Eland Oil & Gas to increase activity in Nigeria

ELAND Oil & Gas has said it still makes commercial sense to invest in increasing production in Nigeria, in spite of the plunge in crude prices.

Aberdeen-based Eland said it plans to drill two wells in the second half of the year that it expects will deliver a significant increase in production from the Opuama field.

“These wells are commercially robust at current oil prices,” the Aim-listed company told investors, citing a price of $50 per barrel.

It said the wells should repay the investment they will require within six months at expected production rates, of between 4,500 and 5,500 barrels oil each per day.

Eland has secured a $35 million (£23m) credit facility from Standard Chartered Bank and expects to have a further $40m debt commitments by the end of April. It could draw on these to fund drilling.

The comments may help reassure investors that Eland’s growth plans remain achievable in spite of the slump in oil prices since June. Eland got an average $103.77 for the crude oil it sold last year.

Chief executive George Maxwell said Eland expects to record material increases in production and revenues in 2015. Eland also expects to restart production from two wells on the Opuama field that are currently shut in.

The company brought Opuama back into production in February last year after it was shut in by Royal Dutch Shell in 2006 amid security concerns.

Output has averaged 3,100 barrels oil per day for those days it has been in production to date, with Eland’s share worth 1,395 barrels.