Eland Oil & Gas commence plans to drill five wells on OML 40 in June

Eland Oil & Gas, Nigeria focused upstream oil and natural gas exploration company  and its partner state-owned Nigerian Petroleum Development Company (NPDC) are set to start a five-well drilling campaign this month in OML 40 onshore the Niger Delta.

In this month of June, Eland Oil & Gas and its joint venture partner (NPDC) are planning to drill five wells on its OML 40 assets, a development which could lead to gross output of about 45,000 bpd.

“We are planning to drill five wells this year, with a rig going to spud two development wells on Gbetiokun beginning in June and a further two wells in Opuama,” Eland’s CEO George Maxwell said in an intelligence report.

According to Eland’s CEO, production from this asset, which borders the Gulf of Guinea and flows to Shell’s Forcados terminal, is currently running at about 26,000 barrels per day all from the Opuama field.

However, by the end of this drilling campaign, Maxwell said gross output could hit about 45,000 bpd as Gbetiokun field is set to be exploited by an early production facility with a capacity of up to 25,000 bpd.

“In addition, an exploration well is due to be drilled on the Amobe prospect, which could house about 78 million barrels of recoverable oil,” Maxwell said.

Eland Oil & Gas, an Alternative Investment Market (AIM) listed oil and gas firm describes Amobe as “a large, clearly-defined structure comparable to Opuama in terms of structural style and areal extent.”

Eland’s other asset is the Ubima licence in northern Rivers State where an extended production test on the Ubima-1 discovery well is due to start “at the end of June,” said Maxwell.

Through its joint venture company Elcrest, Eland’s core asset is a 45percent interest in OML 40 which is in the Northwest Niger Delta and a 40 per cent interest in the Ubima Field, onshore Niger Delta, in the northern part of Rivers State.

The OML 40 license holds gross 2P reserves of 82.2 million barrels, gross 2C contingent resources of 50.7 million barrels and a best estimate of 252.1 million barrels of gross un-risked prospective resource while the Ubima field holds gross 2P reserves of 9.3 million barrels of oil and gross 2C resource estimates of 4.2 million barrels.

Recall in March this year, a report from Netherland Sewell& Associates revealed following 2018’s oil production of 6.5 million barrels of oil, Eland Oil & Gas had recorded an 8 per cent upgrade to the value of its reserves at OML 40 higher than previous estimates as the license holds proven reserves of 42.9 million barrels.

Also, Eland Oil & Gas announced that following a redetermination, the borrowing base amount had increased from $103 million to $134 million and an initial accordion increase of $50 million is being underwritten by The Standard Bank of South Africa Limited and Stanbic IBTC Bank PLC, resulting in the commitments under the facility increasing from $75 million to $125 million. Of the commitments, $50 million is currently drawn.

Eland Oil & Gas completed the acquisition of a 45percent equity stake in OML 40 in September 2012 and has been producing oil from the Opuama field since 2014.

The Gbetiokun field, which was discovered in 1987 and further appraised in early 1990s, has never been developed, however,  Eland had been progressing this field development with a 2018 re-entry into the discovery well for data gathering and a new appraisal well.