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AIM newcomer Eland Oil and Gas (LSE:ELA) floated its new shares today, opening at 100 pence. The price was 110.00 during the noon hour on a volume of 2,081,196 shares after having reached as much as 115.00 during morning trading.
Ready to Go after IPO
Expecting to raise some £118 million based on the placing price, Eland is now well-prepared to consummate a 45% stake in a licence in Nigeria currently owned by Royal Dutch Shell, Total, and Agip, but which has been sitting idle. The company has also raised an additional £42 million through a $22 million credit facility with Standard Chartered and equity options with two unnamed investors. The buy-in for the Eland stake was $154 million, with $138.6 million remaining to be paid.
Eland entered into the agreement as part of a joint venture, Elcrest, in which it currently owns 45% equity interest. Its partner in Elcrest is Starcrest. Within 30 days of the acquisition of the stake in the OML 40 licence, Eland has committed to increase its interest in Elcrest to 49%.
Elcrest will own 45% interest in the OML 40 licence. The Nigerian Petroleum Development Company (NPDC) owns the remaining 55%.
OML 40 Has Great Promise
OML 40, covering nearly 500 square kilometers, has been closed since 2006. The Elcrest JV frees Shell to focus more towards onshore activities in cooperation with the Nigerian government.
Once Eland ramps OML 40 back up into production mode, which should take six months, it expects to produce 2,500 barrels of crude per day, the rate at which it was producing prior to shut down in 2006. In its regulatory statement this morning, Eland said that it plans to deliver 113 million barrels of oil in 2013 by drilling two additional exploration wells. Its four-year goal is production of 50,000 bopd. The field has been independently certified to have gross recoverable proved-plus-probable reserves of 71.5 million barrels, possible reserves of 117 million barrels, and mean contingent reserves of 16.7 million barrels.
Corporate Comments
Eland CEO, Les Blair, said, “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.”
Company & Project Spotlight
The company was incorporated in August 2009 and has offices in Aberdeen, Scotland; Aguja, Nigeria; and Sharjah, UAE. The company has focused on oil exploration in Nigeria, which is the largest producer of oil in Sub-Saharan Africa and which also still has the largest oil and gas reserves in the region.
