UK-based Eland Oil & Gas PLC (ELA.L) is an independent oil and gas company focused on building and developing a portfolio of producing upstream oil and gas assets in West Africa, primarily in the Niger Delta region of Nigeria. Its core assets are the OML 40 license and the Ubima field, both onshore Nigeria. The OML 40 license is situated within the Niger Delta, approximately 75 kilometers northwest of Warri and covers an area of over 500 square kilometers. The environment in OML 40 consists of shoreline and coastal mangrove swamps. The OML 40 license includes Opuama, Gbetiokun, Polobo, Abiala and Amobe. Primary gross contingent resources in the OML 40 license amounts to 41.2 million barrels (mmbbl). The Ubima Field covers an area of approximately 70 square kilometers and is located onshore in the northern part of Rivers State.
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On January 17th 2018, Eland reported that its joint-venture subsidiary Elcrest Exploration and Production Nigeria Ltd had successfully drilled and completed the Opuama-8 well. The Opuama-8 well has been handed over to the Opuama field production team and the well will flow test into the production facilities and on to export. Production performance from the Opuama field is strong, with gross production from Opuama-1, -3 and -7 wells being approximately 18,000bopd. CEO George Maxwell, commented: “We are pleased with the successful drilling and completion of the Opuama-8 well and we look forward to confirming stabilised production rates in due course. The success of Opuama-8 will result in increased production and cash generation from OML 40. Our drilling programme will continue beyond Opuama-9, where our continued investment will further enhance both production and cash flow levels.” At the interim results on September 26th 2018 George Maxwell said, “The outlook for the remainder of 2017 and beyond is very positive”.
VectorVest first published an article on ELA in May 2017 when the stock traded at 65p. The Opuama development took a while to move to production, but the stock recently hit and passed our May target of 81p. Today, the stock continues to score highly across all key VectorVest metrics, with the VST-Vector, (master indicator for ranking every stock in the VectorVest database) logging ELA today at 1.35, which is very good on a scale of 0.00 to 2.00. And with an excellent RT (Relative Timing) rating of 1.46, (scale of 0.00 to 2.00), VectorVest now values the stock at 108p, offering significant upside from the current 85p.
The chart of ELA.L is shown below with the green line study above the price reflecting the VectorVest calculated valuation of the company. The share is trending higher and is on a Buy recommendation on the VectorVest program. Earnings per share is shown by the blue line study in the window below the price and is growing strongly over the past year.
Summary: ELA is another growth company that highlights the solid track record of the VectorVest stock analysis and portfolio management system. With the Opuama field resulting in increased production and cash generation, the timing is right to once again buy into this quality oil and gas play.
February 6th 2018
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