Eland cuts forecasts after delays on Nigerian oil field

Offshore oil rig17 August 2013, News Wires – Eland Oil & Gas, the Aberdeen-based firm active in Nigeria, has cut production forecast for 2013 after delays in its campaign to bring a Nigerian oil field back on stream.

However, chief executive Les Blair said work on the scheme to revamp the Opuama field is gathering pace and the longer term prospects for the company’s work in the area remain good.

Aim-listed Eland expects to be producing 2,500 to 5,500 barrels oil per day from the Opuama field in the Niger Delta by the end of 2013.

That compares with a forecast for a year end exit production rate of 10,000 bopd issued in May.

Eland said the revision reflected challenges it has faced in its attempts to restart pumping from two wells that were used to produce oil from the field before it was shut in by Shell in 2006.

“Some delays in contracting services and local permitting have been experienced to date and as a result first oil production in excess of 2500 bopd from two previously shut wells is now anticipated in October,” said Eland.

The company had previously said it hoped to restart production from the field, on the OML 40 licence, in the summer.

Eland has also faced delays in obtaining a rig to drill new development wells to boost production from the field. The company said it now expects to start drilling one development well in the fourth quarter. It had previously hoped to drill two development wells this year.

However, Mr Blair said: “The momentum of OML 40 development work is now gathering pace.”

A graduate of Aberdeen university and veteran of the Nigerian oil and gas industry, Mr Blair added: “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.”

The company believes it can add 3000 bopd to production with each development well it drills.

Eland acquired an interest in the ML40 licence last September in a deal with Royal Dutch Shell, Total and Nigerian Agip worth $154 million.

Announcing the deal, Shell Nigeria said operations on the ML40 licence had been shut down since 2006 because of militant activity.

Eland also raised £107m net of expenses in a share placing last September. Mr Blair said this was the biggest Initial Public Offering on the AIM Market in more than three years.

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