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Eland Oil resumes production on Nigeria’s Opuama Field

By Businessnews Staff on September 10, 2014

Eland Oil and Gas Plc, the oil and gas exploration and development company with a focus on Nigeria and West Africa, has resumed production on the Opuama field in Oil Mining Lease (OML) 40, after a number of production interruptions, including a prolonged shutdown of the Forcados Export Terminal and pipeline ruptures due to corrosion and illegal bunkering.

The company had resumed production on the field in February 2014, exactly seven years after Shell Petroleum Development Company (SPDC) undertook a controlled shut down of its oil and gas facilities, including OML 40, due to militant attacks on oil workers and infrastructure in the Niger Delta.

The Opuama field production stabilised at an average rate of over 3,500 barrels of oil equivalent per day (bopd) before it was shut down due to a number of production interruptions.
But the company said at the weekend that production had again recommenced, with gross production stabilising at an average rate of over 3,500 bopd.
The company also stated that Elcrest Exploration and Production Nigeria Limited, its joint venture company, had received payment for its August lifting from Shell Western Supply & Trading Limited.

According to the company, Elcrest has now sold and received funds for a total of 46,022 bbls of crude to date.

The statement added that Elcrest’s next lifting is expected to take place in this early September and is due to be a cargo of circa. 38,000 bbls of crude oil.

The resumption of production on Opuama field by Eland came barely three weeks after the company announced that Wester Ord Oil & Gas Limited, its wholly owned subsidiary, had agreed to acquire a 40 per cent participating interest in the Ubima Field from Allgrace Energy Limited (the Farmor).

The Ubima oil field, which lies onshore in the northern part of Rivers State, was carved out of Oil Mining Lease (OML) 17 held by Nigerian National Petroleum Corporation, SPDC, Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited.
Ubima has 3-Dimensional seismic coverage and four wells have been drilled in the field between the 1960s and 1981 with hydrocarbons being encountered in all four wells in multiple stacked reservoirs.

The Ubima 1 well was suspended and identified for completion and production by the previous operator, but this programme was not executed.

Wester Ord is planning to re-enter this well and perform an extended production test, and oil produced will then be trucked to the nearest sales point prior to the Ubima export pipeline being in place.

The company believes that subsequently an initial four development wells can be drilled and put into production nine to 12 months from commencement of the full work programme.
The full work programme is estimated to require development capital expenditure of $125 million, and a proportion of this is anticipated to be met from early cashflows from the extended production test

Wester Ord entered into a farm-in agreement with the Farmor for a 40per cent interest and as consideration for the assignment, will pay a signature bonus of $7 million to the Farmor and, contingent on production and receipt of ministerial consent to the transfer of the participating interest, a production bonus of $3 million.

Wester Ord also entered into a separate commercial agreement to fund the initial work programme.

The terms of this agreement entitle Wester Ord to 88 per cent of production cash flow from Ubima until the costs have been recovered.

The company will guarantee the obligations of Wester Ord under the farm-in agreement and the signature bonus will be paid from existing cash resources.

[This Day]

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