North-east oil explorer Eland Oil and Gas said yesterday it planned with a partner to invest nearly £80million in an African field this year.
The Westhill firm said that they would spend £78million to restart production and drill new wells at its Nigerian onshore development.
It comes after Eland bought a stake in an oil block in the Niger Delta alongside joint-venture partner Starcrest for £97million.
The pair have formed Elcrest, which now has a 45% share in the oil mining lease (OML) 40 licence following an auction by Shell, Total and Agip. The remaining stake is held by Nigerian state oil company NPDC.
Eland – which raised £118million through its float on the Alternative Investment Market (Aim) last year – said it expected to resume output at OML 40 before the end of March and start drilling further wells at the start of the third quarter.
Chief executive Les Blair said: “I am pleased with the progress made during the four months since we joined Aim and acquired our interest in OML 40. With the budget and work programme now approved and finance in place, we can quickly progress the remedial and infrastructure work necessary to restart production.”
Eland is targeting an initial flow rate of 2,500 barrels of oil per day (bpd), but has set its sights on 50,000bpd within four years.
OML 40 was originally licensed by Shell in 1964, and it started production in 1975 at an initial 12,000bpd. The oil giant shut in the facility in 2006.
Eland is led by experienced north-east businessmen Mr Blair and chief financial officer George Maxwell. The pair both worked for Addax Petroleum, a Canada-listed exploration and production company with assets in Nigeria, before it was bought by Chinese firm Sinopec for £4.4billion in 2009. Eland’s shares closed up 1.1% at 120.5p yesterday. They were placed at 100p in September.