On most financial and operational metrics, momentum appears to be with Eland Oil and Gas’ (ELA), as results for 2018 attest. Average production at its Elcrest joint venture more than doubled to 8,000 barrels of oil per day (bopd), and finished the year at a rate of 13,420 bopd. Production testing at the Ubima field – in which Eland holds a 40 per cent stake – was deemed a success and came on stream post-period. Development drilling has boosted reserves, and with it Eland’s borrowing facility.
Flat costs meant operational gearing also kicked in, causing cash profits to surge to $40 (£30) per barrel, while the bottom line was sweetened by a $70.5m tax credit. What's more, production is expected to rise to between 14,000 and 17,000bopd, net to Eland.
Time will tell whether this strong run can continue. But these results also revealed problems at two wells linked to the Gbetiokun early production facility, which Eland hopes to remediate in the second quarter, but which took the gloss off the tests’ “encouraging preliminary outcomes”.
Undaunted, and following £2.8m of repurchases since November, the board has extended the share buyback programme to £6m, reflecting its belief that “the current share price undervalues the group's assets, the performance of the business to date and its prospects”.
Analysts at Peel Hunt expect adjusted earnings per share of 39.5¢ this year, falling to 27¢ in 2020.
| ELAND OIL & GAS (ELA) | ||||
| ORD PRICE: | 120p | MARKET VALUE: | £261m | |
| TOUCH: | 120-121p | 12-MONTH HIGH: | 139p | LOW: 77p |
| DIVIDEND YIELD: | nil | PE RATIO: | 6 | |
| NET ASSET VALUE: | 182¢ | NET DEBT: | 1% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2014 | 11.7 | -16.9 | 7.0 | nil |
| 2015 | 18.1 | -9.57 | 13.0 | nil |
| 2016 | 2.4 | -31.4 | 9.0 | nil |
| 2017 | 68.9 | -15.6 | 6.0 | nil |
| 2018 | 169 | 77.6 | 28.0 | nil |
| % change | +145 | - | +367 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.32 | ||||
