Eland Oil & Gas Announces Major Reserves Upgrade for Nigeria Operations

Eland Oil & Gas PLC on Thursday reported a three-fold increase in the amount of recoverable reserves within the existing Opuama and Gbetiokun well inventory, adding 22.6 million gross barrels.

Eland said, alongside its partner, it intends to initiate production by means of a side track on the Opuama-7 well in the second quarter of 2017 followed by an early production system on the Gbetiokun field in the second half of 2017.

The company said the reserves report carried out on Opuama-1, Opuama-3, Opuama-7 and Gbetiokun-1, all contained within OML 40 in Nigeria, revealed its total net entitlement after royalties stands at 8.0 million barrels, 2P reserves stand at 11.5 million barrels and 3P of 15.1 million barrels.

Eland’s future net revenue from those 1P reserves is estimated at USD146.1 million based on a USD55 per barrel oil price. 2P reserves were estimated to be worth USD186.8 million in revenue while 3P reserves carried an estimate of USD243.8 million.

Excluding Gbetiokun, the Opuma wells reported its net entitlement after royalties of 1P reserves at 5.7 million barrels worth future net revenues of USD118.5 million, 7.8 million barrels of 2P reserves worth USD142.6 million and 3P reserves of 9.9 million barrels worth USD174.3 million.

“The confirmation of an additional gross 22.6 million barrels from our existing well re-entry strategy is very exciting. The level of capex investment required to produce this incremental volume is less than a USD1.5 per barrel, contributing to the significant NPV of USD186.8 million from the four wells,” said Chief Executive George Maxwell.

The initial stage of a planned phased development of the Opuama and Gbetiokun fields carry associated capital expenditure with Opuama-7 of USD7.0 million, or USD3.2 million net, and the Gbetiokun-1 cost estimate is USD16.0 million, or USD7.2 million net. Eland’s joint-venture subsidiary Elcrest Exploration & Production Nigeria Ltd holds 45% equity in the OML 40 license.

“This programme will put the company in a very strong position to move forward with the Opuama infill drilling and the full development of the Gbetiokun and Ubima fields, creating greater value for all our stakeholders,” he added.

“Opuama fields total reserves previously reported in the NSAI 30 June 2015 CPR remain unchanged. However, the significant increase in oil recovery from the existing well inventory are expected to lead to less infill wells being required to access the remaining reserves on OML 40 and therefore reducing future total capex spend,” said the company.

Eland shares were down 1.0% on Thursday at 56.68 pence.

Source: Alliance News