LEK.L Regulatory News (LEK)

30 September 2014

Lekoil Limited

("Lekoil" or the "Company" or the "Group")

Half Year Results for six months ended 30 June 2014

Lekoil (AIM: LEK), the oil and gas exploration and development company with a focus on Nigeria and West Africa,reports its Half Year Results for the six months ended 30 June 2014.

Summary

· 3D seismic acquisition programme on OPL310 completed successfully, processing of the data is currently underway.

· Acquisition of a 40 per cent. participating and economic interest in the Otakikpo Marginal Field provides access to potential early production.

o Otakikpo CPR post period end contained a 57.6% increase in gross 2C oil resource estimates to 56.75 mmbbl

o The Group is currently in discussions with a number of banks regarding provision of debt facilities for the development of Otakikpo.

· Evaluation of opportunities to grow the asset portfolio continues.

Financial

· Total comprehensive loss of $5.3m for the six months ended 30 June 2014 (2013: $8.8m)

· Cash at period end of $61.7m ($66.6m at 31 December 2013, $5.9m at 30 June 2013)

Outlook

· Processing of the OPL 310 seismic data is ongoing with fast-track and time-migrated seismic volumes expected in Q4 2014, prior to further drilling in 2015. Detailed well planning and engineering studies are underway.

· Otakikpo field development planning underway with production currently expected to commence in the second half of 2015.

Lekan Akinyanmi, Lekoil's CEO, commented, "Our priorities are the appraisal of the Ogo discovery and the development of Otakikpo. We remain committed to our strategy of building a substantial, Africa focused E&P business, diversified by risk, maturity of assets and geography."

For further information, please visit www.lekoil.comor contact:

Chairman's and CEO's Statement

Introduction

During the first half of 2014 we have made much progress on a number of initiatives set out for our portfolio. The 3D seismic acquisition programme on OPL310 was completed successfully in May 2014 and the processing of the seismic data is currently underway. The acquisition of a 40 per cent interest in the Otakikpo marginal field in May 2014 was a good addition to our portfolio and in line with our stated strategy.

Strategy

Lekoil's strategy is to build an exploration and production group, diversified across lower risk production assets and appraisal projects and higher risk exploration assets, in both known exploration basins and newly discovered basins. Our business is focused initially on West Africa in general and Nigeria in particular.

We continue to believe that our competitive advantage in Nigeria, achieved through our well respected Board and management team and our indigenous status, can act as the springboard allowing us to execute our broader strategy of becoming a multi asset exploration, development and production business in Africa. We seek to achieve our goals through the acquisition of promising underdeveloped and underfunded assets, supplemented by longer term exploration interests in overlooked oil basins.

We may also participate in marginal fields licensing rounds as well as looking selectively to acquire interests being divested by International Oil Companies and National Oil Companies. We believe our ability to acquire, or farm into, such interests is underpinned by our in-house technical expertise and the experience our management team has gained with major International Oil Companies, service providers and in global financial markets.

Values

Our core values are summarized by innovation, integrity, teamwork and transparency. We define innovation in two ways: doing things differently and looking at things differently. We bring this to bear to achieve excellent, durable and the most cost-effective results. We believe in dealing honestly and fairly with all stakeholders, whilst maintaining the highest standards of ethical conduct at all times. We believe that by working together everyone achieves a great deal more. We aim to be the best, work with the best and work together to achieve the best result.

OPL 310

The next phase of our exploration and appraisal programme on OPL 310 commenced with the acquisition of additional 3D seismic to enhance our understanding of the Ogo discovery and the adjacent area. In May 2014, Lekoil and its partners completed an extensive 1,505 square kilometers of marine 3D seismic acquisition representing approximately 80 per cent. of the acreage within OPL 310. Processing of the seismic data is ongoing with fast-track and time-migrated seismic volumes expected in Q4 2014, which will be followed by further drilling in 2015. Detailed well planning and engineering studies are underway in support of the appraisal drilling timeline.

Otakikpo

In May 2014, we announced that a wholly owned subsidiary of Lekoil Nigeria Limited ("Lekoil Nigeria"), had acquired a 40 per cent. participating and economic interest in the Otakikpo Marginal Field from Green Energy International. Lekoil Limited holds ninety per cent of the economic interests in Lekoil Nigeria. The Company believes that Otakikpo can be brought into production within 12 to 18 months of commencement of the work programme which we began in May 2014.

Otakikpo lies in oil mining lease (OML) 11 in the south eastern coastal swamp of the Niger Delta. OML 11 is held by the SPDCJV (Shell Petroleum Development Company Joint Venture) which includes the Nigerian National Petroleum Corporation, the Shell Petroleum Development Company of Nigeria Limited, Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited. Otakikpo was awarded to Green Energy International by the Department of Petroleum Resources in 2011. The award also included a commitment to develop a small scale gas utilisation project within 30 months of commencement of production.

