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Eland Oil brings in US$18.5mln in premium placing

Last updated: 15:09 29 Apr 2016 BST, First published: 07:35 29 Apr 2016 BST

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Eland is sufficently confident to raise money at a premium

Eland Oil & Gas PLC (LON:ELA) revealed it had raised US$18.5mln in an oversubscribed premium placing as its drilling programme steps up a gear.

Due to a strong response from investors, the cash call was increased from a base size of US$15mln to around US$18.5mln.

The oil firm issued around 37.3mln shares at 34p each. Last night's closing price was 33.375p.

Nigeria focused Eland’s share price has risen sharply recently after an increase in oil reserves for the Gbetiokun field, part of the OML 40 licence and better than expected flow rates from the Opuama-3 well, also in Nigeria.

Some US$10mln of the placing money has been earmarked for the Gbetiokun-1 well with the remainder to be used for general working capital.

Production from Gbetiokun is expected later this year following the test.

Earlier this week, Eland reported test production from the Opuama-3 well of 10,584 barrels of oil per day, while 5,000-10,000 barrels daily is expected from Gbetiokun.

George Maxwell, Eland’s chief executive, said: "Following the exceptional success of Opuama-3 well re-entry, we look forward to further enhancing production through the development of the Gbetiokun-1 workover well.

“The initial rate from the Gbetiokun-1 well is expected to be circa 7,800 bopd gross.

“This project will once again almost double the company's already significant production profile and facilitate the development of this project in the second half of this year prior to the planned Ubima Early Production System."

Broker Cantor noted that Eland ended 2015 with US$8.4ml (FY2014 – US$15m) on the balance sheet. 
 
In 2015, the company embarked upon a cost reduction programme in response to the falling oil price, and has guided the market to a 30% reduction in operating costs by the end of Q1/2016, it added.
 
Eland shares gained 1.87% to stand at 34p each.

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