Two London-listed energy companies Eland Oil and Gas and ADM Energy are consolidating expansion into Nigerian assets, an indication that the country’s oil and gas sector may be at the verge of recovering from its first-quarter 2019 contraction.
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Data from the National Bureau of Statistics (NBS) show that in the first three months of 2019 real Gross Domestic Product growth in the oil sector contracted by -2.40 percent (year-on-year), indicating a decrease by 16.43 percent points relative to the rate recorded in the corresponding quarter of 2018.
AIM-listed ADM Energy plans to rapidly expand its Nigerian asset base while targeting “other investment opportunities in the oil and gas sector, primarily in West Africa,” according to newly elected chief executive, Osamede Okhomina.
ADM Energy is an AIM quoted natural resources investment company targeting near term production assets in proven oil and gas jurisdictions such as Nigeria. The Aje Field, part of oil mining licence (OML) 113, which is ADM Energy’s investment in Nigeria, has now commenced production.
AIM is a sub-market of the London Stock Exchange that was launched in 1995 to allow smaller, less-viable companies to float shares with a more flexible regulatory system than is applicable to the main market. At launch, AIM comprised 10 companies valued at £82.2 million.
Similarly, London-listed Eland Oil & Gas had received the green light for its planned development of the Gbetiokun field in oil mining licence (OML) 40 in Nigeria, from the Department of Petroleum Resources (DPR).
The plan includes the drilling of five oil production wells during the first phase of development, with six more production wells and a single workover, to convert the Gbetiokun-2 well to a water disposal well, to be carried out during the second phase.
The first two wells, Gbetiokun 4 and 5 will be drilled back-to-back and are expected to increase the output from the field to 20,000 barrels per day. It was reported in June that Eland was preparing to bring the early production system at Gbetiokun online this month, with output from the Gbetiokun-1 and 3 wells expected to average an initial gross rate of 12,000 bpd.
The facility has a nominal capacity of 22,000bpd, which will allow for production from the additional wells being drilled this year and next.
Eland has also previously stated that the modular design of the early production system would allow it to expand the capacity beyond 22,000bpd if required.
However, the selection this week of Nigerian national, Okhomina, founder and former vice-chair of UK explorer Energy Equity Resources (EER), follows the non-board appointment last month of Dubai royal Sheikh Ahmed Bin Dalmook Al Maktoum as ADM president following a major investment.
“It is very heartening to see the arrival of Middle East capital into West Africa’s upstream sector,” Okhomina said.
ADM Energy, formerly MX Oil, is currently focused on Nigerian block OML-113, including the gas-rich but oil-producing Aje field in partnership with Nigerian indigenous operator Yinka Folawiyo Petroleum.
Okhomina told Upstream, a global oil and gas platform, that ADM would soon welcome “a new technical director, well-versed in the latest techniques – oil and gas technology has advanced in leaps and bounds over the past half-decade and we aim to deploy these modern technologies in the field.”
Sheikh Ahmed had earlier said he favoured “a larger, balanced portfolio of projects, leveraging extensive contacts to identify opportunities in undervalued production and near-production assets, primarily in Africa.”
