Eland Oil & Gas PLC on Thursday in a new report on its OML 40 and Ubima licences announced an increase in the proved reserves and in Eland’s net present value.
The oil and gas production and development firm, also said the borrowing base of its loan has been increased to USD134 million from USD103 million.
Gross reserves at OML 40, following the gross production of 6.5 million barrels of oil in 2018, was 42.9 million barrels, up 8 per cent from the end of 2017.
The proved plus probable gross reserves fell 1 per cent to 8.2 million barrels and proved plus probable plus possible gross reserves fell 1 per cent to 116.8 million barrels.
Eland’s net entitlement present value, at a 10 per cent discount rate and with a flat price deck of USD71.16 per barrel is USD473.9 million proved, up 68 per cent.
The net entitlement is based on treating Eland’s funding of its joint venture partner’s share in the licence as a carried working interest, which gives Eland a participating interest of 45 per cent before its payout of loans and 20 per cent after payout.
Its net entitlement proved plus probable is USD568.9 million, up 36 per cent year-on-year, and its proved plus probable plus possible net entitlement is USD620.7 million million, up 28 per cent.These figures also assume a 10 per cent discount rate and USD71.16 per barrel flat price deck.
At the Ubima licence, in which Eland’s interest is 40 per cent, the prove gross reserve is now 6.2 million barrels, more than six times the year-ago figure. The proved plus probable gross reserve is now 9.3 million barrels, more than two and a half times the previous estimate, and the proved plus probable plus possible reserve is now 13.1 million barrels, nearly three time the previous estimate.
Eland’s proved net entitlement, again at a 10 per cent discount rate and USD71.16 per barrel, is USD17.2 million, more than six and a half times the previous figure. Proved plus probable is USD31.4 million, twice what it was, and proved plus probable plus possible is USD39.7 million or more than one and a half times the previous entitlement estimate.
Eland Chief Executive George Maxwell said: “We have always believed that OML 40 had significantly more to offer than simply the Opuama and Gbetiokun fields. We will be drilling our first near field exploration well on the licence later this year with the Amobe prospect, followed next year by appraisal drilling on Abiala. These two wells have the potential to more than double the licence’s current [proved plus probable] reserves base. At Ubima, I look forward to the initial phase of development for this field in 2019 following the fourfold increase in reserves estimates.
“I am delighted that the CPRs ascribes a value for Eland’s share of [proved plus probable] reserves in OML 40 and Ubima of approximately USD600 million, suggesting there is still material potential upside within the company”.
In November, Eland refinanced its existing reserve-based lending facility with a new five-year syndicated reserve-based lending facility that has an option to increase the loan to up to USD200 million via an accordion.
Then, on Thursday, the company announced that, following a redetermination, the borrowing base amount has risen to USD134 million from USD103 million with an initial accordion increase of USD50 million being underwritten by the Standard Bank of South Africa Ltd and IBTC Bank PLC.
As such, the commitments under the facility have risen to USD125 million from USD75 million, of which USD50 million is already drawn.
“Since refinancing the [reserve-based lending facility] in 2018 into a longer-term facility we have the flexibility to diversify the capital structure of the company leveraging our position comfortably within our debt parameters and lowering the overall cost of capital,” said Eland Chief Financial Officer Ron Bain.