Eland Oil & Gas : Operations Update

11 July 2016

Eland Oil & Gas PLC

('Eland' or the 'Company')

Operations Update

Eland Oil & Gas PLC (AIM: ELA), an oil & gas production and development company operating in West Africa with an initial focus on Nigeria, is pleased to provide an operational update for the six months ended 30 June 2016.

Highlights

- Work on two supplementary and independent export routes to diversify crude deliveries:

o Barging proposals have been received from a number of vendors to allow shipping of oil from the Opuama flowstation to a tie in point on the Benin River and via a shuttle vessel from the Benin River to an offshore FSO

o Implementation of the barging solution remains subject to agreement of terms with barging vendors and crude oil offtakers and timing of the Forcados terminal ('Forcados') restarting

o Pipeline survey has commenced to identify the optimal route for a 6 km pipeline into a nearby terminal, as a direct extension from the existing OML 40 JV's export pipeline

- Following successful workover operations, the testing of Opuama-3 well achieved a combined initial flow-rate from two separate horizons of over 10,500 bopd under three separate sequential production tests, materially ahead of expectations

- Following flow rate optimization, combined production from Opuama field is expected to reach over 10,000 bopd when re-started

- Maintenance activity and equipment re-certification at the Opuama Flow Station have now been completed to ensure high equipment uptime once Forcados comes back on line

- Engineering work was completed on a de-watering initiative to maximise ullage of our production and reduce operating cost per barrel by shipping dry crude instead of wet crude from Opuama

- Ubima field CPR with gross 2P Reserves of 2.4mmbbl (net: 1.1mmbbl) to the Ubima-1 early production systemand 2C Contingent Resources of 31.1mmbbls (net: 13.1mmbbls)to the full field development plan

- Gbetiokun-1 early production system, OML 40 CPR with gross 2P Reserves of 10.8mmbbls (net: 3.9mmbls)

- Active 2016 work programme including:

o Re-entry and completion of Ubima-1targeting four oil zones to prove up the contingent resources and move towards the early production system scheduled for H2 2016

o Re-entry, completion and production of the Gbetiokun-1 well to commence in H2 2016

o Development of supplementary production export routes

- Strong un-audited cash position of $20.6 million as of 30 June 2016.

o Successful equity placing of $18.5 million in April 2016 increased from the base size of $15 million, priced at a premium to the previous closing mid-market price.

o Prepayment sale of production to Shell of $3.0 million in April 2016

o As at 30 June 2016 the position of the reserved based lending facility ('RBL Facility') with Standard Chartered Bank remains unchanged. Drawdowns to date amount to $15 million and the Company does not intend to make any further drawdowns this year in order to execute it's outlined work programme.

- Average first half production up to the point of Forcados shutdown in February of 4,230 bopd gross based on production days (H1 2015: 2,190 bopd) with 38,200 bbls of crude oil lifted in the period (H1 2015: 163,100 bbls)

George Maxwell, CEO of Eland, commented

''Despite the challenging market conditions, Eland has made considerable progress so far in 2016 as we continue to deliver on our low cost well re-entry strategy to sharply grow our production. During the period we have successfully raised $18.5 million, boosted our 2P reserves following the upgrades at Gbetiokun-1 and Ubima and demonstrated the potential to double our production rates again following a successful workover at Opuama-3 which had initial flow-rates of over 10,500 bopd.

'We continue to execute the outlined work program presented during our recent fund raise and have used the recent production downtime due to the Forcados Terminal shutdown to accelerate our Planned Preventative Maintenance program and improve the efficiency and reliability of the Flow Station. These actions will reduce operating costs and progress the diversification of export routes available to the Company through the proposed Benin River tie-in access for barging options and an additional 6 km pipeline to provide access to an alternative terminal.

'We have an active work programme in the second half of the year which includes the re-entry of Ubima- 1 to accelerate the development of this asset, and achieve early production and the re-entry of the Gbetiokun-1.'

Diversification of export routes

Forcados remains shut-in due to sabotage and the Company is awaiting a further update from the Operator as to when it will become operational. To alleviate the Company's single export route option, Eland has identified two supplementary and independent export routes to diversify its crude deliveries:

· A barging option utilising a tie-in point on the Benin river

· A dedicated 6 km pipeline extension directly into a nearby terminal

The Company is making good progress in the delivery of the tie-in point at Benin Riverto allow shipping of oil via ashuttle vessel from the Benin River and then on to an alternateterminal. Barging proposals have been received from a number of vendors and the Company expects to implement the barging of production subject to economics and the timing of Forcados restarting.

The Benin River tie-in will also be used for the injection of additional oil production from the planned Gbetiokun-1well delivered by barge via a short route along the Benin River.

A bid for the pipeline survey has commenced to identify the optimal route for the 6 km pipeline into the nearby terminal directly linked from the OML 40 JV's export pipeline.

On completion the Company will have production security with three evacuation routes for its OML 40 crude oil.

Opuama

Elcrest successfully re-completed the Opuama-3 well in April 2016, achieving a combined initial flow-rate from two separate horizons of over 10,500 bopd and successfully shutting off 1,500 bbls water production confirmed with three separate sequential production tests. The well, which produced materially ahead of expectations, initiated production from the D1000 Upper and D2000 reservoirs for the first time, as well as providing valuable field data for future workover and development activities. The combined production from Opuama Flow Station is expected to reach in excess of 10,000 bopd when re-started and flow rates have been optimised.

