Lekoil readies OPL 310 for drilling, completes site survey

AIM-listed Lekoil , an energy company with investment focus in Africa and Nigeria and its partner, Optimum Petroleum Development Company, the Operator of the OPL 310 License, have completed the site survey on OPL 310 with drilling expected soon.

The company announced this in a press release informing shareholders that it has requested and received a three-month extension to the filing deadline for its audited financial results for the year ended 31, December 2019 AIM Regulation.

With the site survey completed, Optimum Petroleum Development Company and LEKOIL can finalise the selection of the appropriate rig to commence appraisal drilling, the company said.

Site surveys are done on a location where a drilling rig or a platform will be installed. The process ensures that the location is free of debris, junk, wrecks and shallow gas pockets and flat seabed is identified. Hazards are identified and mitigation actions recommended.

Following this completion, Lekoil envisages a two-well programme with the objective of obtaining dynamic flow data from well testing while preserving the drilled wells as producers.

Nigeria’s petroleum sector regulator, Department of Petroleum Resources (DPR) granted approval for the site survey on OPL 310 at the end of the year. The marine vessel, conducting the site survey, arrived on site location in January and was expected to complete the operation in March 2020 in accordance with the regulator’s deadline.

It appears the company has secured an extension on the basis of the coronavirus pandemic which it also blamed for the delay in filing its financial report.

“The extension, which allows the LEKOIL until 30 September 2020 to finalise and publish its 2019 Audited Annual Results, was sought due to the disruptions of work practices, particularly for the Company’s auditors, caused by the COVID-19 pandemic. The Company intends to publish its 2019 Audited Annual Results in advance of 30 September 2020, with the current target of July 2020,” the company said in the release.

LEKOIL said it also implemented general and administrative cost reduction measures and is having constructive discussions regarding restructuring of current loans to reduce quarterly amortisation.

“Cashflows generated at Otakikpo in conjunction with our significant cost reduction initiatives have been key for us as we remain committed to creating value for our shareholders,” said Lekan Akinyanmi, LEKOIL’s CEO.

The company also said it has renewed offtake agreement with Shell Western Supply and Trading Limited for at least another year with potential to extend for a further year following the provision of a prepayment facility.

Optimum and LEKOIL had earlier planned that the first well spud could occur in the second half of the year as the pandemic was not on the cards.

LEKOIL secured US$184 million (gross) of funding for the appraisal drilling and initial development programme activities on the Ogo field and further development would be based on the ability to secure more financing.