RNS Number : 2455L
Eland Oil & Gas PLC
18 April 2018

18 April 2018

Eland Oil & Gas PLC

("Eland" or the "Company")

OML 40 Reserves and Resources Update

Eland Oil & Gas plc (AIM: ELA), an oil & gas development and exploration company operating in West Africa with a principal focus on Nigeria, is pleased to announce the results of a new competent persons report ("CPR" or "Report") provided by Netherland, Sewell & Associates Inc. ("NSAI") as at 31 December 2017.

Since the previous full field OML 40 independent CPR which had an effective date of 30 June 2015, the Opuama field has produced 3.86 million barrels of oil. However, the result of the new NSAI report shows a small increase in 2P reserves in OML 40, illustrating how robust and attractive OML 40 is as an investment, and the significant quantity of reserves and resources still to be extracted from the license.

Highlights

·

Gross OML 40 Reserves


-

Proved ("1P") of 39.5 million barrels ("MMB"), an increase of 20%


-

Proved plus Probable ("2P") of 83.4 MMB a slight increase


-

Proved plus Probable plus Possible ("3P") of 117.9 MMB, an increase of 11%

·

Eland's Net Entitlement Reserves (after royalties)


-

1 P of 13.5 MMB, an increase of 14%


-

2P of 26.3 MMB, an increase of 17%


-

3P of 30.3 MMB, an increase of 11%

·

Eland's Net (Entitlement) Present Value at 10% with a flat price deck of $66.54 per barrel of oil


-

1P of US$ 281.8 million


-

2P of US$ 419.2 million


-

3P of US$ 484.4 million

Net entitlement is based on treating Eland funding of the Starcrest Nigeria Energy Limitied share of Elcrest E&P Nigeria Limited as a carried working interest, resulting in an Eland participating interest of 45 percent before payout of the loans and 20.25 percent after payout.

Mr George Maxwell, CEO, commented:

"I am pleased to announce an updated CPR for the Company's core OML 40 licence. This shows that over the two and a half year period since the last CPR, total 2P reserves in the licence have slightly increased, net of oil production of 3.9 million barrels. On a 1P and 3P basis, we have seen increases in reserves of 20% and 11% respectively, again a very encouraging sign.

Although the Opuama field has seen a decline in 2P reserves, the Eland technical team is confident that the results of the recent drilling programme and the increase in Opuama oil production will see a reversal of this once the logging results have been fully appraised. Moreover, I am delighted that the increase in 2P reserves from the Gbetiokun field more than offsets the Opuama decline.

I sincerely believe that this updated CPR highlights the significant upside that we still see within our flagship licence OML 40".

For further information:

Eland Oil & Gas PLC (+44 (0)1224 737300)

www.elandoilandgas.com

George Maxwell, CEO

Ronald Bain, CFO

Finlay Thomson, IR

Canaccord Genuity Limited (+44 (0)20 7523 8000)

Henry Fitzgerald O'Connor / James Asensio

Panmure Gordon (UK) Limited (+44 (0)20 7886 2500)

Adam James / Atholl Tweedie

Tom Salvesen

Camarco (+44 (0) 203 757 4980)

Billy Clegg / Georgia Edmonds / Tom Huddart

Inside Information

This announcement contains inside information as stipulated under the market abuse regulation (EU no. 596/2014). Upon the publication of this announcement via regulatory information service this inside information is now considered to be in the public domain.

Competent Person

In accordance with the guidelines of the AIM Market of the London Stock Exchange, Pieter van der Groen, a geologist and Eland's Chief Operating Officer, who has a geology degree from Auckland University, a Masters degree in Petroleum Geology from the University of Aberdeen and has over 25 years of relevant experience in the upstream oil and gas industry and who is a member of the Society of Petroleum Engineers and meets the criteria of qualified person under the AIM guidance note for mining and oil and gas companies, has reviewed and approved the technical information contained in this announcement.

