Financial results for the 12 months ended 31 December, saw the Nigeria-focused producer make a maiden annual profit before tax of US$77.6mln.
It highlighted “transformational” cash generation and earnings (EBITDA) of US$104mln, which equates to US$40 per barrel.
Operationally, the company saw oil output ramp-up substantially. Production for the whole year averaged 8,000 bopd net to Eland’s Elcrest subsidiary.
It exited 2018 with a net production rate of 13,240 bopd, with the underlying Opuama field flowing some 29,425 bopd gross, meanwhile, the peak rate measured was 13,986 bopd or 31,081 gross.
Ramp-up operations continue with additional wells due to come online in the future at the Ubima and Gbetiokun fields.
Ubima is due to begin commercial production during the first half of 2019, while Gbetiokun development kicked off this quarter – starting with the recompletion of the Gbetiokun-1 well and the drilling of the Gbetiokun-3 well.
Eland highlighted that it is presently in the most active development period in the company's history.
Chief executive George Maxwell said: "2018 was a ground-breaking year for Eland.
“Record oil production, revenues and profits, and confirmation of a 20-year extension to the OML 40 licence allow us to continue our investment in this world-class asset.
“As well as our continuing investment in the Opuama oil field, in 2018 we accelerated the development of the Gbetiokun and Ubima oil fields, both of which are expected to contribute to a material increase in production and cash flow in 2019.”
During 2018, Eland refinanced its reserves based lending facility. It ended the year with US$4.3mln of net debt and US$43.1mln of cash.
Cash is the only important marker
In a note to clients, analysts at SPAngel commented: “The announcement of the results underlines the fact that 2018 was a year of transition, with the Company reporting a healthy operating profit. Turnover is interesting and EBITDA a strong marker, but cash is the only important marker, and in this regard, the Company has made significant progress.”
They added: “While net/net/net the cash flow is down on the year, this is only after a substantial increase in activity. Consequently, we believe that the Company is in a good position and will benefit significantly from the investment that has been put in.
“What we would like to understand better, however, is the risk mitigation programme that the Company has installed to protect its revenue stream. Nevertheless, we believe that the Company is in a strong position and shareholders should be pleased with the progress.”
In afternoon trading, shares in Eland O&G held steady at 122p.
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