Continuous Production at Otakikpo

RNS Number : 2474X

Lekoil Limited

20 February 2017

 

20 February 2017

LEKOIL Limited 

("LEKOIL" or the "Company")

LEKOIL starts continuous production at Otakikpo

Production ramping up to 10,000 bopd

LEKOIL (AIM: LEK), the oil and gas exploration, development and production company with a focus on Africa, is pleased to announce that further to the announcement on 8 December 2016, the six kilometre offshore pipeline leading from the storage tanks to the tanker offloading manifold has been completed and commissioned.  All onshore facilities and the offshore pipeline have been fully commissioned and signed off by the regulators.  Continuous production has now commenced from the Otakikpo Marginal Field ("Otakikpo") in OML 11, jointly developed by Green Energy International Ltd as the Operator and LEKOIL as technical and financial partner.

Initial production (from the four production strings across both wells Otakikpo-002 and -003) is in line with company expectations.  Initial production rates are 5,000 bopd, per current regulatory approvals for production commencement.  As is customary for a new field, the Company will now focus on gathering production data and optimizing well performance.  With regular exports underway, the Company is focused on ramping up to production of 10,000 bopd by end of Q2 2017.

Lekan Akinyanmi, LEKOIL's CEO, said: "LEKOIL is now a producing company.  I would again like to thank the entire team that has worked so hard on this project, our partner Green Energy, our investors and debt financiers, our host communities and our government regulators for their continuing support.  The Otakikpo project began in a swamp location with no infrastructure and our team delivered production in under two years with, importantly, nearly 915,000 hours without any lost time injuries.  I am extremely proud of our people's achievements." 

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 / Barney Hayward / 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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