In compiling the announcement, the Company has used the definitions and guidelines as set forth in the 2007 Petroleum Resources Management System ('PRMS') approved by the Society of Petroleum Engineers (SPE)

SUMMARY OF OIL RESERVES AS AT 31 DECEMBER 2017



Oil Reserves (MB)


Future Net Revenues (M$)



Gross


Net Entitlement



Present Worth at 10%

Category


Before Royalties

After Royalties


After Royalties

%


Total

1P


39,538.1

31,630.5


13,522.0

42.7%


329,769.2

281,780.1

2P


83,411.0

66,728.8


26,293.3

39.4%


490,190.7

419,225.1

3P


117,856.4

94,285.1


30,380.5

32.2%


564,984.0

484,427.4

*Net entitlement is based on treating Eland funding of the Starcrest Nigeria Energy Limitied share of Elcrest E&P Nigeria Limited as a carried working interest, resulting in an Eland participating interest of 45 percent before payout of the loans and 20.25 percent after payout.

Since the previous CPR in June 2015, Opuama 2P Reserves have declined by 12 MMstb from 57.4 MMstb to 45.4 MMstb (a reduction of 8.7 MMstb allowing for production of 3.9 MMstb between June 2015 and December 2017). The main changes are:

a) 5.9 MMstb reduction in D1000-D2000 reserves, a consequence of the new 3D dataset and different method of depth conversion (steeper western flank), being partially offset by the increase in the depth of the D1000 OWC (now common with D2000).

b) 6.8 MMstb reduction in D5000 reserves. Its revised reserves figure is broadly consistent with Eland's previous estimate.

c) 2.6 MMstb reduction in E2000 reserves,a consequence of the new 3D dataset and different method of depth conversion

d) Transferof 3.3 MMstb in the D3500 and D4000 reservoirs from Contingent Resources (June 2015 CPR) to Reserves (December 2017 CPR).

Opuama 8's log and positive production results indicate that the D5000 current reserves are conservative and remapping is ongoing which will be further enhanced by the Opuama 9 and 10 well results. Opuama 9 and 10 are step out well which will test the flank of the structure.

Since the previous CPR, Gbetiokun 2P Reserves have increased by 12 MMstb from 25.8 MMstb to 38 MMstb. The main changes are:

1. Oil in D8900, E1000 and E6500 included as Reserves in the December 2017 CPR (not included previously);

2. Significant increases in Reserves in the E2000, E5000 and E6000 reservoirs compared to the June 2015 CPR;

The above being partially offset by Oil in the shallow D5000 and D7300 reservoirs moved from Reserves (June 2015 CPR) to Contingent Resources (December 2017 CPR) as development of these reservoirs is contingent on results from the earlier wells targeting the deeper reservoirs whose properties are reasonably clearly defined.

SUMMARY OF CONTINGENT AND PROSPECTIVE OIL RESOURCES:

GROSS LEASE CONTINGENT RESOURCES (UNRISKED)

·

1C of 15.6 MMB

·

2C of 40.4 MMB

·

3C of 111.8 MMB

SUMMARY OF UNRISKED GROSS CONTINGENT RESOURCES AS AT 31 DECEMBER 2017



Unrisked Gross Contingent Oil Resources (MB)



Low Estimate

(1C)

Best Estimate

(2C)

High Estimate

(3C)

Abiala North


909

1,981

4,112

Abiala South


4,259

14,105

70,643

Adagbassa Creek


647

1,495

2,845

Gbetiokun


0

2,577

4,411

Opuama


885

2,248

5,440

Polobo


8,614

17,354

23,230

Ugbo


298

630

1,082

Total


15,611

40,390

111,764

Note:

1.

Based on current market conditions in Nigeria, neither contingent resources nor values have been attributed to gas or natural gas liquid volumes. However, the Company has rights to monetise gas volumes and is currently discussing and assessing the market potential for development.

2.

