Lekoil, an oil and gas exploration and development company has acquired, a 45 per cent participating interest in Oil Prospecting Licence 276, located onshore Akwa Ibom state using a subsidiary, Lekoil 276 Ltd but regulatory consent could delay the process.
The agreed acquisition from Newcross Petroleum Limited who owns 90 percent of the field is for a consideration of $5million and Lekoil will serve as technical partner. However, the field whose license expired in 2016 will require an extension by the regulator Department of Petroleum Resources, obtaining the consent of the Nigerian National Petroleum Corporation (NNPC) and the approval of the Minister of Petroleum Resources of the Federal Republic of Nigeria who doubles as the president.
Lekan Akinyanmi, Lekoil’s CEO, said the acquisition of an interest in the OPL276 PSC represents an excellent opportunity to further build its growing production base in line with our stated strategy to create a balanced portfolio of assets.
“With the completion of this, Lekoil will have acquired a potential near-term producing asset with significant resource potential.
“We are optimistic about the prospects here, 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.”
But the company’s unpleasant experience in obtaining regulatory approvals may douse investors optimism. Worse still, the government has not particularly placed a premium over speedy regulatory approvals.
The slow pace of regulatory approval is at the heart of the company’s recent legal case against the government. Lekoil applied for Ministerial Consent to acquire 23% participating interest in OPL 310 block, in Ogo fields, from Afren Nigeria Holdings in 2016, but the consent was neither given nor denied.
So in May 2017, Acting president Yemi Osinbajo, issued an executive order which among other things provided that any application not approved or rejected by a government agency or official within the agency’s specified timeline shall be assumed to have been approved. Relying on this provision, the company proceeded to complete the acquisition.
However, a Federal High Court ruled that the acquisition still requires consent from the Minister of Petroleum Resources. Based on the judgement, OPL 310 interest is still held by the seller, Afren Investments Oil and Gas Nigeria Limited. Lekoil still holds a 17.14 per cent participating interest in the block.
Lekoil will return to the government seeking approvals to complete acquisition of OPL 237 which was formerly operated by Shell Petroleum Development Corporation (SPDC) as OML 14 until 2004.
Newcross has previously identified ten prospects and seven leads in the area covered by the Licence. Four wells have been drilled in the License area, resulting in four discoveries (two oil and two gas) including ,Uda drilled in 1972 (oil & gas discovery), Okposo-East; drilled in 1980 (oil & gas discovery), Mbo; drilled in 1990 (gas discovery) and Davy Bank; drilled in 1986 (gas discovery).
According to Lekoil, preliminary resource estimates by Newcross, based on data from these four wells, reported gross recoverable volumes of 29 million barrels of oil and 333 Bcf of gas, upside of 33 million barrels of oil and 476 Bcf of gas (recoverable).
