Eland Oil & Gas PLC (LON:ELA) said that drilling on the third appraisal well on the Gbetiokun field in Nigeria has successfully encountered hydrocarbon-bearing sands and added that operations will continue down to the remaining target reservoir.
The AIM-listed oil & gas production and development company operating in West Africa said that following completion of operations on Gbetiokun-1, the OES Teamwork rig commenced operations on the Gbetiokun-3 appraisal well on the 20 November 2018.
The group said the operations, conducted via its joint-venture subsidiary Elcrest Exploration and Production Nigeria Ltd., now expects to see the completion of Gbetiokun-3 in January.
Once completed, it added, production testing of the Gbetiokun-1 and Gbetiokun-3 wells will be conducted using an early production system (EPS) with initial gross combined production estimated to be approximately 15,000 barrels of oil per day - 6,750 net to Elcrest.
Start-up of the EPS is expected to be in the first quarter of 2019, the company said.
George Maxwell, Eland’s CEO commented: "Gbetiokun has the potential to deliver a 50% increase in oil production from OML 40”.
In a note to clients, analysts at SPAngel commented: “The update from the Company regarding the forward plan for the testing and early production testing … provides a positive start for 2019, and looks set to deliver on the Company’s promise.
“While the journey to this point hasn’t been simple or straightforward, this finally appears to be behind them.”
But reflecting the dull market conditions on Christmas Eve, Eland O&G shares still shed 0.5% at 102p.
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