Eland Oil and Gas an Aberdeen Oil and Gas Firm expresses confidence in Nigeria, commits investment
ABERDEEN-based Eland Oil & Gas is facing fresh challenges in Nigeria but has emphasised its commitment to investing in the country where directors believe the new administration is doing good things.
Announcing a $10.3m (£6.8m) first half loss Aim-listed Eland said work on restarting production from a renovated well on the Opuama field had been delayed due to minor contracting issues.
Led by chief executive George Maxwell, Eland expects to start production from Opuama 5 in October. In May Eland had said it expected to have Opuama 5 on the OML 40 licence onstream during the second quarter of 2015.
The additional well is expected to help Eland to achieve a significant increase in production during the second half.
The company is producing from two wells on the Opuama field, which it brought back into production in February last year. Opuama had been shut in by Royal Dutch Shell in 2006 amid security concerns.
Eland suffered interruptions to production from Opuama last year, reflecting factors including theft from pipelines through illegal bunkering.
Production from Opuama was halted for five per cent of the first half of 2015 due to industrial action.
However, Mr Maxwell underlined the company’s confidence in the prospects for oil and gas firms in Nigeria where Muhammadu Buhari was elected president in May after promising to fight corruption.
Mr Buhari said on Tuesday that he planned to appoint himself oil minister in the new cabinet.
Mr Maxwell said: “With the new administration’s continued support in offering a transparent, level playing field for positive foreign investment in Nigeria, we remain committed to investing in and commencing a multi-well drilling programme on OML 40 for many years to come.”
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In March Mr Maxwell said it still made sense to increase Eland’s investment in Nigeria in spite of the plunge in the crude price.
He said then that wells Eland planned to drill in the second half of the year would repay the investment in them within six months at expected production rates.
Brent crude traded at around $50 per barrel at the time, and at $48/bbl yesterday.
Eland generated $9.9m revenue in the first half, up from $58,000 in the same period last year.
The company’s share of production from Opuama averaged 1,273 barrels oil daily.
The field has averaged 90 per cent up time since 1 July.