OPL310 Drilling and Resources Update

RNS Number : 3445T

Lekoil Limited

19 November 2013

 



19 November 2013

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN, OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA

Lekoil Limited

("Lekoil" or the "Company")

OPL310 Drilling and Resources Update

Drilling results significantly above expectations - P50 gross recoverable resources estimated at

774 mmboe (pre-drill estimate of 202 mmboe)

Lekoil (AIM: LEK), the oil and gas exploration and development company with a focus on Nigeria and West Africa, and its partners Afren plc and Optimum Petroleum Development Ltd (together "the Partners"), announces the suspension of current drilling operations at the Ogo prospect located on the OPL310 licence offshore Nigeria and a significant upgrade to estimated gross mean recoverable resources compared to pre-drill expectations.

OPL310 is located in the Upper Cretaceous fairway that runs along the West African Transform Margin. Extending from the shallow water continental shelf to deep water, the block represented a wild cat exploration opportunity in an under-explored basin. Detailed pre-drill evaluation of the block identified several prospects lying in the same Turonian, Cenomanian and Albian sandstone intervals that have yielded significant discoveries in Ghana and Côte d'Ivoire. The first exploration well drilled by the Partners (the "Ogo-1 well") was the Ogo prospect, a four-way dip-closed structure in the Turonian to Albian sandstone reservoirs, which was targeting 78 mmboe of gross P50 prospective resources. The drilling programme included a planned side-track well (the "Ogo-1 ST"), testing a new play of stratigraphically trapped sediments that pinch-out onto the basement high targeting 124 mmboe of gross P50 prospective resources.  In total, the Partners were targeting 202 mmboe of gross P50 prospective resources.

The Ogo-1 well was drilled to a total measured depth of 10,518 ft (10,402 ft true vertical depth subsea), and encountered a gross hydrocarbon section of 524 ft, with 216 ft of net stacked pay.  The Ogo-1 ST reached a total measured depth (TD) of 17,987 ft (12,050 ft true vertical depth subsea) and encountered hydrocarbon intervals in the same Turonian, Cenomanian and Albian reservoirs that were successfully drilled and logged at the Ogo-1 well. In addition, the syn-rift section encountered a 280 ft true vertical thickness gross hydrocarbon interval.

Based on the well data, the Partners estimate the P50 to P10 gross recoverable resources range to be significantly ahead of pre-drill expectations at 774 to 1,180 mmboe across the Ogo prospect four-way dip-closed and synrift structures.  This suggests potential net recoverable resources to Lekoil Nigeria, in which the Company's interest remains unchanged from the date of admission, of 232 mmboe (P50) and 354 mmboe (P10).  Additional upside potential is expected in the synrift play. In addition, the latest PVT (Pressure-Volume-Temperature) analysis confirms excellent reservoir fluid properties with a 40 deg API, 600 GOR, 0.42 cp viscosity oil in the Turonian, a 39 deg API, 870 GOR, 0.40 cp viscosity oil in the Cenomanian and a condensate rich gas in the Albian of up to 115 bbls/mmscf.  The Partners expect the synrift to contain a light oil or a condensate rich gas.

Whilst circulating bottoms up at TD, the drill string parted at 3,390 ft and during good progress towards recovery of the drill string from the well bore, the well took a hydrocarbon kick. After the kick was safely controlled, the Partners considered it prudent to move to permanently secure the well. 

The Partners intend to drill an appraisal well in H2 2014, ahead of development planning and will also increase 3D coverage on the block, currently covering only 25 per cent. of the block, to define further prospectivity.

Commenting, Lekan Akinyanmi, Lekoil's CEO, said, "Today's announcement confirms a very significant upgrade to the resources at Ogo compared with our pre-drill expectations.  We will continue to work with our partners to progress the Ogo discovery while also focusing on examining other opportunities to build our portfolio of assets.  Ogo has provided us with a flying start to our strategy to build a substantial, Africa-focused oil and gas business."

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

Lekoil Limited Dave Robinson, Chief Financial Officer	[phone]
Strand Hanson Limited  (Financial and Nominated Adviser) James Harris / James Spinney / Ritchie Balmer	[phone]
Mirabaud Securities LLP (Broker) Peter Krens Edward Haig-Thomas Ladenburg Thalmann & Co. Inc. (US Placing Agent) Jim Hansen Barry Steiner	[phone] [phone] [phone] [phone]
Tavistock Communications (Financial PR) Simon Hudson / Conrad Harrington / Ed Portman	[phone]

Review by qualified person:

Samuel Olotu, Chief Technical Officer and technical expert for the Company, has reviewed and approved the technical information contained within this announcement in his capacity as a qualified person under the AIM Rules.  Mr. Olotu holds a BSc degree in Geology and an MSc in Geophysics from the University of Ibadan, and has over 20 years' experience in the oil and gas industry (ranging from asset management, field development, reservoir management and seismic data processing and interpretation) in Nigeria, Europe, Middle-East and Asia. He is a member of the Society of Petroleum Engineers, Society of Exploration Geophysicists, the National Association of Petroleum Explorationists and the Nigerian Mining and Geosciences Society.

Glossary:

API                          a standard measure of oil density, as defined by the American Petroleum Institute;

GOR                        gas-oil ratio; and

cp                            centipoise; a measure of viscosity.

Certain statements in this Announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. The information contained in this Announcement is subject to change without notice and neither the Company nor Mirabaud assumes any responsibility or obligation to update publicly or review any of the forward-looking statements contained herein.

Past performance is not a guide to future performance.

The material in this Announcement is for informational purposes only and does not constitute an offer of securities for sale in the United States or any other jurisdiction in which such an offer or solicitation is unlawful.  The Company's securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or the laws of any state, and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state laws.  No public offering of securities will be made in the United States.

Neither the content of websites referred to in this Announcement, nor any hyperlinks on such websites is incorporated in, or forms part of, this Announcement.

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