Eland eyes low-cost boost to production

ABERDEEN-based Eland Oil & Gas has said an expert study has underlined the potential of its acreage in Nigeria.

The Aim-listed company said the analysis by Netherland, Sewell & Associates indicated the company will be able to produce around 22 million barrels more than expected from four existing wells on the OML 40 licence onshore.

The increase indicates that efforts to increase production by improving the performance of wells that were in place when Eland acquired its interest in the licence have reduced the need to drill more wells

The research suggests the company could produce 22.6 million barrels more from the four wells than the 10.9mm expected when the last study was completed. The additional reserves could be worth $187 million in present value terms.

Chief executive George Maxwell noted: “The level of capex investment required to produce this incremental volume is less than a dollar fifty per barrel.”

The money generated following the work on the four wells should put the company in a strong position to develop other assets in Nigeria.

On Monday Eland said Standard Chartered Bank had agreed to provide a $24 million (£18.75m) borrowing facility to support investment in Nigeria after completing a review which took account of the firm’s performance in the country. LATEST statistics from the Scottish Government estimate that average farm incomes have decreased by 48 per cent in the last year alone, leaving farming families a return of £12,600.

The downward slide in farm incomes since a peak in 2010/11 has seen a devastating 75 per cent fall over five years.

Scottish Government states when converting farm income estimates to hourly income for unpaid labour – such as farm owners, family members and business partners – the income generated from almost two-thirds of farm businesses wouldn’t have been enough to meet the legal minimum agricultural wage for paid workers.

The figures, released yesterday by Scotland’s chief statistician, examine a number of financial indicators for the accounting period 2015-2016, which focuses on the 2015 crop year. The results are based on annual audits of 500 commercial farms in Scotland.

There was less spending on inputs in 2015-16 compared to the previous year, however there was a bigger decrease in crop and livestock production on average for all farm types.

This, combined with a reduction in grants and subsidy payments, and less favourable market prices, especially for dairy farms, created a downward pressure on profitability from agriculture.

The Basic Payment Scheme replaced the Single Farm Payment Scheme in 2015 as the method of allocating funding through direct payments. The average value of all grants and subsidies in 2015-16 was £38,100, a fall of six per cent on the previous year.

General cropping farms had the highest Farm Business Income (FBI) in 2015-16, at £24,000.

However this was still an 11 per cent decrease on the previous year. Between 201415 and 2015-16 all eight farm types experienced a decrease in overall FBI.

Dairy farms had the largest decrease with average FBI down 97 per cent.

This was largely due to the drop in milk prices over the last year from an average of 30p per litre in 2014-15 to 21p in 2015-16.

Mixed farms had the second largest percentage decrease in average FBI, down 81 per cent. United Auctions sold 1180 store heifers at Stirling on Wednesday to a top of 290.8p per kg to average 229.1p (-1.1p on the week), while 1370 store, beef-bred bullocks peaked at 307.4p and levelled at 240.7p (+5.3p).

Seventy-four store, B&W bullocks sold to 172.1p and averaged 158.1p (no change), while 12 store bulls peaked at 265.5p and levelled at 241.7p (no comparison).

C&D Auction Marts Ltd sold five prime heifers in Dumfries to a top of 228p and an average of 195.9p, while a couple of prime bulls peaked at 156p and levelled at 143.3p.

In the rough ring 16 beef cows averaged 132p and 55 dairy cows levelled at 114.3p.

The firm also sold 469 prime hoggs to a top of £90 per head and 198p per kg to average 178p (-4p).

A nice show of 171 cast sheep saw heavy ewes sell to £112.50 for Texels and average £82.21, while light ewes peaked at £74.50 for Blackfaces and levelled at £48.25.

Messrs Craig Wilson Ltd sold 849 prime hoggs in Newton Stewart on Wednesday to a top of £87 and 194.1p to average 167.5p (-7.8p), while 41 prime lambs peaked at £100 and 225p to level at £93 and 205.4p (no comparison).