logo-loader
Eland Oil & Gas PLC

Eland Oil & Gas shares advance as explorer confirms Gbetiokun-3 drilling success

"Gbetiokun has the potential to deliver a significant increase in oil production from OML 40," Eland O&G’s chief executive, George Maxwell said

oil and gas operations
Gbetiokun is expected to yield 15,000 bopd from its early production system

Nigeria focused Eland Oil & Gas PLC (LON:ELA) shares gained on Thursday after the explorer told investors that the Gbetiokun-3 well has encountered oil-bearing reservoirs across multiple horizons and it will be completed as a producer.

In a statement, Eland O&G confirmed the completion of the drilling of the appraisal and development well.

READ: Eland Oil & Gas looks to monetise Ubima crude after well test success

It said it expects production testing will take place during the first quarter for the Gbetiokun-1 and Gbetiokun-3 wells into an early production system, which will have combined production at around 15,000 barrels of oil per day.

George Maxwell, Eland O&G’s chief executive, said: “The company has successfully completed the drilling of the Gbetiokun-3 well. Gbetiokun has the potential to deliver a significant increase in oil production from OML 40 and we look forward to updating shareholders on flow testing later this quarter."

The well is seen to have net pay of around 46 feet. Eland O&G noted that it will produce from the D9000 and E4000 reservoirs whilst it also noted that E7000, a secondary target reservoir, was encountered slightly deeper than expected.

Eland O&G added that the E7000 is currently being reassessed with a view to being targeted by future wells.

Additionally, readings in the D5000 reservoir section showed mobile oil, so further analysis will now be conducted to assess whether it can be developed commercially.

In a note to clients, analysts at Peel Hunt commented: “Expectations for a combined gross initial production rate on start-up during 1Q 2019 from Gbetiokun-1 and 3 stand at 15,000bbl/d, which would take overall gross production to c45,000bbl/d.

They noted: “Eland currently trades on FY18 EV/EBITDA of 2x and at a 21% discount to our estimate of Core NAV of £319m, or 146p/share.”

The analysts reiterated a ‘buy’ rating and 160p target price on Eland O&G shares, which in afternoon trading were up 4.3% at 121p.

 -- Adds analyst comment, share price --

Quick facts: Eland Oil & Gas PLC

Price: £1.20

Market: AIM
Market Cap: £258.51 m
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

In exchange for publishing services rendered by the Company on behalf of Eland Oil & Gas PLC named herein, including the promotion by the Company of Eland Oil & Gas PLC in any Content on the Site, the Company...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Pharma giant Novo Nordisk extends contract with e-Therapeutics

Headlines from the Proactive Investors UK newsroom. E-therapeutics (LON:ETX) has extended its collaboration with Novo Nordisk to investigate new therapeutic approaches for type 2 diabetes. It is the first research agreement for e-therapeutics' new functional genomics technology. Eland Oil...

2 weeks, 3 days ago

RNS

Transaction in Own Shares

1 day, 11 hours ago

Transaction in Own Shares

1 day, 21 hours ago

Transaction in Own Shares

2 days, 21 hours ago

Transaction in Own Shares

4 days, 10 hours ago

Transaction in Own Shares

5 days, 10 hours ago

Transaction in Own Shares

1 week, 2 days ago

Share Buyback Programme

1 week, 2 days ago

Transaction in Own Shares

1 week, 3 days ago

2 min read