Eland looks to increase borrowing after adding to interests in Africa

OIL and gas explorer Eland is in advanced talks with lenders to take on more debt after buying a stake in an onshore field in Africa.

An existing $22 million (£13.2m) facility with Standard Chartered remains undrawn, but Eland said it wants to “significantly increase” its borrowing capacity by entering into a new lending agreement.

The Aberdeen-based firm, which focuses on Nigeria and West Africa, said the purchase of a 40 per cent interest in the Ubima field in the Niger Delta was a “very attractive and accretive deal”.

Chief executive Les Blair believes the field could contain up to 66.9 million barrels of oil.

”The acquisition of Ubima is a very attractive and accretive deal for Eland on very positive terms,” he said. “As the technical and financial partner, we will be able to lead the development and move quickly to bring these assets into early production generating strong cashflow for the benefit of all stakeholders.”

Eland also revealed that its losses after tax widened to $12m for the six months to from $11m a year ago.

The company was cheered earlier this year when first oil started flowing from its Opuama field in Nigeria, where production is averaging 3,500 barrels a day, and Blair said the benefits of stable output “cannot be overemphasised”.

It had experienced delays in restarting a field that had stopped production seven years ago under previous owners following security concerns. The oil Eland is now extracting from the field is providing valuable cash flow to fund future activity.

30 June,