Eland gets nod for oil asset offshore Nigeria
ABERDEEN-BASED oil firm, Eland Oil and Gas Plc and its joint venture company, Elcrest Exploration and Production Nigeria Ltd have been approved to jointly operate the Oil Mining Lease 40 (OML 40) license in Nigeria.
The company, in a statement yesterday said, after fulfilling all the necessary obligations, it has received confirmation from the Department of Petroleum Resources (DPR) that it has become the co-operator of the license, after paying $2.3 million in requisite premiums and fees to the agency.
According to the statement, Elcrest will now co-operate the license for a minimum of 10 years, even as the DPR advised the Nigerian National Petroleum Corporation (NNPC), to finalise the joint operator model agreement with Elcrest for the license.
The joint operating model agreement, it stated, has been fully drafted and is currently under review by all parties. Signing of the agreement is expected in the coming weeks, Eland according to Eland.
The OML 40 license currently has one producing oil field, Opuama, which is achieving over 3,500 barrels of oil per day. Eland, through Elcrest, holds a 45 per cent stake in the license.
Chief Executive Officer, Eland Oil and Gas, George Maxwell said: “We are delighted to have received consent from the Ministry of Petroleum Resources for Elcrest’s appointment as operator of OML 40. It only remains to complete a revised joint operating agreement between Elcrest and NPDC when a further announcement will be made.”
Eland had earlier expressed its willingness to commit more investment in Nigeria in spite of the drop in oil prices which has resulted into apprehension among oil producing nations.
The international oil firm said it plans to drill two wells in the second half of the year, which 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 required within six months at expected production rates of between 4,500 and 5,500 barrels of oil per day.
Eland had however secured a $35 million credit facility from Standard Chartered Bank and expects to have a further $40 million debt commitments by end April. It could draw on these to fund drilling.
Maxwell said that 2015 will be a transformational year for the company with material increases in production and revenues.
The company brought the Opuama field back into production in February last year, but it had been shut in by Royal Dutch Shell in 2006 amid security concerns.
Eland suffered a number of interruptions to production from Opuama last year, reflecting factors including theft from pipelines through illegal bunkering.
While production was stopped in January during planned pipeline maintenance work, the field has been on stream an average 85 per cent of the time in the first quarter to date.
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.
Maxwell said the company continues with a cost reduction programme to reduce operating expenses as far as possible and maximise the return on capital expenditure.
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