Since the Forcados shut down, the Company has used the downtime to perform critical maintenance activity and equipment re-certification at the Opuama flow-station, which have now been completed. This will ensure high equipment uptime once Forcados comes back on line.

In addition, work has been completed to maximise efficiency of our production and reduce operating cost per barrel. Dewatering of Opuama production currently takes place at Forcados at a cost in the region of $2.50 per/bbl. Our full de-watering initiative, in conjunction with the water shut off work completed on Opuama 3 will considerably reduce operating costs and allow production and transport of dry crude.

Ubima

In April 2016, AGR TRACS International Limited ('TRACS') assigned 2P Reserves of 2.4 mmbbl (net: 1.1 mmbbl)to Ubima 1, and 2C Contingent Resources of 31.1 mmbbls (net: 13.1 mmbbls)to the full field development.

Following the publication of the Ubima CPR the Company announced plans to accelerate the development of this asset, and achieve early production with its partner AllGrace Energy by re-entering, completing and producing Ubima-1.

Site clearance and well site preparation is under way utilising local community contractors. Tenders have been issued for well and rig services and a rig has been identified for award of contract. The Company expects to commence re-entering and completing Ubima-1 in second-half 2016 and will be targeting four oil zones to prove up the contingent resources and produce through an early production system.

Production from the Ubima Field will diversify the Eland portfolio, bringing in a secondary cash flow stream while appraising the larger upside on the block, and remains an exciting opportunity for the Company in the second half of 2016.

Gbetiokun-1

In April the Company announced the results ofa Reserves and Resources evaluation on Gbetiokun-1, OML 40, provided by Netherland Sewell as at 31 March 2016 which assigned 2P reserves of 10.8 mmbbls (net: 3.9 mmbls) and oil-in-place estimates for E2000 and E6000 onOML 40 to be 25.9 and 12.8 MMstb respectively, increases of 73% and 45% compared to its previously announced 30 June 2014 evaluation.

The net proceeds of the placing successfully completed in April are in part to be used to fund the re-entry, completion and production of the Gbetiokun-1 well. The Company alongside our partner NPDC have commenced tendering on the procurement process and we are on track to commence operations in H2 2016.

Financial

At 30 June 2016, the Company had a strong un-audited cash position of $20.6 million and is fully funded for its 2016 work programme.

As at 30 June 2016 the position of the RBL Facility through Standard Chartered Bank remains unchanged. Drawdowns to date amount to $15 million and the Company does not intend to make any further drawdowns this year in order to execute it's outlined work programme.

In April 2016 the Company announced that it had successfully undertaken an equity placing which raised gross proceeds of $18.5 million increased from the base size of $15 million owing to strong investor demand. The placing was executed at a price of 34p/share which was a premium to the previous closing mid-market price.

The net proceeds of the Placing will be used:

- to fund the re-entry, completion and production of the Gbetiokun-1 well, an existing discovery within the OML 40 licence and the Ubima-1 well, an existing discovery within the Ubima block;

- to develop a supplementary export route for OML 40 production; and

- for working capital purposes.

In May 2016, the Company made forward sales to its offtake partner, Shell Western Supply and Trading Limited, which has yielded a further $3 million in part to cover any further potential interruptions at the Forcados Terminal.

Management

Olivier Serra joined the board of Eland as an Executive Director and CFO in May 2016 following the departure of Louis Castro.

This announcement may contain inside information

For further information:

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

www.elandoilandgas.com

George Maxwell, CEO

Olivier Serra, CFO

Finlay Thomson, IR

Canaccord Genuity Limited (+44 (0)20 7 523 8000)

Henry Fitzgerald O'Connor

Nilesh Patel

Panmure Gordon (UK) Limited (+44 (0)20 7 886 2500)

Adam James / Atholl Tweedie

Tom Salvesen

Camarco (+44 (0) 203 757 4980)

Billy Clegg / Georgia Mann

Notes to editors:

Eland Oil & Gas is an AIM-listed independent oil and gas company focused on production and development in West Africa, particularly the highly prolific Niger Delta region of Nigeria.

Through its joint venture company Elcrest, Eland's core asset is OML 40 located in the Northwest Niger Delta approximately 75km northwest of Warri and covers an area of 498km². In addition, the Company has a 40% interest in the Ubima Field, onshore Niger Delta, in the northern part of Rivers State and has been carved out of OML 17.The Company's strategy is to sharply grow its production base through low cost operations and well re-entries. Since November 2015, the Company has delivered a three-fold increase to its production base from the Opuama field in OML 40 through a number of lower-cost workovers and the field most recently produced at over 4,400 bopd (exit 2015). The Company's current export route is via the Forcados terminal and is currently working on adding two supplementary evacuation routes to diversify its crude deliveries

The OML 40 licence area holds gross 2P reserves of 83.2 mmbbls, gross 2C contingent resources of 41.2 mmbbls and a best estimate of 254.5 mmbbls of gross unrisked prospective resources. The Ubima field holds gross 2P reserves of 2.4 mmbbl of oil and gross 2C resource estimates of 31.1 mmbbl.