Columns may not add due to rounding.

GROSS LEASE PROSPECTIVE RESOURCES (UNRISKED)

·

Low Estimate of 80.3 MMB

·

Best Estimate of 254.5 MMB

·

High Estimate of 772.4 MMB

SUMMARY OF UNRISKED GROSS PROSPECTIVE RESOURCES AS AT 31 DECEMBER 2017



Unrisked Gross Prospective Oil Resources (MB)



Low Estimate

Best Estimate

High Estimate

Abiala North


568

1,530

3,413

Abiala Northeast


3,970

10,996

24,516

Abiala South


5,731

13,289

26,449

Abiala South South


932

2,432

4,698

Amobe


15,300

78,430

340,070

Dudu Town


5,879

13,207

23,847

Dudu Town East


4,707

10,492

19,383

Gbetiokun West


8,124

16,744

31,740

Gbetiokun South


3,880

8,538

17,394

Old Nana Town


2,761

6,491

12,436

Opuama North


1,228

2,909

5,951

Polobo


4,090

19,250

57,090

Polobo East


9,425

20,640

42,495

Tongarafa


1,286

3,058

6,593

Tsekelewu Northwest


5,907

30,858

123,451

Ugbo East


2,484

6,260

13,253

Ugbo North


4,006

9,397

19,611

Total


80,278

254,522

772,390

Note:

1.

There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be economically viable or technically feasible to produce any portion of the resources.

2.

Columns may not add due to rounding.

PRICING ASSUMPTIONS

This report was prepared using a flat price deck of $66.54/bbl. This being the approximate Brent oil price as at 31 December 2017, adjusted for a regional price differential of $0.54/bbl. This is the average Forcados Blend differential the Company received in 2017 following resumption of export from the Forcados Terminal.

GLOSSARY

US$

United States Dollars

%

Percent

1C

Low estimate scenario of contingent resources

2C

Best estimate scenario of contingent resources

3C

High estimate scenario of contingent resources

1P

Proved

2P

Proved plus probable

3P

Proven plus probable plus possible

2D or 2D Seismic

Seismic data which is acquired along a line with a "Shot and Receiver" configuration that allows the signal-to-noise ratio to be enhanced by linear stacking of the reflections caused by subsurface interfaces between rocks with different acoustic properties

3D or 3D Seismic

Seismic data which is acquired in a multi-azimutual pattern and processed such that the signal-to-noise ratio is enhanced by three dimensional stacking of the reflections caused by subsurface interfaces between rocks with different acoustic properties

bbl / bbls

barrel / barrels

Contingent Resources

Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent Resources are a class of discovered Recoverable Resources.

CPR

The reserves and resources evaluation provided by Netherland, Sewell & Associates Inc. as at 18 November 2015

MB

Thousand barrels

MMB

Million barrels

Mmtsb

Million stock tank barrels

OML 40

Oil Mining Lease 40

Prospective Resources

Those quantities of petroleum estimated, as of a given date, to be potentiallyrecoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of recovery and a chance of development. Prospective Resources are further subdivided in accordance with the level of certainty associated with the recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity

Proved Reserves ('Proved')

Those quantities of petroleum, which by analysis and geoscience, can be estimated with reasonable certainty to be commercially recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated Proved Reserves

Probable Reserves ('Probable')

Those additional reserves that are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. It is equally likely that actual remaining quantities recovered will be greater than or less than the sum of the estimated proved plus Probable Reserves

Possible Reserves ('Possible')

Those additional reserves which analysis and geoscience and engineering data suggest are less likely to be recovered than Probable Reserves. The total quantities ultimately recovered from the project have a low probability to exceed the sum of proved plus probable plus Possible Reserves


This information is provided by RNS
The company news service from the London Stock Exchange
ENDUPDBDLLFVZFEBBD

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Eland Oil & Gas plc published this content on 18 April 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 18 April 2018 07:41:04 UTC