ELAND Oil & Gas has announced a big increase in the estimated value of its reserves in Nigeria, which reflects the benefit of a tax break the company will enjoy.
Aberdeen-based Eland Oil & Gas said the estimated value of its share of oil and gas on the OML 40 licence, on the industry measure of proved and probable (2P) reserves, increased to $679 million (£420m) at June 30 from $445m a year earlier.
The estimates were prepared by the oil and gas consultancy Netherland, Sewell & Associates.
The increase in the valuation reflects the fact Eland received confirmation from the Nigerian authorities in May that production from the licence will be exempt from petroleum profits tax until April, 2019.
The estimate was prepared using a $100 per barrel price for Brent crude adjusted for a regional premium.
Netherland, Sewell & Associates cut its estimate of Eland's share of the volume of 2P reserves on OML 40 to 20.2m barrels at June 30, 2014, compared with 23.5m barrels at June 30, 2013.
However, Eland's chief executive George Maxwell noted the consultancy increased its upper estimate of the oil and gas that may lie in prospects on OML 40 by 224 per cent to 772m barrels, from around 238m barrels.
The change reflects additional information collected by Eland.
"The increase ... confirms our belief that OML 40 truly represents a portfolio within a single licence," said Mr Maxwell.
Aim-listed Eland is facing complications in its efforts to maximise production in Nigeria.
The company said it expects to start drilling development wells on Opuama in the first quarter of 2015, rather than the last quarter of 2014 previously.
It said the change reflected an ongoing review of operations and some consequential changes to Eland's work programme and delays in dredging.
Eland started production from the Opuama field in February but has suffered disruptions caused by factors including theft of crude.
Opuama had been shut in by Royal Dutch Shell in 2006 amid security concerns.
The field is producing 3,500 barrels per day currently.
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