3 Apr 2020 07:00
3 April 2020
Lekoil Limited
("LEKOIL" or the "Company")
Cost Reduction Measures and Confirmation of Optimum Payment
LEKOIL (AIM: LEK), the oil and gas exploration and production company with a focus on Nigeria and West Africa, provides the following corporate update:
Cost Reduction Measures
With the current significant drop in oil prices from recent levels, the Board has approved the immediate and accelerated implementation of the Company's general and administrative ("G&A") cost reduction measures. These measures are targeting an annual reduction of US$8.0 million or at least 40% in G&A costs, which is inclusive of a reduction in staff numbers. The Company has commenced the immediate execution of these measures which will be completed within the next four to six weeks. Production from Otakikpo for the rest of this year will be unaffected by these cost reduction measures.
Payment for OPL 310 Confirmed
Further to the announcement made on 25 March 2020, the Company has received confirmation that the payment of US$2.0 million to Optimum Petroleum Development Company ("Optimum"), the Operator of the OPL 310 License, to cover the portion of sunk costs and consent fees due on 20 March 2020, has been completed.
Change of Registered Office Address
With immediate effect, the Company's registered office address has changed to Cayman Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands.
Lekan Akinyanmi, LEKOIL's CEO, commented, "We have kept our commitments on our world class asset, OPL 310, despite the detrimental effects of the COVID-19 pandemic on the global economy and the subsequent fall in oil price. With the implementation of our cost reduction measures, we believe we are in a good position to navigate this challenging period."
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.
For further information, please visit www.lekoil.com or contact:
LEKOIL Limited Ore Bajomo, Investor Relations |
+44 20 7457 2020 |
Strand Hanson Limited (Financial & Nominated Adviser) James Spinney / Ritchie Balmer / Georgia Langoulant |
+44 20 7409 3494 |
Mirabaud Securities Limited (Joint Broker) Peter Krens / Edward Haig-Thomas |
+44 20 7878 3362 / +44 20 7878 3447 |
Numis Securities Limited (Joint Broker) John Prior / Emily Morris | +44 20 7260 1000 |
Instinctif (Financial PR) Mark Garraway / Dinara Shikhametova / Sarah Hourahane | +44 20 7457 2020 lekoil@instinctif.com |
Background on OPL 310
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.
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.