Eland restarts production at Opuama, gets August sales payment

Eland Oil & Gas said the Opuama field in Nigeria has restarted production at a stable rate of 3,500 barrels a day.

Production had been interrupted by by the closure of Shell’s Forcados export terminal to allow the repair a subsea leak and while work was carried out to its own pipeline.

In the same announcement, Eland also revealed Elecrest, its joint-venture company, has received payment for August’s output from Shell Western Supply & Trading. It has shipped and received payment for 46,022 barrels to date.

The next sale, to take place early this month, is expected to be in the order of 38,000 barrels.

The OML 40 licence, which contains Opuama, lies within the Niger Delta, approximately 75km north-west of the city of Warri and covers an area of 498 square kilometres.

The shares rose 6.5% to 106p, valuing the business at £148 million.

“The market has been concerned about the challenges of achieving sustained production from OML40 and this update should go some way to addressing those fears,” said analyst Mark Henderson.

According to Northland Capital’s Andrew McGeary output from Opuama was above expectations and should stabilise at 2,600 barrels a day after the first full year.

He said Eland is looking to begin well development in the fourth quarter of the year and pointed out that, with a reserve base of 81mln barrels, there is “significant development headroom”.

At the same time McGeary believes the recently-acquired “Ubima marginal field looks like an ideally suited transaction playing to management’s strengths”.

“That said progress sat Opuama is key to the near term and we expect advancement of the development programme towards the end of this year to be reflected in an improved share price performance,” he added.