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magazineEland update reinforces expectations for big production growth in 2019
Eland Oil & Gas (ELA:AIM) 124p
Gain to date: 17.5%
Original entry point: Buy at 105.5p, 10 January 2019
Our positive call on Eland Oil & Gas (ELA:AIM) in last week’s issue is already off to a strong start with an operational update (15 Jan) reinforcing our confidence in the company.
Production guidance for 2019 is between 14,000 and 17,000 barrels of oil equivalent per day, so likely to be at least double the average output achieved in 2018.
The majority of this output will come from its flagship OML 40 licence but the company also expects a modest contribution from its Ubima field, thereby providing some diversification in its production.
The company reported a year-end net debt position of $4.7m but adds that post year-end it has received $20m from Nigerian state oil firm NPDC for its share of costs on two recent development wells.
Capital expenditure in 2019 is expected to be $80m to $90m and the company has committed to drilling its first exploration well on the Amobe prospect at the end of the second quarter, quoting potential resources of 78m barrels with a 42% probability of success.
Broker Cantor Fitzgerald comments: ‘(2018 was) a transformational year for Eland, which saw a step-change in production from Opuama and the diversification of its producing asset base. 2019 is shaping up to provide more of the same, with the first exploration well in the company’s history and commercial production from Ubima
in the near-term.’
Shares says: Keep buying.
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