Payments to Optimum Petroleum Development Company

RNS Number : 3527I

Lekoil Limited

11 December 2020

 

11 December 2020

Lekoil Limited

("LEKOIL" or the "Company")

Payments to Optimum Petroleum Development Company

LEKOIL (AIM: LEK), the oil and gas exploration and production company with a focus on Nigeria and West Africa, announces that its wholly owned subsidiary, Mayfair Assets and Trusts Limited ("Mayfair") has received a letter from Optimum Petroleum Development Company ("Optimum"), the Operator of the OPL 310 Licence, communicating its enforcement of the default clause which specifies the conditions for establishing default contained within the Cost and Revenue Sharing Agreement ("CRSA").

Optimum have conveyed its enforcement of the default clause, as payments of US$6.6 million, to cover the portion of sunk costs and consent fees, have not been received by 30 November 2020. In addition to these fees, Optimum highlighted that Mayfair, has also not made payments in excess of US$1.0 million to cover general and administrative costs for the year as agreed within the CRSA. Pursuant to the CRSA, the default clause stipulates that, following a cure period, if a default has occurred, Optimum and Mayfair shall jointly seek and agree on a buyer to whom Mayfair's 17.14% Participating Interest as well as all the financial obligations within OPL 310 will be transferred.

The Company continues to discuss with Optimum, a deferment of these payments as the Company intends to focus its financial and other resources in support of securing funding for the second phase of the Otakikpo development as well as the Ogo appraisal programme. The Company, working with Optimum, has identified and engaged an appropriate rig for the appraisal drilling where the service provider has accepted the result of the early performed site survey. Due to a good working relationship between the Parties, the Company has in the past been able to receive multiple extensions on outstanding payments and remains hopeful of a mutually acceptable solution being reached between the Parties. To finance the appraisal programme, the Company has explored and is in constructive discussions with potential financiers to provide a combination of cost effective vendor and alternative financing solutions. A further update will be provided to shareholders when appropriate.

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014.  Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

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

LEKOIL Limited Hamilton Esi, Corporate Communications Ore Bajomo, Investor Relations	[phone]
Mirabaud Securities Limited (Joint Broker) Peter Krens / Edward Haig-Thomas	[phone] / [phone]
SP Angel Corporate Finance LLP (Joint Broker) Richard Hail / Stuart Gledhill / Sam Wahab	[phone]
Instinctif (Financial PR) Mark Garraway / Dinara Shikhametova / Sarah Hourahane	[phone] [e-mail]

Background on OPL 310

In 2013, the first exploration well (Ogo-1) drilled by the OPL 310 partners - then consisting of Optimum, LEKOIL and Afren - was the Ogo prospect, a four-way dip-closed structure in the Turonian to Albian sandstone reservoirs. The drilling programme included a planned side-track well (Ogo-1 ST) which aimed to test a new play of stratigraphically trapped sediments at the basement of the Ogo prospect. The Ogo-1 well encountered a gross hydrocarbon section of 524ft, with 216ft of net stacked pay whilst the Ogo-1 ST well encountered the same reservoirs as Ogo-1 in addition to the syn-rift section which encountered a 280 ft vertical section gross hydrocarbon interval. Owing to well data collected from the two wells, the partners estimated P50 gross recoverable resources to be at 774 mmboe across the Ogo prospect four-way dip-closed and syn-rift structure.

 

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