Advance Payment Facility with Shell

RNS Number : 1034B

Lekoil Limited

31 March 2017

 

31 March 2017

LEKOIL Limited 

("LEKOIL" or the "Company")

Advance Payment Facility with Shell

LAGOS, NIGERIA - LEKOIL (AIM: LEK), the oil and gas exploration, development and production company with a focus on Africa, announces that its wholly owned subsidiary, LEKOIL Oil and Gas Investments Limited ("LOGL"), has agreed an advance payment facility with Shell Western Supply and Trading Limited ("Shell Western"), a member of the Royal Dutch Shell group of companies (LSE: RDSA, RDSB), in accordance with which Shell Western will provide LOGL with a facility of $15 million.

The facility has a maturity of three years and is repayable quarterly following a six-month moratorium with a market margin over LIBOR.

Lekan Akinyanmi, LEKOIL's CEO, said, "We are pleased to be working with Shell as a commercial and financial partner to enable the continued development at Otakikpo.  The facility is a strong endorsement of our commercial production and secures funding which is non-dilutive to our shareholders.  We believe that this relationship with a globally recognised O&G major will complement LEKOIL in its long-term growth and aspirations."   

For further information, please visit www.lekoil.com or contact:

Lekoil Limited Alfred Castaneda, Investor Relations Hamilton Esi, Corporate Communications	[phone] [phone]
Strand Hanson Limited (Financial & Nominated Adviser) James Harris / James Spinney / Ritchie Balmer	[phone]
Mirabaud Securities LLP (Joint Broker) Peter Krens / Edward Haig-Thomas	[phone] / [phone]
BMO Capital Markets (Joint Broker) Vicary Gibbs / Neil Haycock / Thomas Rider	[phone]
Tavistock (Financial PR) Simon Hudson / Merlin Marr-Johnson	[phone]

Background to Otakikpo

Otakikpo is sited in a coastal swamp location in oil mining lease (OML) 11, adjacent to the shoreline in the south-eastern part of the Niger Delta. LEKOIL Nigeria exercises the rights and benefits of its 40% Participating and Economic interest in Otakikpo via the Farm-in Agreement and Joint Operating Agreement signed on 17 May 2014 with Green Energy International Limited ("GEIL").

The Company holds 90% of the economic interests in LEKOIL Nigeria. LEKOIL Limited's economic interest in Otakikpo therefore equates to 36%.  The Otakikpo Joint Venture (LEKOIL as Financial and Technical Partner to GEIL) began operations in December 2014. Ministerial consent was granted by the Honourable Minister of Petroleum Resources of Nigeria in June 2015. LEKOIL funded the costs of development and is entitled to recover this expenditure preferentially from 88 per cent. of production cash flow from Otakikpo.

The Otakikpo Field Development Plan consists of two phases.  Phase 1 comprises the recompletions of two wells, Otakikpo-002 and Otakikpo-003, with the installation of an Early Production Facility of 10,000 bopd capacity and export via shuttle tanker. Phase 2 covers the subsequent incremental development of the rest of the field with a new Central Processing Facility and new wells expected.

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