London-listed Eland has completed a $10 million farm-in agreement for 40% of the onshore Ubima oil and gas field in Rivers State, Nigeria
London, United Kingdom | – West Africa-focused independent oil and gas companyEland Oil & Gas reported Friday that its subsidiary, Wester Ord Oil & Gas, has agreed to buy a 40-percent participating interest in Nigeria’s Ubima field from Allgrace Energy Limited.
Ubima lies onshore in the northern part of Rivers State, adjacent to Oil Mining Lease 17. Four wells were drilled on the field between the 1960s and 1981, with hydrocarbons being encountered in all four wells in multiple, stacked reservoirs. Eland said that the most-recent independent 2C resources estimate for Ubima is 34 million barrels of oil, with “significant upside” in a 3C resource estimate of 66.9 million barrels as well as an extra 2C resource estimate of 97 billion cubic feet of non-associated gas in two reservoirs.
The Ubima 1 well was suspended and identified for completion and production by the previous operator, but this program was not executed and Wester Ord is planning to re-enter this well and perform an extended production test, oil produced will then be trucked to the nearest sales point prior to the Ubima export pipeline being in place.
Eland believes that subsequently an initial four development wells can be drilled and put into production 9 to 12 months from commencement of the full work program. The full work program is estimated to require development capital expenditure of $125 million, however a proportion of this is anticipated to be met from early cash flows from the extended production test, the firm added.
Eland CEO Leslie Blair commented in a company statement: “The acquisition of Ubima is a very attractive and accretive deal for Eland on very positive terms. As the technical and financial partner we will be able to lead the development and move quickly to bring these assets into early production generating strong cash flow for the benefit of all stakeholders.”