Final Results for the Year Ended 31 December 2018

Source Press Release
Company Eland Oil & Gas PLC 
Tags Production/Development, Upstream Activities, Guidance, Financial & Operating Data
Date March 20, 2019

George Maxwell, CEO of Eland, commented:

"2018 was a ground-breaking year for Eland. Record oil production, revenues and profits, and confirmation of a 20-year extension to the OML 40 licence allows us to continue our investment in this world-class asset.

As well as our continuing investment in the Opuama oil field, in 2018 we accelerated the development of the Gbetiokun and Ubima oil fields, both of which are expected to contribute to a material increase in production and cash flow in 2019.

This progress would not be possible without the ongoing hard work and dedication of our staff, our partners, and the support of NPDC."

2018 Highlights

·      Average production in 2018 was 8,000 barrels of oil per day ('bopd') net to Elcrest, more than doubling the 2017 average production of 3,934 bopd.*

·      2018 exit production rate of 13,240 bopd net to Elcrest (29,425 bopd gross), a record exit production rate for OML 40 and Eland. Peak record production of 13,986 bopd net to Elcrest (31,081 bopd gross).

·      Formal renewal of the 20-year OML 40 licence, allowing the Joint Venture to continue its significant investment into the OML 40 work programme.

·      Ubima field tested at rates of up to 2,200** bopd net to Eland (2,500 bopd gross), with commercial production commencing in H1 2019.

·      The first phase of Gbetiokun development commenced in H2 2018 with the recompletion of the Gbetiokun-1 well and the drilling of the Gbetiokun-3 infill well.

·      The most active development period in the Company's history, running two rigs and drilling continuously throughout 2018 with seven wells drilled, re-entered or completed on the Opuama, Gbetiokun and Ubima fields.

·      Lease Automatic Custody Transfer ('LACT') unit commissioned in 2018, reducing hydrocarbon allocation losses from the crude oil delivered from OML 40.

·      Total Recordable Injury Frequency Rate of 0.2

·      One million man-hours with no Lost Time Injury

Financial

·      Record 2018 revenues net to Eland of $169.2 million.

·      Maiden annual profit before tax $77.6 million.

·      Transformation in cash generation with EBITDA at $104.0 million equating to $40 per barrel.***

·      Successfully refinanced its existing reserve-based lending facility ('RBL') with a new $75m facility which has the potential to increase to $200m (subject to production growth and reserves). In March 2019 the facility increased to $125m through further syndication, based on a redetermined borrowing base of $134m.

·      Year-end cash position of $43.1m and net debt position of $4.3m.

·      Post year end NPDC reimbursed the Company $19.3m for drilling costs on Opuama-8 and Opuama-9.

Post-period end activities

·      Testing of the Gbetiokun wells is ongoing and whilst the testing program is not yet completed some encouraging preliminary outcomes are available.

·      The Gbetiokun-1 Short String, completed on the E2000 reservoir, successfully flowed at stable rates up to 4,000 bopd gross (1,800 bopd net to Elcrest) on a 32/64" choke. This performance is fully in line with the pre-completion predictions.

·      Similarly, the Gbetiokun-3 Long String, completed on the E4000 reservoir, successfully flowed at stable rates up to 3,000 bopd gross (1,350 bopd net to Elcrest) on a 36/64" choke. Again, this performance is fully in line with the pre-completion predictions.

·      Testing continues on the Gbetiokun-1 Long String and the Gbetiokun-3 Short String. The Gbetiokun-1 Long String, completed on the E6000 reservoir, whilst demonstrating good rate potential in line with expectations, was complicated by mechanical issues related to poor cementing of the original casing prior to Elcrest's entry into the OML40 licence.  Testing of the Gbetiokun-3 Short String was delayed as no satisfactory pressure integrity test could be obtained on the completion. Determination of appropriate remedial activities is underway and it is anticipated that these strings should be available for testing during Q2 2019 and based on current results they are anticipated to perform in line with previous expectations.

·      The combination of Gbetiokun-1 Short String and Gbetiokun-3 Long String will be monetised once the Early Production Facility (EPF) is installed in April and it is expected that the initial rates will be higher than the recent test rates as they will be flowed with a less restrictive choke.

·      Drilling of the next phase of Gbetiokun development wells is scheduled immediately after the OES rig returns from its current maintenance/upgrade program which will quickly provide further production potential for the EPF facility which will have a nominal capacity of 25,000 bopd gross.

Outlook

·      2019 production is expected to average in the range of 14,000 to 17,000 bopd net to Eland (post 15% budgeted downtime)

·      Ongoing production from Opuama field to be augmented by Gbetiokun and Ubima start-ups

·      2019 active development work programme targeting four new wells across Opuama -12 and -13 and Gbetiokun -4 and -5

·      Amobe exploration prospect, the Company's first near-field exploration well, expected to spud in H2 2019, targeting best case gross resources of 78 mmbbls, with a 42% probability of success****

·      2019 capex guidance of $80-90 million net to Eland

·      The Company has advised of its Capital Return and Dividend Policy

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd