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Nigeria: Eland Oil & Gas announces placing to raise £118 million - completes acquisition of OML 40, Nigeria

03 Sep 2012

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Eland Oil & Gas, an oil & gas exploration company operating in West Africa, with an initial focus on Nigeria, has announced the completion by its Nigerian joint venture company Elcrest, of the purchase of licence OML 40 and the placing of new ordinary shares in the capital of the Company with investors to raise gross proceeds of £118 million. Eland is also pleased to announce the admission of all of its ordinary share capital (including the Placing Shares) to trading on the AIM market of the London Stock Exchange at 08.00 today, symbol ELA.

Key point summary

  • Placing price 100 pence per Placing Share.
  • Gross proceeds of the Placing are approx. £118 million and the net proceeds are approx. £106.8 million.
  • The expected market capitalisation upon Admission based on the Placing Price is approx. £134.9 million.
  • The Placing Shares represent approx. 87.5 per cent of the total issued ordinary share capital of the Company at Admission.
  • Eland has also secured a facility of $22 million with Standard Chartered Bank (the "Facility Agreement") and equity option agreements with two key investors of £10 million each.
  • The net proceeds of the Placing together with other available financing will be applied to pay the outstanding balance for the acquisition of OML 40, increase Eland's economic interest in OML 40, re-commission existing infrastructure and restart production and provide working capital for the current 2P development of OML 40.
  • Given Eland's focus on Nigeria and the importance of alignment with the Nigerian Government's indigenisation programme, Eland established with a Nigerian partner, a joint venture company, Elcrest, in which Eland currently has a 45% equity interest and has agreed to acquire a further 4% within 30 days of completion.
  • On 31st August 2012, Elcrest completed the purchase of a 45 per cent interest in OML 40 jointly from Shell Petroleum Development Company of Nigeria Ltd ("SPDC"), Total E&P Nigeria Ltd and Nigerian Agip Oil Company Ltd, for a total consideration of US$154 million, of which US$15.4 million had been previously paid on signing the acquisition agreement as a deposit with US$138.6 million now being paid as the balance. The remaining 55 per cent interest is held by the Nigerian Petroleum Development Company (NPDC).
  • OML 40, located onshore Nigeria within the prolific Niger Delta, represents an asset with production and exploration potential and with independently certified gross recoverable 2P Reserves of 71.5 million barrels, 3P Reserves of 117 million barrels in the Opuama and Gbetiokun Fields and Mean Contingent Resources of a further 16.7 million barrels in the Abiala and Ugbo Fields. All fields contain light "sweet" oil.
  • In addition, there is an exciting identified exploration portfolio of Gross Prospective Resources of 356 million barrels of oil based on 3D seismic within the 498 sq km. of OML 40.
  • Production from existing wells will be restarted at an expected initial gross rate of at least 2,500 bopd within six months of Admission.
  • It is planned to drill two exploration wells targeting 113 million barrels of oil in 2013.
  • Production will increase through development, appraisal and exploration drilling to reach a target gross production of 50,000 bopd within four years.
  • Eland will seek to acquire and develop underexploited upstream assets in Nigeria.
  • Admission of the ordinary shares to AIM and commencement of dealings under the symbol "ELA", are to take place on 03 September 2012.
  • Canaccord Genuity Limited acts as nominated adviser and broker to Eland.

Les Blair, CEO of Eland Oil & Gas, commented today,

'I am extremely grateful to the shareholders of the Company who have supported us to complete this milestone transaction. The fundraising of £118 million is the largest on an AIM IPO for over three years and highlights the exciting prospects for OML 40 and Nigeria as a whole.

'Together with our partner Starcrest, we will now work in close coordination with Nigerian Petroleum Development Company (NPDC), the oil and gas exploration and production subsidiary of the Nigerian National Petroleum Corporation ("NNPC"), which holds a 55% interest in OML 40, towards the full redevelopment of OML 40 including recommissioning of the existing facilities infrastructure to restart production and then the full development of the licence.

'I look forward to updating shareholders and the market as we progress our work programme which is designed to rapidly monetise this asset for the benefit of both our shareholders, the communities within the licence area and all other stakeholders'.

Click here for Eland Oil & Gas Admission Document

Source: Eland Oil & Gas

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