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Lekoil provides half year results for the 6 months to 30 June 2019

LEKOIL (AIM: LEK), the oil and gas exploration and development company with a focus on Nigeria and West Africa, reports its unaudited half year results for the six months to 30 June 2019. These results will be made available on the Company’s website soon.


· Operating profit of US$0.5 million (2018: US$3.0 million);

· Net loss of US$5.2 million (2018: net profit of US$1.8 million);

· Borrowings at period end of US$15.8 million (US$20.5 million at 31 December 2018);

· Period end cash of US$7.0 million ( US$10.4 million at 31 December 2018);

· Cash of US$8.3 million,and borrowings of US$13.9 million, as at 31 August 2019.

Production – Otakikpo*

· Otakikpo production averaged 5,822 bopd gross with 2,329 bopd net to LEKOIL (2018: 2,042 bopd net) and downtime of zero days;

· Updated Otakikpo CPR released 26 June 2019 – gross 2P reserves of 48.6 MMbbl (19.4 MMbbl net to LEKOIL), an uplift of more than 200 per cent compared to 2015’s CPR figure of 15.0 MMbbl. 2P NPV10 of US$226 million, after income taxes, net to LEKOIL;

· Planning completed for the Phase Two development at Otakikpo to increase production towards 15-20,000 bopd (6-8,000 bopd net to LEKOIL), subject to securing the necessary funding;

· MOU signed in July between the Otakikpo Joint Venture partners, Schlumberger and a Nigerian subsidiary of a major international oil company (“IOC”) which has been operating in Nigeria for more than 50 years to cover a project to provide comprehensive infrastructure sharing and a drilling programme around a group of marginal field assets, including Otakikpo, in OML 11;

• phased development plan includes up to five new wells in Otakikpo and expanding processing infrastructure to comprise a new onshore terminal, to be located outside the Otakikpo field operations area, and the construction of an export pipeline from the onshore terminal to an offshore buoy

• the infrastructure will handle Otakikpo production and other fields in OML 11

• project capex estimated at US$170 million, of which LEKOIL is expected to contribute US$68 million – to be provided to the Otakikpo Joint Venture by the IOC subsidiary and repaid from production revenues

• investment by the IOC subsidiary, which will provide funding to the Otakikpo Joint Venture alongside the other funding partners, is subject to due diligence, project economics, entry into definitive documentation and final investment decision.

Appraisal – OPL 310*
· OPL 310 legal action withdrawn following judgement against LEKOIL in the Federal High Court to enable the Ministry of Petroleum Resources to consider re-award of the block;

· Post period end, on 30 August, the Company announced a legally binding agreement with operator Optimum to progress appraisal and development programme activities at Ogo and to seek a funding partner using LEKOIL’s disputed 22.86 per cent interest in OPL 310 as a potential funding and security vehicle;

· In September, LEKOIL announced the Ministry of Petroleum Resources had approved the extension of the licence for three years, subject to the holders of the licence paying an extension fee of US$7.5 million by the end of October 2019 which will be funded 100 per cent by LEKOIL.

Exploration – OPL 325*
· Awaiting the execution of the Production Sharing Contract for OPL 325 and readying one of the prospects for drilling – farm-down process to commence once these activities are complete.

Appraisal – OPL 276*
· Acquisition announced in August of a 45 per cent participating interest in the Production Sharing Contract in relation to OPL 276, covering a territory located onshore in the eastern Niger Delta basin;
• total staged consideration of US$5.0 million, subject to certain milestones

• four wells have been drilled in the licence area, resulting in four discoveries (two oil and two gas) with preliminary resource estimates, based on data from the four wells, of gross recoverable volumes of 29 million barrels of oil and 333 Bcf of gas, with upside of 33 million barrels of oil and 476 Bcf of gas (recoverable).

* Held through LEKOIL Nigeria

Lekan Akinyanmi, LEKOIL’s CEO, commented, “The recent settlement with Optimum, receipt of the OPL 310 licence extension from the Nigerian Government, and encouraging progress made in preparing to commence work on all our other interests, leads us closer to delivering on our commitment to monetise the significant value that we believe exists in both our existing and recently acquired opportunities. We thank our shareholders for their continued patience and remain optimistic that the outlook is set to improve. We are excited about what we see is in prospect for all of us over the next few years, and we look forward to delivering on this.”

Source: Lekoil