15th Aug 2014 07:46
LONDON (Alliance News) - Eland Oil & Gas PLC Friday said its losses widened in the first-half of its financial year, and it has just acquired a 40% interest in the Ubima Field, onshore Niger Delta.
Eland Oil & Gas is a Nigeria and West Africa focused oil and gas exploration and development company.
The company reported a pretax loss of USD11.9 million for the six months to June 30, compared with USD11.0 million in the first half of last year, due to higher operating expenses, including increased salary costs and a net foreign exchange loss.
Eland said that it is planning a seven well development drilling programme in the Opuama field, onshore Nigeria, which it plans to commence in the fourth quarter and complete at least one new producing well in the period.
The company said it expects its year-end gross production exit rate from the OML 40 site to be roughly 7,000 barrels of oil per day.
Eland also said that it is currently in advanced discussions with its lenders, as it seeks to enter a reserve-based lending facility and significantly increase the debt level above the current USD22.0 million.
"The completion of our first two liftings of crude oil and the sale to Shell is a significant milestone for Eland. We are now generating cash from OML 40 which together with the five year Pioneer tax incentive granted earlier this year and the current and anticipated debt facility means we expect to be fully funded for our current plans. Going forward we anticipate more prolonged periods of stable production," said Chief Executive Officer Leslie Blair in a statement.
Eland Oil & Gas holds a 45% interest in the joint-venture company Elcrest Exploration and Production Nigeria Ltd, which completed the loading and sale of 46,022 barrels gross of crude through two cargoes to Shell Western Supply & Trading Ltd, part of Royal Dutch Shell PLC, in July and August.
The remaining stake in Elcrest is held by Starcrest Energy Nigeria Ltd.
In a separate statement Friday, the company said it has acquired a 40% participating interest in the Ubima Field from Allgrace Energy Ltd.
According to an independent report, the most recent independent 2C resources estimate for the Ubima Field is 34 million barrels of oil reserves. There is also a significant upside 3C resource estimate of 66.9 million barrels of oil, with an extra 2C resource estimate of 97 billion cubic feet of non-associated gas in two reservoirs.
Contingent resources refer to quantities of petroleum that have, on a certain date, been estimated as potentially recoverable from known reservoirs but are not commercially recoverable yet.
The equivalent terms for contingent resources are 1C, 2C, and 3C, and refer to a "low estimate", "best estimate", and "high estimate". The 2C level is commercially viable.
Eland said it believes an initial four development wells can be drilled and put into production nine to 12 months from the commencement of the full work programme in the Ubima Field. It said the full work programme is estimated to require development capital expenditure of USD125 million, although it said a proportion of this is expected to be funded from early cashflows from the extended production test.
"As the technical and financial partner we will be able to lead the development and move quickly to bring these assets into early production generating strong cashflow for the benefit of all stakeholders," said Blair in the statement.
Eland Oil & Gas shares were trading 2.0% lower in early trading Friday, at 87.00 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Eland Oil & Gas