Lekoil said it has completed planning for the phase two development at Otakikpo which would increase production towards the range of 15,000 bopd to 20,000 bopd from the range of 6,000 to 8000bopd.
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“As part of the Otakikpo development process, we commissioned an updated Competent Person’s Report detailing recoverable volumes within the Otakikpo Marginal Field in OML 11. The CPR, prepared by McDaniel Associates & Consultants Ltd focused on the discovered conventional oil accumulations only, with the field’s significant gas resources expected to be reflected in a future update,” Lekoil said.
Lekoil, an Africa focused oil and gas exploration and Production Company with interests in Nigeria and Namibia announced revenue of $22.3 million from its Otakikpo operation in the first half of 2019 compared to $22.4 million in the corresponding period last year.
Lekoil said capital expenditure to be incurred by the Otakikpo Joint Venture is expected to be approximately $170 million covering new wells and processing infrastructure, of which LEKOIL is expected to fund $68 million.
Lekoil said the Nigerian subsidiary of the IOC will provide funding to the Otakikpo Joint Venture alongside the other funding partners, subject to due diligence, project economics, entry into definitive documentation and final investment decision while repayment will be made from production revenues from Otakikpo, in priority to any existing lending facilities (subject to agreement with existing lenders), future capital expenditure and returns to equity holders.
Concerning the much battled OPL 310 licence, Lekoil said it has executed a legally binding agreement with Optimum to progress appraisal and development programme activities at Ogo.
CEO of Lekoil Lekan Akinyanmi said the recent settlement with Optimum, receipt of the OPL 310 licence extension from the Nigerian Government, and encouraging progress made in preparing to commence work on all its other interests, leads Lekoil closer to delivering on the commitment to monetise the significant value that we believe exists in both existing and recently acquired opportunities.
Optimum and LEKOIL are initially targeting a two-well programme over the next twelve to eighteen months, subject to receiving an extension of the OPL 310 licence from the Ministry of Petroleum Resources for the block and securing the necessary funding for the programme.
“We thank our shareholders for their continued patience and remain optimistic that the outlook is set to improve. We are excited about what we see is in prospect for all of us over the next few years, and we look forward to delivering on this,” Akinyanmi said.
Under the terms of this agreement, LEKOIL will pay Optimum approximately $12.5 million in respect of Optimum’s past costs and fees, as previously announced on 30 August 2019. This amount includes $2.0 million in outstanding G&A arrears, a $5.0 million Operator’s fee in regard to LEKOIL’s 17.14 per cent participating interest and $5.5 million for the Operator’s sunk cost.
Although the agreement does not address the recovery of the $13.0 million consideration previously paid by LEKOIL with respect to the acquisition of the shares of Afren Oil & Gas (Nigeria) limited in 2015 (which held the 22.86 per cent. participating interest in OPL 310). However, LEKOIL is working with Optimum on a resolution of this matter alongside the possible allocation of the 22.86 per cent to a Potential Funding Partner and remains hopeful that an agreement can be reached.
On OPL 325 which Lekoil holds a 62 percent interest in, the company believe it’s a promising exploration asset containing an exciting deepwater turbidite fan play although it has gross unrisked prospective resources estimated by Lumina Geophysical of 5,067 MMbbls.
“We are awaiting the execution of the Production Sharing Contract (PSC) for the licence, at which point LEKOIL is due to pay $0.95 million to the seller as a back-cost reimbursement,” Lekoil announced. “In addition, we are performing some portfolio work to ready one of the prospects for drilling. Once these are complete we intend to begin the farm-down process.”
Regarding OPL 276 which the company holds a 45 per cent participating interest in, Lekoil is optimistic about the prospects which have shallow reservoirs and are cost-efficient to develop.
“Our focus will now shift to moving plans quickly forward for oil and gas production,” Lekoil said concerning OPL 276,” Lekoil said concerning OPL 276
