Eland Oil to List After Buying Nigeria Block

03.09.2012 -

West Africa-focused energy firm Eland Oil and Gas will float on London's junior stock market on Monday with a market value of 135 million pounds ($214 million) after completing the purchase of a stake in a Nigerian oil block, it told Reuters on Saturday.

Eland Oil Chief Executive Les Blair said the company, in partnership with Nigerian oil firm Starcrest, bought a 45 percent stake in block OML 40 owned jointly by Shell, Total and Eni for $154 million.

Blair said the block had 71.5 million barrels of proven oil reserves and it planned to be producing 2,500 barrels per day within 6 months.

Eland will list on London's AIM market at 100 pence per share on Monday, raising 118 million pounds ($187 million), Blair added.

Nigeria's state oil company, the Nigerian National Petroleum Corp (NNPC), owns the other 55% of the block and its subsidiary NPDC will take over the operating rights from Shell, Blair said.

"We are very pleased this deal has been completed and we look forward to working closely with NPDC on this lease, which has production and exploration potential," Blair said by phone.

Shell said last year the sale of OML 40 had been agreed but Eland had to go through months of negotiations with the Nigerian government, partly over who would operate production, before the deal was finally signed off on Friday.

The Anglo-Dutch oil major is selling several of its smaller assets in the onshore Niger Delta as it rejigs its operation in Nigeria to focus on major projects and deep offshore blocks.

Shell's onshore facilities are plagued with problems such as militancy and rampant oil theft, although the firm says such problems have not influenced its divestment plans.

The company said in June it was seeking buyers for OMLs 30, 34 and 40. Eland could be a potential bidder for the other assets as well.

"We're very interested in acquiring other assets IOCs (international oil companies) may be looking to rationalise," Blair said.

Foreign company's bidding for onshore assets need to partner with local firms because of the Nigerian government's policy of boosting local participation in the oil industry.

NNPC wants to increase the amount of oil it operates as partner in projects, although critics say the company lacks the funds to invest sufficiently in its own assets.