Eland Oil & Gas Plc (LON:ELA) has unveiled a re-evaluation of the Ubima field, within OML 17 in Nigeria, where there is now greater confidence that an early production system can bring the start of production later this year.
The group’s 40% owned Ubima field has been estimated by independent consultant AGR TRACS International to host some 2.42mln barrels of proved and probable (2P) oil reserves which would be worth US$25.49mln.
These reserves relate to the areas of Ubima that would be part of the early production system.
The purpose of the early production operation would be to establish production at a lower cost, whilst also gathering important information about the field which can be used to optimise the plans for full field development.
Contingent resources associated with a full field development - and also assuming the field receives designation for new entrant tax status - amount to 31.12mln barrels gross which are estimated to be worth US$144.2mln.
Eland share of reserves totals 1.13mln barrels, worth US$10.48mln net, and its contingent resources equate to 13.08mln barrels, worth US$57mln.
George Maxwell, Eland chief executive, told investors that the new assessment of Ubima moves the asset significantly closer to monetisation.
“It is particularly encouraging that AGR TRACS classify oil associated with the early production system as reserves in contrast to the previous contingent resources classification.
“We are confident that a successful EPS later this year would move us quickly to a full field development, which will deliver material value for Eland and its Partner, Allgrace Energy.”
Maxwell separately highlighted that the ongoing development work at the OML 40 asset is gathering pace.
He said flow test results for the Opuama-3 are due shortly, and it is expected that the well will materially increase production rates at the field.
“With plans to increase Eland production from Opuama-3, Gbetiokun-1 and Ubima in the near term; attractive timeframes for returns on investment, even at these lower oil prices; and an operating environment that is increasingly favourable, we look forward to the coming months with significant confidence.”