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Opuama-3 production test completion and operations update

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Oilfield Technology,

Eland Oil & Gas PLC (AIM: ELA) has announced that the company has fully tested the Opuama-3 well, which was worked over in April this year, and also provides an operational update.

The Opuama-3 well has been flow tested at several choke sizes to establish the maximum efficiency rate for production. Opuama-3 is a dual-completion well with the Long String accessing the D1000 reservoir and the Short String accessing the D2000 reservoir. The Long String tested at 5955 bpd on a 48/64 in. choke and the Short String tested at 5067 bpd on a 48/64 in. choke, giving a combined rate of about 11 000 bpd. No water was produced from either string during the tests.

This Opuama-3 production rate, when combined with the production from Opuama-1, increases initial anticipated OML 40 gross output to circa. 14 500 bpd.

As previously announced, OML 40 has not been in production as a result of interruptions to third party export facilities. Despite all parties working towards a period of stable production, interruptions have continued. In light of the ongoing uncertainty, it is intended that the Company will now accelerate its plans for the implementation of crude export through shipping and continue working towards the development of an additional permanent alternative export solution.

Shipping the crude as an alternative to pipelines is a well established route to monetisation in Nigeria and the company's plans are already well advanced for this option which is expected to commence by January. The company is in discussion with its partner NPDC to accelerate work on a permanent alternative export solution in advance of the material increase in production that is expected from the side-tracking of Opuama-7 and the re-entry and completion of Gbetiokun-1. The company does not anticipate commencing these workovers until production can be regularised to the export terminals and the Company will provide an update on timing of the work programme following recommencement and stabilisation of production from Opuama. However, the company has alternative production options within our Ubima Field and will review opportunities to accelerate this development.

Although the Forcados terminal remains under force majeure, Elcrest Exploration and Production Nigeria Ltd, Eland's joint venture company, completed a crude oil sale of 45,000 barrels from Forcados terminal in October. In addition to the production from the recent Opuama-3 well test of 33 900 bbls, the 6000 bbls of stored crude from the Opuama-3 production test in April 2016 has also been injected into the OML 40 export line for future liftings.

George Maxwell, CEO of Eland, commented:

"Developing opportunities in Nigeria can contain a number of challenges but the rewards more than compensate for these periodic production delays. We have demonstrated the phenomenal sub-surface characteristics of OML 40, with the work-over on OP3 cost of US$2.3million and has resulted in the tested initial flow rates of 11 000 bpd. We have clearly demonstrated the advantages of our input into the planning and delivery of the work programme on OML40 and we look forward to working with all stakeholders, both at a local, community and government level to fully exploit the opportunities contained within this license. In addition we have the opportunity to diversify our investment towards Ubima, which also can provide low cost production, producing through an alternative evacuation route."

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