Eland Oil & Gas proceeding with plans to restore production at two wells

AIM-listed Eland Oil & Gas is proceeding with planning for a rehabilitation and restart of existing production facilities at its OML 40 asset, an operational update has shown.

The company also stated that planning for a further field development drilling campaign in 2013 was also progressing.

OML 40 is an asset with existing production facilities and significant low risk exploration potential.

Since it was acquired in September 2012, the company said that the focus had been on restoring production from the wells that were shut-in in March 2006.

The work required to restore production at the two existing wells involves the laying of 3km of replacement four-inch flowlines, a 30m sectional repair of the export pipeline and recertification of the existing production flowstation facilities.

Eland said: "Good initial progress has been made, however it would seem likely that completion of the necessary work will extend beyond the original first quarter target."

"After production is restored, the development drilling programme, which includes two development wells in 2013 and a continuous drilling programme through 2014, will commence," the company added.

The group further added that negotiations to secure a swamp-drilling rig to begin drilling operations in 2013 had been completed, and a rig had recently arrived in Nigeria after extensive refurbishment and upgrade in Asia.

Anticipated flow rates per new development well: 3,000 bopdEland said that a review of all production wells drilled to date by Shell, the previous operator, had been completed.

Anticipated flow rates per new development well are 3,000 barrels of oil per day (bopd) on average while the existing production facilities have capacity for 30,000 bopd, the company said.

Eland reported that recently reprocessed 3D seismic data set over the eastern part of the block including Gbetiokun had been interpreted, resulting in the identification of multiple reservoir prospects across the lease.

CEO: OML 40 asset has 'world class reserves'Les Blair, Chief Executive Officer of Eland Oil & Gas, commented: "Our strategy remains focused on developing OML 40 with its world class reserves and resources, and to continue in our efforts to build a portfolio of exploration and development assets in Nigeria and West Africa. This will deliver a growing production cash flow and we are very excited by what lies ahead."

The company's share price was up 1.89% to 127.75p at 11:43 on Friday.

MF