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Eland slips on Nigerian oil spill

Illegal bunkering, pipeline ruptures and the prolonged shutdown of an oil-shipping terminal in Nigeria have all hampered production at Eland Oil & Gas

No one said it would be easy. But investors who gave Eland Oil & Gas (ELA) over £130m to put Shell's old Opuama oil field in Nigeria back into production must have hoped for a smoother ride than this.

IC TIP: Sell at 90p

In February, Eland finally restarted production after re-commissioning an ageing pipeline and re-opening two existing wells - nearly a year behind schedule. But no sooner had it done so, Shell was forced to shut down the oil-shipping terminal used by Eland, halting production. Then there were pipeline ruptures due to corrosion. Now, Eland's management say they've found an "illegal bunkering" point, which is currently being removed; they expect production to resume "in the very near term".

And in a surprise announcement alongside its financial results, Eland said it had agreed to acquire a 40 per cent interest in another onshore field in the Niger Delta. It must pay a signing bonus of $7m (£4m), as well as spend up to $125m to fully develop the field, in exchange for receiving 88 per cent of production cash flows until the capex is recovered. But Eland had just $21.6m in the bank as of early August.

Analysts at broker Davy forecast full-year pre-tax profits of $8m, giving EPS of 8.6¢, rising to $79m and 34.3¢ in 2015.

ELAND OIL & GAS (ELA)

ORD PRICE:90pMARKET VALUE:£127m
TOUCH:90-91p12-MONTH HIGH:131pLOW: 86p
DIVIDEND YIELD:nilPE RATIO:75
NET ASSET VALUE:165¢NET CASH:$19.7m

Half-year to 30 JunTurnover ($m)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
2013 (restated)nil-11.00.0nil
20140.1-11.91.0nil
% change----

£1=$1.67