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Eland Oil & Gas updates on production as it looks forward to Gbetiokun start-up

The delivery and subsequent ramp-up of Gbetiokun has been delayed due to rig maintenance.

oil and gas operations
Eland forecasts 12,000 to 13,500 bopd average production for 2019

Eland Oil & Gas PLC (LON:ELA) told investors that production averaged 9,880 barrels of oil per day, up 32%, over the first five months of 2019.

The company, in a statement, noted that system uptime was recorded at 88% for the period.

At the Gbetiokun project the company continues to work on the start-up of the field via an early production facility (EPF) which is expected in July.

The Gbetiokun EPF is expected to begin with an initial production rate of 12,000 bopd (5,400 bopd net) from two wells, Gbetiokun-1 and Gbetiokun-3.

READ: Eland Oil & Gas reveals maiden profit for “ground-breaking” year

In line with the company’s early monetisation strategy the EPF output will go-to-market via the shuttling of crude tankers between Gbetiokun and the main OML 40 export pipeline.

The operation has been designed with a modular approach and Eland highlighted that this allows production volumes to increase over the next 12 to 18 months.

Eland is awaiting the completion of maintenance and refurbishment of a drill rig for new drilling operations, though it noted that the down-time has been longer than expected due to contractor delays.

It expects that the refurbished rig will be commissioned in July. Once up and running, it will deliver wells envisaged in the Gbetiokun field development plan.

Five production wells (Gbetiokun 4 through 8) are planned. The first two will be drilled back-to-back to enable the EPF to increase volumes up to 20,000 bopd – just shy of the facilities initial phase capacity.

The rig will then drill an exploration well, on the Amobe target, and, two additional wells at the Opuama field before returning to Gbetiokun in order to complete the development programme.

Amobe is a 78mln barrel target with the chance-of-success estimated at 42%.

Eland highlight that it may be possible to supplement the proposed drill programme with the procurement of a second rig during the fourth quarter, with a view to accelerating the appraisal of Amobe (subject to exploration results).

The company said that all proposed work programmes can be funded from existing financial resources, based on expectations of production exit rate of 19,000 bopd for 2019 with further growth continuing in 2020, though it noted that due to the delayed drilling and EPF the forecast material increase in output would be “more second-half weighted” than originally expected.

It now forecasts average full year production of 12,000 to 13,500 bopd, marking a 50% increase from the preceding twelve month period.

"Whilst any delays to development plans are frustrating, I am pleased that we will soon have production from our second oil field, Gbetiokun, marking a significant expansion and de-risking within our core OML 40 licence, and leading to increased production and cash-flow,” said George Maxwell, Eland chief executive.

“We are extremely proud that from the point of re-entry of the Gbietiokun-1 well in November 2018, we will have achieved four producing strings with processing and full evacuation via shipping all within a period of 10 months.

“This also creates a fantastic foundation for the continued development of the license in early 2020 and beyond.”

Quick facts: Eland Oil & Gas PLC

Price: 165.4 GBX

AIM:ELA
Market: AIM
Market Cap: £356.7 m
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