Eland Oil & Gas PLC, an oil & gas production and development company operating in West Africa with an initial focus on Nigeria, announce the results of a Reserves and Resources evaluation on Ubima Field, OML 17.
The results are provided by AGR TRACS International Limited ("TRACS") as at April 2016 (collectively, the "TRACS Report" or the "Report").
Eland has carried out a complete re-evaluation of the Ubima Field. This work has increased our confidence in initiating production towards the end of this year by means of an Early Production System ("EPS"). This is anticipated to comprise the re-entry and completion of existing well Ubima-1 and perforating and producing oil from five reservoirs. Eland, through its wholly owned subsidiary Wester Ord Oil & Gas Limited ("Wester Ord"), holds a 40 per cent. working interest in Ubima which is located onshore in the northern part of Rivers State, within OML 17. Allgrace Energy Limited ("Allgrace") hold the balance of the equity in Ubima Field.
The objectives of the EPS are to establish early production at relatively low cost while simultaneously gathering important information on oil characteristics and reservoir performance. The EPS development thereby acquires significant subsurface data, enabling the future Full Field Development ("FFD") to be carried out in an optimal manner, including the potential for a commercial gas development, while also delivering significant positive cash flows to the Company and its partner.
Eland’s Ubima re-evaluation work has enabled AGR TRACS to categorise the oil to be produced during the EPS as Reserves. Previously all Ubima oil was categorised as Contingent Resources. The results of the TRACS Report, details of which are set out below, demonstrate both near-term accessible 1P, 2P and 3P oil Reserves and material value to Eland from both the Reserves and Contingent Resources of Ubima.
– Gross Mid-Case STOIIP of in the range of 99-118 MMbbls
– Oil Reserves associated with the Ubima Early Production System under PPT New Entrant tax status
– Unrisked Contingent Resources associated with the Ubima Full Field Development under PPT New Entrant tax status.
George Maxwell, CEO of Eland, commented:
"We are pleased to announce the results of this Ubima CPR, which we believe moves the asset significantly closer to monetisation. It is particularly encouraging that AGR TRACS classify oil associated with the Early Production System as Reserves in contrast to the previous Contingent Resources classification. We are confident that a successful EPS later this year would move us quickly to a Full Field Development, which will deliver material value for Eland and its Partner, Allgrace Energy. Ubima once again highlights the prolific reserves of the Niger Delta and the EPS demonstrates our ability to build meaningful production from our asset base at relatively low cost.
Our development of OML 40 is gathering pace and we look forward shortly to receiving the flow test results from Opuama-3, which as previously indicated we expect to materially increase our reported production rates.
With plans to increase Eland production from Opuama-3, Gbetiokun-1 and Ubima in the near term; attractive timeframes for returns on investment, even at these lower oil prices; and an operating environment that is increasingly favourable, we look forward to the coming months with significant confidence."