The company sealed the deal after it was listed in the Alternative Investment Market, AIM, of the London Stock Exchange, three years after the company was founded.
It targets to increase its total gross production to 50,000 barrels of oil equivalent per day, bopd, as the company seeks to acquire and develop under-exploited upstream assets in Nigeria.
As part of plans to achieve its targets, the company plans to increase production from existing wells at Opuama that will be restarted at an expected initial gross rate of at least 2,500 barrels of oil per day (bopd) in the next six months.
Eland Oil also plans to explore two wells in late 2013, targeting 113 million barrels per day and within the next four years, it is hoped total gross production will rise to 50,000bopd.
Mr. Les Blair, the company’s chief executive officer, said of his company’s achievements, “I am extremely grateful to the shareholders of the company who have supported us to complete this milestone transaction.
The fundraising of £118 million is the largest on an AIM IPO for over three years and highlights the exciting prospects for OML 40 and Nigeria as a whole.”
OML 40 is an asset with production and exploration potential and with independently certified gross recoverable 2P reserves of 71.5 million barrels, 3P reserves of 117 million barrels in the Opuama and Gbetiokun fields and Mean Contingent resources of a further 16.7 million barrels in the Abiala and Ugbo Fields.
OML 40 covers some 500 square kilometres and is located onshore in the Niger Delta and contains light ‘sweet’ oil.
Since 1964, 18 wells have been drilled there, with 15 finding hydrocarbons. One field, Opuama, was formerly in production for over 30 years, from 1975 to 2006.
The stake in OML 40 was previously held by Royal Dutch Shell, Totaland Eni.
Shell owned 30 per cent stake in the joint venture for OML 40 along with Nigerian National Petroleum Corporation, NNPC, with 55 per cent while Total E&P Nigeria held 10 per cent and Agip Oil 5 per cent.
The Federal Government and the NNPC granted all relevant approvals for the sale including 45 per cent interest to the buyers.
Shell sold 30 per cent interest of OML 40 to Elcrest Exploration and Production Nigeria, EEPN, for $102 million.
EEPN is a consortium of Starcrest Nigeria Energy and Eland Oil and Gas.
With the purchase, Eland will own an initial 20.25per cent, with 24.75per cent held by its Nigerian joint venture partner.
The remaining 55per cent is held by the Nigerian government.