LONDON (Alliance News) - Lekoil Ltd Wednesday revealed it has made substantial cost cuts in the first half of 2015 to narrow its pretax loss as its Nigerian asset moves into the production phase.
The oil producer reported a USD6.6 million pretax loss in the first six months of 2015, substantially narrower than the USD11.9 million loss a year earlier after it severely cut its finance and administrative costs.
Lekoil's administrative expenses dropped to USD7.5 million from USD11.8 million whilst finance costs fell to USD27,849 from USD192,223. It also benefited from finance income rising to USD919,467 from only USD79,949 a year ago.
Although the company did not generate any revenue in the period, it did start production from the Otakikpo field in Nigeria at the start of September. The recently completed Opakikpo-002 well flowed at a peak rate of 5,703 barrels of oil per day when it was tested, and it is only one of two planned wells.
"Original guidance of around 6,000 barrels of oil per day from the four strings at Otakikpo-002 and -003 is likely to be exceeded substantially, subject to further testing and analysis," it said in a statement.
The company is in discussions with its partners in the OPL 310 licence which hosts the Ogo discovery, regarding options for further appraisal and the allocation of financial responsibilities and interests between the partners.
"We believe that the successful transition to a producing company has positioned Lekoil to grow further in the coming years - even in a prolonged lower oil price environment. We will continue to look for acquisitions, subject to the availability of finance that can add the kind of value for our shareholders that Otakikpo looks likely to do," said Chief Executive Lekan Akinyanmi.
Lekoil shares were down 4.6% to 21.0 pence per share on Wednesday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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