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Eland Oil & Gas hits the production accelerator in Nigeria

Snapshot

  • Owns substantial production assets in Nigeria
  • Production profile rising strongly  
  • Gross production might hit 45,000 barrels per day by end 2019
  • First profit posted in 2018, expects first dividend in 2019
  • One broker's target price is 160p
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Quick facts: Eland Oil & Gas PLC

Price: 163.2 GBX

AIM:ELA
Market: AIM
Market Cap: £351.85 m
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We are pleased to have successfully completed the remedial work on Gbetiokun-3 and are very happy with the achieved flow-rates of almost 7,000 bopd.

 

George Maxwell, chief executive

How it is going

Eland Oil & Gas PLC's (LON:ELA) production for 2019 is anticipated at between 14,000 and 17,000 barrels per day (bopd) net to Eland’s joint venture Elcrest.

Eland owns 45% of Elcrest, with 55% held by Starcrest Energy Nigeria

Elcrest has a 45% stake in OML 40, located in the north-west Niger Delta.

A development programme is set to get underway at Gbetiokun comprising two wells that can add a further 15,000 barrels per day gross.

Eland also has a 40% interest in the Ubima field, located onshore Niger Delta just north of Port Harcourt.

Ubima has tested at 3,500 bopd gross or 1,400 net to Eland.

 

 

What the brokers say

Peel Hunt: “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.

The broker has a ‘buy’ rating and 160p target price on Eland O&G shares.

SP Angel: “2019 will be a year of consolidation as the company sets the foundations for what we believe will be further growth in 2020.”

 

 

Inflexion points

Four new development wells are slated for 2019 across the Opuama and Gbetiokun fields.

Gbetiokun-1 performance already established at over 5,000 bopd.

Gbetiokun-3 achieved flow rates of 7,000 bopd in recent flow test.

Eland anticipates a dividend yield of 2 to 2.5% when it pays its first dividend..

2019 capex guidance of US$80 - 90mln net to Elcrest

Eland ended 2018 with cash of US$42.6mln and a net debt position of US$4.7 mln.

 

Blue sky

The OML 40 licence holds gross 2P reserves of 82.2 mmbbls (million barrels) and gross 2C contingent resources of 50.7 mmbbls.

Ubima holds gross 2P reserves of 9.3 mmbbls of oil and gross 2C resource estimates of 4.2 mmbbl.

Both prospects offer substantial upside from further exploration and development.

At 121p, Eland is valued at £261mln.

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