8th Oct 2014 07:07
LONDON (Alliance News) - Eland Oil & Gas PLC Wednesday said a new competent persons report it has received has materially increased the value of the reserves and resources of the OML 40 oil license in Nigeria, but expects a slight delay to its development drilling programme to creat new production wells.
The new report was provided by Netherland, Sewell & Associates Inc and took into account the Petroleum Profits Tax incentive awarded to Elcrest Exploration and Production Nigeria Ltd in May 2014, which results in a significant increase in cash flows and net present value, Eland said.
Eland owns 45% of the Elcrest Exploration and Production Nigeria Ltd joint venture, with the rest held by Starcrest Energy Nigeria Ltd.
"The updated Competent Person Report highlights the value of the tax incentive to Eland and demonstrates a material increase in the value of the reserves, increasing the (net present value) per net 2P barrel by over 75%," Chief Executive George Maxwell said in a statement.
"The increase in prospective resources high estimate to over 750 million barrels confirms our belief that OML 40 truly represents a portfolio within a single licence," he added.
Eland said that it light of an ongoing operational review, consequential changes to its work programme and delays in dredging, it now expects development driiling on new production wells to begin in the first quarter of 2015.
"As part of the review, the company will also evaluate the potential for additional production through the re-entry of existing non-producing wells on Opuama. The re-entry work will be carried out before or in conjunction with the revised development drilling programme," it said.
Opuama is a site on the OML 40 license.
In August, Eland had said it was planning a seven-well development drilling programme in the Opuama field, onshore Nigeria, with the aim of completing at least one producing well by the end of 2014, with expectations of achieving 7,000 barrels of oil per day gross production at the OML 40 site by its year-end.
"The company is currently on production and working towards satisfying debt accessibility, which is anticipated in the near-term. The company, which on 30 September 2014 had cash reserves of USD18.2 million, has no immediate need to draw down the debt facility. However, accessing the debt provides greater flexibility and optionality with regard to the work programme," it said of its funding situation.
The key details in the new competent persons report are as follows:
· Gross and Net OML 40 Reserves
- Proved ("1P") of 38.7 million barrels ("MMB"), 16.4 MMB net to Eland (before royalties), 13.2 MMB net to Eland (post royalties)
- Proved plus Probable ("2P") of 81.4 MMB, 25.3 MMB net to Eland (before royalties), 20.2 MMB net to Eland (post royalties)
- Proved plus Probable plus Possible ("3P") of 104.8 MMB, 30.9 MMB net to Eland (before royalties), 24.7 MMB net to Eland (post royalties)
· Eland's Net (Entitlement) Present Value at 10%
- 1P of US$ 440 million, US$ 505 million with financing arrangement, an increase of 26.5%
- 2P of US$ 649 million, US$ 679 million with financing arrangement, an increase of 52.4%
- 3P of US$ 740 million, US$ 768 million with financing arrangement, an increase of 62.2%
. Gross OML 40 Contingent Resources
- 1C of 16.7 MMB, a decrease of 9.2%
- 2C of 41.2 MMB, a decrease of 9.1%
- 3C of 114.7 MMB, a decrease of 17.2%
. Gross OML 40 Prospective Resources
- Low Estimate of 80.3 MMB, an increase of 59.0%
- Best Estimate of 254.5 MMB, an increase of 113.0%
- High Estimate of 772.4 MMB, an increase of 223.9%
By Steve McGrath; [email protected]; @stevemcgrath1
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