San Leon's Nigeria oil production hit by downtime and pipeline losses
AIM-listed oil and gas firm San Leon, headed by Irish CEO Oisin Fanning, has said production levels at its onshore Nigeria concession OML18 were hit last year by a scarcity of investment capital, downtime and pipeline losses.
That has resulted in "materially lower" production and sales compared to those assumed in the company's admission document, Mr Fanning noted.
In a trading update, San Leon said that its OML18 concession produced an average of 40,360 barrels of oil a day during 2017 after pipeline losses, and 50,450 per day prior to those losses.
But daily sales only hit 26,440 barrels of oil a day last year, compared to 30,969 in 2016.
San Leon blamed the discrepancy on "workover/drilling progress, production downtime and estimated pipeline losses".
"Each of these is being addressed by Eroton, the operator of OML 18," San Leon noted. Eroton, an exploration and production company, is based in Nigeria.
Located in the southern Niger River delta, the OML18 concession covers 1,035 sq km and contains nine fields.
San Leon said that production downtime at the OML18 field was due to shipping delays at a terminal, as well as intermittent outages of a pipeline used to transport oil to the shipping terminal.
"Eroton is evaluating a number of independent alternative oil evacuation routes that will improve consistency of supply to the market," said San Leon.
"The preferred evacuation route selected by Eroton is a new dedicated pipeline and offshore floating storage and offloading system.
"The pressure on production levels caused by a scarcity of capital available to OML18 for investment in well activity, together with securing permissions, has been exacerbated by downtime and pipeline losses caused by external factors," said Mr Fanning, who added that San Leon has been involved in the project for the past 18 months.
He added: "We look forward to receiving the new competent person's report which will form a new basis for evaluating the development plans, forward production profile and economics of the OML 18 project."