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Eland Oil & Gas lowers production guidance due to technical issues

Eland has now moved onto drilling Gbetiokun-5, which is expected to be spudded within two weeks.

Eland Oil & Gas PLC -
The Gbetiokun-4 well has been suspended while Eland waits for the right equipment to arrive

Eland Oil & Gas PLC (LON:ELA) has revised down its production estimates for this year due to technical and permitting issues in Nigeria.

The Gbetiokun-4 well has been suspended because of problems casing the core with attempts to rectify the issue hampered as the equipment required is not currently available in the country.

Eland's joint venture Elcrest has now moved onto drilling Gbetiokun-5, which is expected to be spudded within two weeks.

A decision on when to start a re-entry of Gbetiokun-4 will be taken when the retrieval equipment is available but Eland said 345ft of oil-bearing sands were drilled through in achieving its target depth.

“With the excellent reservoir results witnessed while drilling we anticipate strong production performance from Gbetiokun-4 once online, said George Maxwell, Eland's chief executive.

There have also been delays with permits for another field, Ubima, which has pushed the start date for an extended well test back to at least mid-November.

As a result of these two issues, Eland has revised its net production guidance for 2019 down to an average 10,500 barrels per day from 12,00-13,500 previously. 

 "The challenges on Gbetiokun-4 highlight the complexities that can occur in the drilling and completion sequence," said Maxwell.

“We are confident that when the required equipment arrives in-country, we will move forward with the completion of Gbetiokun-4 and bring further production online as planned.”

Eland recently agreed to a £382mln/166p per share cash bid from rival Nigerian group Seplat.

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Price: 165.4 GBX

AIM:ELA
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Market Cap: £356.7 m
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