16th Oct 2013 10:26
LONDON (Alliance News) - Eland Oil & Gas PLC Wednesday said it has pushed back the expected completion of restoration of the production facilities at the Opuama oil field in Nigeria, but should have the facility, which has been shut down for seven years, up and running before the end of the year.
The company had been expecting to complete restoration of the facility and export pipelines in October, but said the restoration work was taking place in a "challenging environment".
It said it has been working with the field operator to replace corroded infield flowlines, refurbish the production flowstation and repair the oil export pipeline, replacing all corroded and damaged sections.
It has finished work on the flowlines and will finish work on the export pipeline within three to four weeks. Work on the flowstation is also underway and Eland expects completion in three to five weeks.
"While this is a deferment from the previously prognosed October, comfort can be drawn from the fact that work on all components is underway and is being vigorously monitored for ways of improvement," the company said in a statement.
Once the work is completed, it is hoping to start drilling an initial six development wells at the field. It is waiting for a rig currently being used by Conoil, but says it should get it early next year.
Still, Eland expects to be producing in excess of 2,500 barrels of oil a day from two existing wells in the field by the end of the year. It then expects output to increase by about 3,000 barrels a day for each subsequent new well drilled during 2014.
"The agreed debt facilities with Standard Chartered Bank remain available following first oil and the company currently has sufficient cash to meet first oil requirements," it said.
"The delays we have experienced are frustrating but not unexpected in a project of this complexity and in the environment in which we are operating," Eland Chief Executive Les Blair said.
A joint venture between Eland and Nigerian company Chrome Group acquired a 45% interest in the field, known as OML 40, from Shell, Total and Agip Oil. It is Eland's first and currently only asset. It is hoping to produce 50,000 barrels a day at the field within four years.
Eland Oil & Gas shares were down 5.1% at 102.5 pence Wednesday morning, the lowest level since the company listed in September last year.
By Steve McGrath; [email protected]; @SteveMcGrath1
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