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Eland - Broker sees “compelling value” as production holds up

Last updated: 13:06 07 Aug 2015 BST, First published: 07:46 07 Aug 2015 BST

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Around 400-600 bopd could be added by a newly worked-over well

--UPDATE, ADDS BROKER COMMENT--

Eland Oil & Gas (LON:ELA) revealed that the Opuama field, in Nigeria, was operational for around 81% of the first half of 2015 and the majority of downtime was the result of planned maintenance.

Average production, based on operating days only, amounted to 2,750 barrels oil equivalent gross: which equates to 1,238 barrels of oil per day (bopd) net to Elcrest Exploration and Production, Eland’s joint venture company.

The company told investors that work on the Opuama-5 well has now completed successfully, and the early indications are that the re-perforated well will see a positive result, with gross production of 400-600 bopd anticipated.

There have been a total of eight oil liftings which have seen a total of 201,771 barrels of crude sold at an average price of US$59.43. The next lifting is due this month, and the cargo is anticipated to be around 27,000 barrels.

Eland received US$2.1mln in July for oil cargoes from the preceding month, and it said that it had a US$13.1mln cash balance at the end of June 30.

A syndication process is continuing for a US$40mln reserve-based lending facility, and the company said it has received expressions of interest in excess of the amount of cash being raised and it stressed the remaining discussions centre around pricing and conditions.

Eland’s current share price of 55.75p represents compelling value, according to Cantor Fitzgerald analyst Emily Ashford.

The analyst recommends Eland as a ‘buy’ and has a 178p price target for the Nigeria-focused oil stock.

“With a work programme due to commence shortly, and a management team that is highly experienced in Nigeria, we still believe Eland’s valuation represents compelling value at the current share price,” she said in a note.

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