Otakikpo Operational Update

RNS Number : 3706U

Lekoil Limited

29 July 2015

 

29 July 2015

Lekoil Limited

("Lekoil" or the "Company")

Otakikpo Operational Update

Project on schedule for first oil by end of Q3 2015

Lekoil (AIM: LEK), the oil and gas exploration and development company with a focus on Nigeria and West Africa more generally, announces the following update regarding operational activity at the Otakikpo Marginal Field ("Otakikpo").

Re-entry activities on Otakikpo-002 commenced with the successful drilling-out of the cement plugs in the 9⅝'' casing. While attempting to drill-out the cement plugs in the 7'' liner, the rig crew noticed a potential critical safety issue around the crown block of the rig which has forced temporary suspension of re-entry activities, for safety reasons, pending repairs and replacement of equipment. No injuries were incurred due to the proactive actions of the trained rig crew. Safety remains the highest priority to Lekoil and its partner Green Energy International Limited (GEIL). Replacement parts may be sourced from outside the country and costs relating to the replacement of the rig equipment will be carried entirely by the drilling company, not Lekoil.

As a consequence of this interruption, first oil is now expected to flow from the Otakikpo-002 to the Early Production Facility ("EPF") by the end of Q3 2015.

Lekoil has made significant progress to date at Otakikpo:

·     All necessary approvals for the well re-entry plan were secured during 2014;

·     The contracts for the Phase-1 Field Development Plan, which included a rig, well services and an EPF, were tendered and awarded during the first half of 2015;

·     The Company had to overcome a series of significant logistical challenges related to road remediation and the building of a temporary bridge in order to bring the equipment to site. As a result of the work the surrounding local community have gained a significant socio-economic advantage.

·     Prior to rig mobilisation large tracts of swamp land were reclaimed by sand-filling and land consolidation.

·     Mobilisation of the rig equipment was completed and the rig mast was erected in preparation for well completion and production operations.

Lekan Akinyanmi, Lekoil's CEO, said, "Phase 1 operation from Otakikpo is underway and we look forward to announcing first oil by end of Q3 2015. Safety remains our key priority and we will continue applying the highest standard to our operations. The Company would like to thank Shareholders for their continued support."

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 exercises the rights and benefits of its 40 per cent. economic interest in Otakikpo via the Farm-in Agreement and Joint Operating Agreement signed on 17 May 2014 with Green Energy International Limited. Ministerial consent was granted by the Honourable Minister of Petroleum Resources of Nigeria in June 2015.

The 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 6,000 bbls/d 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 seven new wells coming on stream during 2017.

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

Lekoil Limited Hamilton Esi, Corporate Communications	[phone]
Strand Hanson Limited  (Financial & Nominated Adviser) James Harris / James Spinney / Ritchie Balmer	[phone]
Mirabaud Securities LLP (Joint Broker)	[phone]
Peter Krens / Edward Haig-Thomas	[phone]
BMO Capital Markets (Joint Broker)	[phone]
Rupert Newall / Neil Haycock / Thomas Rider
Ladenburg Thalmann & Co. Inc. (US Placing Agent) Jim Hansen / Barry Steiner	[phone] [phone]
Tavistock Communications (Financial PR) Simon Hudson / Ed Portman	[phone]

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