ELAND OIL & GAS PLC Operations Update
Eland Oil & Gas PLC (AIM: ELA), an oil & gas development and exploration company operating in West Africa with a principal focus on Nigeria, announces the following update on activities for the OML 40 License, located in on shore Nigeria (“OML 40″).
Once first oil is achieved, the long term development and appraisal drilling programme for OML 40 will commence with the Opuama Field which has certified gross 2P reserves of 54 Million bbls (from a total licence 2P number of 82 Million) and an initial production capacity of 30,000 bopd.
· Refurbishment of existing facilities is now progressing with operations personnel on site and initial integrity tests indicating that the facilities are in good condition
· Some delays in contracting services and local permitting have been experienced to date and as a result first oil production in excess of 2,500 bopd from two previously shut in wells is now anticipated in October
· The Swamp Rig ‘Depthwize Imperial’ is planned to mobilize to OML 40 in Q4 2013 allowing the commencement of drilling the first new well before year end. Contractual arrangements are currently being finalized by the operator, NPDC
· Year end exit production rate is anticipated in the range 2,500 to 5,500 bopd, dependent on timing of completion of the first new well. It is expected that production will increase by circa 3,000 bopd for each subsequent new well drilled
· Debt facilities already agreed are available post first oil.
OML 40 Operations update
Since the Company’s previous operations update, contained in the 2012 Annual Results published on 29 May 2013, planning and work for the rehabilitation and restart of existing production facilities on OML 40 has continued.
NPDC’s refurbishment and recertification of the existing production flowstation facilities and the 30 metre sectional repair of the export pipeline is on-going. Integrity tests have been made on the facilities and all are in good condition with a minimum level of refurbishment needed. Two new 4” flowlines are being installed to replace the pre-exiting lines as a precautionary measure against corrosion.
Initial production will be from two existing wells that were shut in in 2006 in a controlled shutdown. These wells are anticipated to flow at a minimum rate of 2,500 bopd based on the well test conducted immediately prior to the controlled shutdown with additional development wells forecast to flow at 3,000 bopd. With this work still underway, production restart on OML 40 is expected for October.
Following the restoration of production, the development drilling programme will start on the Opuama field where there are production and export facilities with a throughput capacity of 30,000 bopd and where Netherland, Sewell & Associates, Inc. recently certified gross 2P reserves of 54.2 MMbbls.
Initial drilling will be performed by the swamp rig ‘Imperial’, which will be secured by NPDC and committed to the development programme on OML 40 in Q4 2013. It is planned that the Imperial will move across to OML 40 later in the year, when it’s current operator completes a single well program.
Previous guidance for drilling has been 2 production wells to spud in 2013 with a year end exit production rate of 10,000 bopd. Due to a delay in rig availability the Company is adjusting its guidance to one new development well being spudded in Q4 2013 with an exit production rate in the range of 2,500 and 5,500 bopd, dependent on timing of completion of the first new well. The spudding of the second development well on Opuama field, planned and budgeted for 2013, is now anticipated for early 2014 in conjunction with the on-going field development plan.
Les Blair, CEO of Eland Oil & Gas, commented: “Field refurbishment is progressing well and despite earlier delays, indications are that the facilities are in good condition which bodes well for the long-term development of OML 40. We are looking forward to gaining entry to the two previously shut in wells and our first production revenues.
Furthermore, we are very excited at the prospect of drilling of our first new production well and subsequently beginning the process of rapid production growth, at what we anticipate to be a rate of circa 3,000 bopd for each scheduled new well.
The momentum of OML 40 development work is now gathering pace.”
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