Lekoil Limited MoU signed for further development at Otakikpo (9298D)
July 01 2019 - 1:00AM
UK Regulatory
TIDMLEK
RNS Number : 9298D
Lekoil Limited
01 July 2019
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.
1 July 2019
LEKOIL Limited
("Lekoil" or the "Company")
Memorandum of Understanding Signed with Schlumberger and Major
International Oil Company for Further Development at Otakikpo in
OML 11
LEKOIL (AIM: LEK), the oil and gas exploration and development
company with a focus on Nigeria and West Africa more generally, is
pleased to announce the Otakikpo Joint Venture (JV) between Green
Energy International Limited ("GEIL") and LEKOIL (with LEKOIL as
Technical Partner). The JV has signed a Memorandum of Understanding
("MOU") with Schlumberger and a subsidiary of a major international
oil company which has been operating in Nigeria for more than half
a century ("Major Oil Company"). The MOU covers a comprehensive
infrastructure sharing and drilling programme around a group of
marginal field assets in OML 11. Standard Chartered Bank ("SCB") is
to act as the lead financial advisor for the Project and perform
financial advisory, security and banking services required for the
Project.
The phased development plan of the project consists of drilling
up to five new wells in Otakikpo, expanding processing
infrastructure to comprise an onshore terminal to be located
outside the Otakikpo field operations area, construction of an
export pipeline connecting the onshore terminal to an offshore buoy
to handle Otakikpo and other fields in OML11. The Otakikpo Joint
Venture will partake in the costs of its field development with
funds provided for such participation by the development consortium
("Consortium") (see below for further details). Project management
and associated asset management costs provided by Schlumberger will
be shared between the Otakikpo Joint Venture and the operators and
owners of other marginal fields participating in the Project.
Capital expenditure to be incurred by the Otakikpo Joint Venture
is expected to be approximately US$170 million covering new wells
and processing infrastructure, of which LEKOIL is expected to fund
US $68 million. The anticipated costs consist of debt repayment to
financing parties, including the Major Oil Company, in addition to
a project implementation fee paid to Schlumberger. Repayment of the
facilities anticipated to be provided to the Otakikpo Joint Venture
pursuant to the project will be made from production revenues from
Otakikpo, in priority to any existing lending facilities (subject
to agreement with existing lenders), future CAPEX and returns to
equity holders.
Under the terms of the MOU, the Major Oil Company will provide
funding to the Otakikpo Joint Venture alongside the other funding
partners, subject to due diligence, project economics, entry into
definitive documentation and final investment decision. The
Otakikpo Joint Venture will enter into an exclusive offtake
agreement with the Major Oil Company for the sale of crude produced
pursuant to this project. Schlumberger will act as technical and
project execution partner to provide oilfield services and project
management services to assist in ramping up production and
long-term field management. The Consortium will also form
multidisciplinary project management teams from LEKOIL and
GEIL.
Due diligence will be undertaken and the financial terms and
cost of capital will be finalized following final investment
decision. The final investment decision is subject to the
satisfaction of customary conditions precedents, including the
credit committee approval of financing parties and the execution of
definitive project agreements. Site mobilisations are tentatively
scheduled for late Q3 2019.
Lekan Akinyanmi, CEO of LEKOIL said, "This MOU is a significant
milestone for LEKOIL and the Otakikpo JV. It secures the necessary
funding, subject to the various conditions being satisfied, to
drill additional wells and unlock further value at Otakikpo. We are
pleased to be working with Schlumberger (who brings world class
implementation) and other members of the consortium. We look
forward to the transformation of operations infrastructure and an
opportunity to earning revenue along the value chain".
For further information, please visit www.lekoil.com or
contact:
Lekoil Limited
Alfred Castaneda, Investor Relations +44 20 7920 3150
Strand Hanson Limited (Financial &
Nominated Adviser)
James Harris / James Spinney / Ritchie
Balmer +44 20 7409 3494
Mirabaud Securities LLP (Joint Broker) +44 20 7878 3362 / +44 20 7878
Peter Krens / Edward Haig-Thomas 3447
Numis Securities (Joint Broker)
John Prior / Ben Stoop +44 20 7260 1000
Tavistock (Financial PR)
Simon Hudson / Barney Hayward / Charles
Vivian +44 20 7920 3150
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
Operator.
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 began operations in
December 2014. Ministerial consent was granted by the Honourable
Minister of Petroleum Resources of Nigeria in June 2015. Commercial
production started in February 2017.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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