Government Royalty and Overriding Royalty Interest

The objectives of the Early Production System are to establish early production at low cost and to gather important information on oil characteristics and reservoir performance, thereby enabling the main development to be carried out in an optimal manner.

The EPS comprises the re-entry and completion of discovery well Ubima-1 and the production of oil from the D1000.5 and D1000.3 on the SS; and the E1000, E2000 and F7000 on the LS. An access road will be prepared, simple production facilities will be installed and a loading bay for trucks constructed. Oil will be exported by road tanker to a flow station or manifold about 60km away.

The EPS phase of development is expected to start in late 2016, with first oil production being achieved within three months after mobilisation.

Engineering has been well progressed to the concept stage to identify and size major components. The flow from the well would be directed to a three-phase separator to separate off the gas and water from the crude. The crude then flows to steel tanks for storage and final water separation.

Tenders have been received for the construction of the access road and potential vendors have been identified for all significant components of the EPS system.

The capital cost of the Ubima-1 re-entry and the EPS development is estimated at approximately US$9 million, of which, under agreement with Allgrace, Eland will carry its partner with a cost recovery ceiling of 80% in place. Fixed operating costs will be about $1.86 million per annum while variable operating costs (trucking costs and tariffs) will be about US$6 per barrel. Initial gross production will be 2,500 barrels of oil per day (BOPD), with over two million barrels of oil (gross) being produced over a four year period from the EPS (2P case).

*Net Reserves and Present Value after Government Royalty and Overriding Royalty Interest

SUMMARY OF UNRISKED CONTINGENT RESOURCES AS AT APRIL 2016, CHANCE OF COMMERICAILITY 75%

*Net Contingent Resources and Present Value after removal of gross Reserves from EPS, Government Royalty and Overriding Royalty Interest

Prior to the appraisal results from the Ubima-1 workover it is expected that the Full Field Development will comprise the development of the most important reservoirs using four horizontal wells (1C and 2C Cases) or six horizontal wells (3C). These wells will be drilled from a surface location close to Ubima-1 and will penetrate the reservoirs in crestal locations on the Ubima structure. Oil export is planned to be by pipeline to a meter station to be installed at the Ibaa Manifold. From Ibaa, oil will be transported to the Bonny crude oil terminal using the existing pipeline.

The capital cost of the FFD is estimated to be approximately $14.2 million per horizontal development well, and facilities and pipeline capital costs are estimated at approximately $47.5 million, of which, under agreement with Allgrace, Eland will carry its partner with a cost recovery ceiling of 80% in place. Fixed operating costs will be about $6.9 million per annum while variable operating costs (transport and tariff) will be approximately US$2.35 per barrel (Eland's FFD costs, Capex and Opex are taken 'as is' and are unverified by AGR TRACS). Initial gross production will be over 14,000 barrels of oil per day (BOPD) from the 4 new horizontal wells and Ubima-1, with over 31 million barrels of oil (gross) being produced over the field life (2C case).

*Net Contingent Resources and Present Value after removal of gross Reserves from EPS, Government Royalty and Overriding Royalty Interest

PRICE ASSUMPTIONS

The report, which is dated as at April 2016, was prepared using a Brent oil price of:

 Sproule Brent crude futures $/bbl RT16, (ref. 29/02/2016) 

 Furthermore the price deck is adjusted for a regional price differential of 75 cents/bbl as Nigerian crudes typically trade at a premium to Brent.

GLOSSARY