The Nigerian oil firm is adapting its operations, moving crude with river barges to overcome pipeline disruptions, and Peel Hunt analyst Werner Riding highlights that oil sales may now begin this month.
“Pioneer Tax status means no tax is payable until May 2019, and increased production is therefore highly cash generative,” Riding said in a note.
“Cash flow should support increased borrowing base on reserves based lending (currently US$25.4mln), fund development of wider portfolio, and potentially enable inorganic growth.”
Peel Hunt has a ‘buy’ recommendation and a 95p price target for Eland.
Elsewhere, Werner Riding highlights that North Sea focussed Serica Energy benefits from stable production cash flows from the Erskine filed, and he says that prospective new ventures and organic growth opportunities “will help Serica continue its growth trajectory”.
“Interim results showed that strong deliverability in Q1 and a high flush production rate follow re-start in August has reduced the impact on our now lower full-year production expectations (1,500 boepd for 2016),” the analyst said.
“Efforts remain focussed on maximising Erskine production uptime and cash generation as well as progressing other value accretic growth opportunities.” The broker rates Serica as a ‘buy’ with a 25p price target (currently 16p).