STOCK market investors have shown faith in Eland Oil & Gas although the firm has seen losses spiral in Nigeria where security problems have compounded the challenges posed by the low crude price.
Aberdeen-based Eland has raised $19.5 million (£15m) from investors in a share placing that it said won a strong response and was oversubscribed.
Aim-listed Eland had set out to raise $14.5m to $19.5m.
The placing provides a notable vote of confidence in a company which has suffered significant setbacks in recent months. It was completed a day after Eland announced that it lost $31.4m in 2016
It lost $9.6m in 2015.
The increase in losses last year was largely due to the fact that Eland had to suspend production in February last year because the terminal that handled its output was shut down due to sabotage.
The Forcados terminal, which is operated by Shell, only reopened last month.
Eland had to develop an alternative way of getting its crude to market using ships, which came into action in January.
The company has faced other security issues on the Opuama field, which it brought back into production in 2014. The field on the OML 40 licence had been shut in by Shell in 2006.
However Eland is confident it can generate good returns from production in Nigeria, even with Brent crude trading at around $50 per barrel compared with $115/bbl in June 2014.
It expects to be able to produce oil relatively cheaply from its onshore fields.
Led by chief executive George Maxwell, the company plans to use the funds to invest in increasing production from its assets in Nigeria.
“We intend on deploying these funds immediately as we focus on growing our production significantly,” said Mr Maxwell.
The proceeds of the placing are expected to help Eland speed up work on the revamping of two more wells on OML 40. One is on the Gbetiokun field.
The additional wells could allow Eland to produce an extra 13,900 barrels oil per day.
It is producing 11,500 bod currently, from the Opuama 1 and 3 wells.
The placing was completed at 55p per share, a 10 per cent discount to the opening price on Wednesday.
Mr Maxwell subscribed for 27,273 shares, taking his holding to 540,802.
Africa-focused Helios Natural Resources subscribed for 1,409,443 shares, leaving it with 56,373,258 or 26.4 per cent of the enlarged total.
Shares in Eland closed down 0.75p at 54.75p.
Eland’s annual report shows the total value of Mr Maxwell’s remuneration fell to £428,000 in 2016, compared with £497,000 the preceding year.
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