13 September 2012, Sweetcrude, LONDON – AFTER successfully raising about £118 million (about N29 billion) to purchase a stake in Nigeria’s Oil Mining Lease, OML, 40 in a flotation on the London’s secondary stock market, Eland Oil & Gas is planning to tap more asset disposals in Nigeria.
The Scotland-based, West Africa-focused company is utilising the funds for the acquisition of Shell Petroleum’s 30 per cent stake in OML 40 licence.
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.
Eland plans to target 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. With the purchase, Eland will own an initial 20.25percent, with 24.75percent held by its Nigerian joint venture partner. The remaining 55percent is held by the Nigerian government.
Shell sold 30 percent interest of OML 40 to Elcrest Exploration and Production Nigeria (EEPN) for $400milllion. EEPN is a consortium of Starcrest Nigeria Energy and Eland Oil and Gas.
In late 2013, the company also plans to explore two wells, targeting 113 million barrels per day. Within four years, it is hoped total gross production would rise to 50,000bopd, while Eland will also seek to acquire and develop underexploited upstream assets in Nigeria.
“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,” an official of the company said.
Expressing his gratitude to the company’s shareholders, Les Blair, CEO of Eland Oil & Gas, said: “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.”
Commenting on the divestment programme, Andrew Yakubu, group managing director of the Nigerian National Petroleum Corporation, NNPC, said the action in which indigenous companies are allowed to take up the assets divested by Shell or other Joint Venture companies has increased indigenous capacity in the upstream which is less than 10 percent.
“This is good progress in terms of increasing indigenous participation that was less than 10 percent in upstream operations.
