21 Feb 2017
AIM-listed Eland Oil & Gas, an oil & gas development and exploration company operating in West Africa with an initial focus on Nigeria, has announced that since the last announcement made by the Company on 31 January 2017, OML 40 has produced over 150,000 barrels of oil, currently only producing from the Opuama-3 well.
Furthermore, the implementation of crude export from the Opuama field through shipping continues to ramp up successfully. The first shuttle vessel arrived at the terminal last week and injected around 39,000 barrels of crude. The second shuttle vessel, being utilised as part of Elcrest's crude export through shipping, has arrived at the terminal, having also loaded with around 40,000 barrels of crude and is preparing to inject into the terminal. The first vessel has since returned to the storage tanker and has loaded a further 40,000 barrels of crude and is on course back to the terminal. The Company anticipates this cycle being repeated on an ongoing basis and although the Company is initially producing from Opuama-3, the system is proving it has the capacity to handle greater quantities of production as other wells are brought online.
Following a significant upfront investment into the operating costs of the crude export through shipping, the current cash balance is $5.9 million (versus $11.1million 31 December 2016), of which $4.3m is in a reserve account whilst the Company finalises its borrowing base with its lenders. The majority of this investment covers the operating expense for the first 40 days of shipping operations. The Company therefore expects its cash balances to grow substantially as further export cycles are completed. Sales and cash will follow the delivery cycle in a timely manner with minimal working capital implications as the export cycle matures.
Amounts drawn under the Company's borrowing facilities are unchanged with the Borrowing Base review of end 2016 due to be completed in Q1 2017 as to reflect the resumption of production and the initiation of export of crude through shipping.
George Maxwell, CEO of Eland, commented:
'As previously announced we have designed and engineered a unique and dedicated alternative export route via shipping due to the prolonged shut-in at Forcados Terminal. This has involved significant capital and operational challenges and it is of enormous credit to our staff and all our partners that we are able to report that we have completed a full export cycle with one vessel, which it now en route to the export terminal for the second time carrying our third cargo. Since we started loading the first vessel we have shipped nearly 120,000 barrels in under 2 weeks; which is an enormous achievement and a huge success for all our stakeholders.'
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Source: Eland Oil & Gas
