ELAND Oil & Gas has said it still makes commercial sense to invest in increasing production in Nigeria in spite of the plunge in crude prices.
Aberdeen-based Eland said it plans to drill two wells in the second half of the year that it expects will deliver a significant increase in production from the Opuama field.
"These wells are commercially robust at current oil prices," the Aim-listed company told investors, citing a price of $50 per barrel.
It said the wells should repay the investment they will require within six months at expected production rates, of between 4,500 and 5,500 barrels oil each per day.
Eland has secured a $35 million (£23m) credit facility from Standard Chartered Bank and expects to have a further $40m debt commitments by end April. It could draw on these to fund drilling.
The comments may help reassure investors that Eland's growth plans remain achievable in spite of the slump in oil prices since June.
Eland got an average $103.77 for the crude oil it sold last year.
Chief executive George Maxwell said yesterday that 2015 will be a transformational year for the company with material increases in production and revenues.
Eland also expects to restart production from two wells on the Opuama field that are currently shut in.
The company brought the Opuama field back into production in February last year. It had been shut in by Royal Dutch Shell in 2006 amid security concerns.
Eland suffered a number of interruptions to production from Opuama last year, reflecting factors including theft from pipelines through illegal bunkering. Availability increased during the year.
While production was stopped in January during planned pipeline maintenance work, the field has been onstream an average 85 per cent of the time in the first quarter to date.
Output has averaged 3,100 barrels oil per day for those days it has been in production to date, with Eland's share worth 1,395 barrels.
Mr Maxwell said the company continues with a cost reduction program to reduce operating expenses as far as possible and maximise the return on capital expenditure.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article