Eland may invest additional $75m in Nigeria
Eland Oil and Gas has expressed its commitment to increase investment in Nigeria’s oil and gas sector, with optimism that its hydrocarbon wells are still commercially viable despite the plunging oil prices.
Indeed, theAberdeen-based oil firm said it plans to drill two wells in the second half of the year which are expected to deliver significant increase in production from the Opuama field.
Eland had already secured a $35 million credit facility from Standard Chartered Bank and expects to have a further $40 million commitments by end April. There are indications that it could draw on these to fund to enhance drilling.
Chief Executive, Eland, George Maxwell, stated that 2015 will be a transformational year for the company with material increases in production and revenues.
“These wells are commercially robust at current oil prices,” he said, citing a price of $50 per barrel.
He believed that the wells should repay the investment required within six months at expected production rates of between 4,500 and 5,500 barrels oil per day each.
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. It also expects to restart production from two wells on the Opuama field that are currently shut in.
The company brought the Opuama field back into production in February last year. 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 however noted that the company will continue with a cost reduction programme to reduce operating expenses as far as possible and maximise the return on capital expenditure.