Key part14 Jan 2020 09:20
Lekoil confirms that its financial exposure associated with the Facility Agreement is limited to approximately US$600,000 (being the amounts paid in good faith as initial arrangement fees to Seawave, and the Company's associated legal fees) and can also confirm that there have been no monies paid by Lekoil to the Counterparties. Any further fees due pursuant to the Transaction (which, for the avoidance of doubt, will not be paid) would only have been payable upon drawdown of funds.
Whilst Lekoil will take all reasonable actions to recover the fees paid to Seawave, there can be no guarantee that such attempts will be successful.
Lekoil continues to generate positive cash flow at the operational level and will seek alternative funding for the future development of OPL 310 as a priority, including reactivating other existing funding discussions. The drilling of an appraisal well within OPL 310 is still expected to occur within the tenure of the license which expires on the 2 August 2022. As previously announced on 30 August 2019, Lekoil is required to pay Optimum Petroleum Development Company Limited ("Optimum") sunk costs and consent fees by February 2020 - a payment estimated at c. US$10 million. LEKOIL is also required to show its ability by February 2020 to raise 42.86 per cent. of the drilling costs for one appraisal well, which is estimated to be c.US$28 million. Failure to make this payment on time may result in Lekoil and Optimum jointly seeking, and agreeing on, a willing buyer to whom the transfer of Lekoil's 17.14% participating interest in OPL 310, as well as all the financial obligations related to OPL 310, can be made.
The Company further confirms that no capital commitments have been made based on anticipated drawdowns, and that the Company will cover the cost of the site survey (estimated at c. US$4 million) on OPL 310 as announced on 10 January 2020 from a mixture of existing cash resources and income from operations at Otakikpo.
As at 31 December 2019, the Company had cash at the bank of approximately US$2.7 million, which takes into account the US$600,000 already paid in relation to the Transaction. No material further payments have been made in relation to the Transaction subsequent to that date, and the Company expects to receive the cash proceeds from an oil lifting which was expected to occur in December 2019 and has now been scheduled to be included as part of the liftings for January 2020, further bolstering its cash resources.
At the time of announcing the Facility Agreement, Lekoil also entered into arrangements to compensate and further incentivise its CEO, Lekan Akinyanmi. All such arrangements have been cancelled with immediate effect and the Company can confirm that no payments have been made to Mr Akinyanmi or any other Lekoil employee, director or representative in relation to the Transaction.
Sign In
Follow the stocks
