LONDON (SHARECAST) - Eland Oil and Gas, an energy firm based in Aberdeen but focused on West Africa, is keen to get cracking on an oil mining lease it has purchased in the Niger delta after making its debut on AIM.
The group, which raised £118m (£106.8m net) through a placing of shares at 100p a throw, started trading on AIM on Monday September 3rd with an implied stock market valuation (based on the placing price) of around £134.9m, making it the largest flotation on AIM in more than three years.
The shares placed represent around seven-eighths of the total issued ordinary share capital of Eland Oil and Gas.
Eland has also secured a facility of $22m with Standard Chartered Bank and equity option agreements with two key investors of £10m each.
In April the group, through a joint venture established with a Nigerian partner, agreed to buy a 45% stake in the OML 40 licence owned by Royal Dutch Shell, Total and Nigerian Agip in a $154m deal. The cash Eland is sitting on will initially go to pay for the economic interest in OML 40, with the remainder earmarked for re-commissioning existing infrastructure on the lease and restarting production.
Production from existing wells will be restarted at an expected initial gross rate of at least 2,500 barrels of oil per day (bopd) by the end of February 2013.
Production will increase through development, appraisal and exploration drilling to reach a target gross production of 50,000 bopd within four years, the company said.
The Nigerian Petroleum Development Company owns the majority 55% stake in OML 40, an onshore project within the Niger Delta, with independently certified gross recoverable proved plus probable (2P) reserves of 71.5m barrels, 3P (2P + possible) reserves of 117m barrels in the Opuama and Gbetiokun Fields, and mean contingent resources of a further 16.7m barrels in the Abiala and Ugbo Fields. All fields contain light "sweet" oil.
In addition, there is an "exciting identified exploration portfolio" of gross prospective resources of 356m barrels of oil based on 3D (three-dimensional) seismic data within the 498 square kilometres of OML 40.
Former Addax Petroleum men Les Blair and George Maxwell are Chief Executive Officer and Chief Financial Officer, respectively, for Eland.
Canadian-listed exploration and production company Addax, which also had assets in Nigeria, was bought by Chinese firm Sinopec for £4.4bn in 2009.
"I look forward to updating shareholders and the market as we progress our work programme which is designed to rapidly monetise this asset for the benefit of both our shareholders, the communities within the licence area and all other stakeholders," Blair said.