Lekoil Limited OPL 310 - Legal Update (3825U)
March 28 2019 - 11:25AM
UK Regulatory
TIDMLEK
RNS Number : 3825U
Lekoil Limited
28 March 2019
28 March 2019
LEKOIL Limited
("LEKOIL" or the "Company")
OPL 310 - Update Re: Application for a Declaration regarding
Ministerial Consent
LEKOIL (AIM: LEK), the oil and gas exploration, development and
production company with a focus on Africa, provides an update on
OPL310 (the "Block") with reference to the Company's Application
for a Declaration regarding Ministerial Consent ("Consent") filed
at the Federal High Court, Lagos on March 26, 2018.
Further to LEKOIL's announcement on 8 February 2019, a Federal
High Court sat in Ikoyi, Lagos State, Nigeria, on 28 March
2019.
The Honourable Justice Muslim S. Hassan ruled that the Company's
acquisition (through its wholly owned subsidiary Lekoil 310
Limited) of Afren Investments Oil and Gas Nigeria Limited
("AIOGL"), the holder of the 22.86 per cent. participating interest
in OPL 310, requires Consent. As previously announced, the Company
sought this Consent from the Minister in 2016, but as yet it has
not been forthcoming.
The Judge further stated that the Executive Order issued by the
Nigerian Acting President in 2017, which should have deemed the
Consent to have been granted, could not supersede the powers of the
Minister to grant such Consent. More specifically, the Judge
disagreed that the Consent could be deemed granted and obtained in
default which the Company believes is contrary to the provisions of
the Executive Order. The Judge further noted that the Executive
Order was signed in 2017, while Lekoil's application for the
Consent was made in 2016 and so could not be applied retroactively.
The Judge stated that due process for the Consent application would
have to be followed prior to any Consent being deemed.
The Judge further ruled that the Sale and Purchase Agreement
executed by and amongst Lekoil 310 Limited, Afren Nigeria Holdings
and the administrators for the purchase of AIOGL was inchoate based
on the fact that Consent is pending. The Judge also ruled that
pursuant to Articles 13.1.4 and 13.1.5 of the JOA between Optimum
and AIOGL, Optimum's consent was required to complete the
assignment of Consent.
The implication of this judgment is that the 22.86 per cent
participating interest in OPL 310 is still held by AIOGL until
Consent is granted. The Company still holds a 17.14 per cent
participating interest in OPL 310, via its wholly owned subsidiary
Mayfair Assets and Trust Limited, the acquisition of which received
Ministerial Consent in June 2017.
The Company is yet to receive the judgement in writing, and
believes it has strong grounds to appeal against this judgment by
the Federal High Court; and intends to file a notice of appeal, and
a stay of execution of this judgment with the Court of Appeal
within a week. The Company will take all necessary action to
preserve its right to the 22.86 per cent interest in OPL 310.
Licence Extension
LEKOIL had previously requested that the Federal Ministry of
Petroleum Resources grant an extension of the OPL 310 license
beyond February 2019 in order to recover over three years lost due
to regulatory delays beyond the Company's control. The Company
understands that the Department for Petroleum Resources has made
its recommendation for an extension to the Honourable Minister of
Petroleum Resources and is currently awaiting final approval of
such extension by the President of Nigeria. Whilst the Company is
hopeful that such extension will be granted, there can be no
guarantee that it will be granted or the period of such
extension.
The Company believes that the OPL 310 license is still in good
standing given that the extension is in process and there has been
no communication from the regulators to indicate that an extension
will not be granted.
LEKOIL continues to make progress with partner Optimum towards
resolving the remaining issues regarding this matter in the
interest of moving forward and beginning appraisal activities on
OPL 310.
The Company will provide further updates as appropriate. The
Company is represented by Fidelis Oditah QC, SAN.
For further information, please visit www.lekoil.com or
contact:
LEKOIL Limited
Alfred Castaneda, Investor Relations
Lisa Mitchell, Chief Financial Officer +44 20 7920 3150
Strand Hanson Limited (Financial &
Nominated Adviser)
James Harris / James Spinney / Ritchie
Balmer +44 20 7409 3494
Mirabaud Securities Limited (Joint
Broker) +44 20 7878 3362 / +44 20
Peter Krens / Edward Haig-Thomas 7878 3447
Numis Securities (Joint Broker)
John Prior / Ben Stoop +44 20 7260 1000
Tavistock (Financial PR)
Simon Hudson / Nick Elwes / Barney
Hayward +44 20 7920 3150
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
Technical Background on OPL310
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.
On 25 November 2015, the Company entered into an agreement with
the administrator of Afren and Afren Nigeria Holding Limited to
acquire the shares of AIOGNL, which held a 22.86% participating
interest in OPL 310 for a total consideration of US$13 million,
subject to Ministerial Consent. Post acquisition, the Company holds
a 40% working interest and 70% economic interest in the block, with
AIOGL's 22.86% working interest and 40% economic interest subject
to Ministerial Consent.
-ends-
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END
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