Scots oil firm suffers setback in Nigeria

ELAND Oil & Gas has seen its shares fall five per cent after the company revealed it had suffered a setback with its expansion programme in Nigeria.

Aberdeen-based Eland has cut its production forecast for this year after the expected date for the start of production from its second field slipped by around three months, amid operational challenges.

The company said it now expects the early production facility (EPF) for Gbetiokun in the Niger Delta to be moved to the field this week with first oil likely in July.

In its annual results announcement in March Eland said it expected to start generating revenues from the output from the first two wells on Gbetiokun following the installation of the EPF in April.

The company is also facing complications with its plans to drill additional wells on Gbetiokun. It said refurbishment work on the rig it will use has taken longer than expected.

Eland cut its production forecast for this year to 12,000 barrels oil per day (bopd) to 13,500 bopd, from 14,000 bopd to 17,000 bopd in March.

“Due to the delays with the Rig and the EPF, the material increase in production is likely to be more second-half weighted than originally forecast,” it said yesterday.

Eland has faced a range of challenges in Nigeria where it is producing oil from the Opuama field on the OML 40 licence, which also contains Gbetiokun.

The Forcados terminal used to handle production from Opuama was shut down from February 2016 to May 2017 following sabotage linked to militant activity in the Niger Delta.

However, the North Sea veteran who runs Eland, George Maxwell, put a brave face on the latest reverse.

“Whilst any delays to development plans are frustrating, I am pleased that we will soon have production from our second oil field, Gbetiokun, marking a significant expansion and de-risking within our core OML 40 licence, and leading to increased production and cash-flow,” he said.

Mr Maxwell reckons the progress achieved on Gbetiokun has provided further vindication for the company’s decision to invest in fields that had been left idle in Nigeria. He noted the company only started work on the revamp of the first Gbetiokun well in November.

Eland achieved a maiden profit of $78m in 2018 based on the output from the Opuama field.

The company expects to drill an exploration well this year on the Amobe prospect, which it reckons could contain around 80 million barrels.

Shares in Eland closed down 5.8p at 119.4p.

Source: The Herald