Eland Oil & Gas PLC (LON:ELA) has unveiled a reserves upgrade that delivers a three-fold increase in recoverable reserves for the wells at the Opuama and Gbetiokun operations in Nigeria.
Proven and probable (2P) reserves for a total of four wells (Opuama-1, Opuama-3, Opuama-7 and Gbetiokun-1) are set at 33.5mln barrels – which amounts to 11.48mln net for Eland’s stake, after royalties.
It gives Eland’s assets a net present value of US$186.8mln, versus a current market value of just over £100mln.
George Maxwell, Eland chief executive, said: “The confirmation of an additional gross 22.6 million barrels from our existing well re-entry strategy is very exciting.
“The level of capex investment required to produce this incremental volume is less than a dollar fifty per barrel, contributing to the significant NPV of US$186.8 million from the four wells.”
The upgrade comes ahead of work programmes that aim to unlock additional production to current operations – which presently see the Opuama field yielding 8,000 bopd from one well. The plan is to open a side-track in the Opuama-7 well during the second quarter and initiate an early production system (EPS) at the Gbetiokun Field in the second half of 2017.
“This programme will put the Company in a very strong position to move forward with the Opuama infill drilling and the full development of the Gbetiokun and Ubima fields, creating greater value for all our stakeholders," Maxwell added.
Today’s upgrade bolsters the group’s proposition ahead of the programme which has an estimated capital cost of around US$10mln.
Somewhat significantly, the company also explained today that better than previously expected productivity and recovery from wells since the prior reserves assessment (back in 2015) means that it is now anticipated that fewer wells may be needed to access the reserves base at Opuama and Gbetiokun – which will, in turn, the capital requirements for full development.