Ross Davidson, 18th June 2012
A north-east oil firm could be heading for a £100million stock market flotation in the coming weeks.
Eland Oil and Gas could join the Alternative Investment Market (Aim) as part of plans to raise funds for a major acquisition in Nigeria.
Westhill-headquartered Eland is speaking with investors and gaining support for a public listing which would provide it with the cash needed to complete the purchase of an interest in a prospect in Nigeria’s Niger Delta.
It is understood Eland’s proposition has been well received by institutions and the firm could join the Aim as early as later this month.
Eland is led by experienced north-east businessmen Les Blair, chief executive, and chief financial officer George Maxwell.
They worked for Addax Petroleum, a Canadian-listed exploration and production company with assets in Nigeria, before it was bought by Chinese firm Sinopec for £4.4billion in 2009.
Eland’s talks with investors come after the company and partner Starcrest Nigeria Energy successfully bid for a 45% stake in the oil mining lease (OML) 40 licence following an auction by Shell, Total and Agip.
OML 40 has produced oil in the past and infrastructure including an export pipeline is already in place, meaning operations could be restarted quickly.
David Barclay, divisional director for investment manager financial-planning specialist Brewin Dolphin in Aberdeen, said it was good to see an oil and gas firm considering a flotation because it represented a “vote of confidence” in struggling equity markets as a source of capital.
He added: “It seems Eland will be able to generate cash flow pretty quickly, which will be a strong selling point.”
The OML 40 acquisition is worth £100million, with £10million already paid.
Should the deal for OML 40 go through, a joint venture between Eland and Starcrest, called Elcrest, will hold the 45% stake.