Lekoil Oil & Gas Investments Limited entered into a farm-in agreement with Green Energy International, effective 17 May 2014. As consideration for the assignment of the interest, Lekoil Oil & Gas Investments Limited paid a signature bonus of US$7 million to Green Energy International and, contingent on production and receipt of ministerial consent to the transfer of the participating interest, will pay a production bonus of US$4 million.

A comprehensive field development plan is being finalised to prioritise production by re-entry of the two existing wells, use of an early production facility and barge evacuation of crude. Following this, some additional seismic data may be acquired in the other under-explored parts of the licence area to explore further development potential.

On 23 September 2014 we announced a competent persons report (CPR) for Otakikpo and a significant upgrade to resource estimates. AGR TRACS International Ltd ("AGR TRACS") carried out a comprehensive review of the surface and subsurface data provided by Lekoil. Following the review, AGR TRACS reported that the gross unrisked 2C Contingent Resources for Otakikpo were estimated to be 56.75 mmbbl. This compares to the 36 mmbbl of gross oil resources in the most recent 2C resource estimates available at the time of the Company's acquisition of the interest in Otakikpo in May 2014.

Governance

The Directors recognise the value of the Quoted Companies Alliance Corporate Governance Code for Small and Mid-Size Quoted Companies, to the extent they consider it appropriate and having regard to the size, current stage of development and resources of the Company. While under the AIM Rules, full compliance is not required, the Directors believe that the Company applies the recommendations in so far as is appropriate for a public Company of its size.

Financial Results

The Group reported a net loss of $5.3 million ($8.8 million in the prior corresponding period). On a per share basis the loss is $(0.01) cents per share ($(0.06) cents per share in the prior corresponding period). The reduction in net loss is due to the one-off costs associated with the admission of the Group to trading on AIM during the previous corresponding period, albeit this was offset by an expected growth in expenses within the business as we continue to develop our existing assets and acquire new assets. Operating cash flow during the period was $(25.0) million ($(10.9) million in the prior corresponding period). The Group exited the period with $61.7 million available in cash and cash equivalents.

At this stage in our development the Directors will not be recommending a dividend in respect of the current period.

Outlook

We remain committed to our strategy of building a substantial, Africa focused E&P business, diversified by risk, maturity of assets and geography. Our priorities remain the appraisal of the Ogo discovery and the development of Otakikpo. In parallel with this, we will continue to evaluate opportunities to grow our asset portfolio. Longer term, we will look to acquire other assets similar to our interest in OPL310 and Otakikpo. These could be onshore or offshore Nigeria or in other areas we understand and view as attractive along the West African Transform Margin.

We will continue to build a portfolio of assets in line with our strategy (20 per cent. of Net Asset Value (NAV) represented by producing assets, 30 per cent. by appraisal assets, 40 per cent. by exploration assets in known basins and the remaining 10 per cent. by new, frontier basin exploration). We believe the working capital position of the Company remains strong and we are well funded to meet our planned work programmes. We will continue to seek opportunities to build value for shareholders.

On behalf of the Board we would like to thank our shareholders for their continued support.

30 September 2014

Financial Review

Overview

In the six months ended 30 June 2014, the Group recorded an operating loss of $5.3 million and exited the period with cash and short-term investments of $61.7 million. The Group is currently in discussions with a number of banks regarding provision of debt facilities for the Otakikpo marginal field development.

Interpretation and appraisal of the extensive 3D seismic program over the OPL 310 block continues. Following completion of this analysis in conjunction with our partners, detailed well planning and engineering studies are underway in support of the appraisal drilling timeline.

Interim results

The Group recorded a total comprehensive loss of $5.3 million for the six months ended 30 June 2014 compared to $8.8 million for same period in 2013. No dividends were paid or declared during the period.

Administrative expenses & operating loss

Administrative expenses were $5.3 million compared to $8.8 million for the same period in 2013. The reduction in administrative expenses is due to the one-off costs associated with the admission of the Group to trading on AIM during the previous corresponding period, albeit this was offset by an expected growth in expenses within the business as we continue to develop our existing assets and acquire new assets. The Group therefore reported an operating loss of $5.3 million for the six months ended 30 June 2014 compared with a loss of $8.8 million for the same period in 2013.

Taxation

No tax was payable for the six months ended 30 June 2014.

Capital expenditure

The Group's capital expenditure during the six months ended 30 June 2014 amounted to $15.8 million compared to $35.8 million incurred for the same period in 2013. Capital expenditure during the period was primarily associated with OPL 310 and the acquisition of the Group's 40% interest in the Otakikpo marginal field.

Cash and cash equivalents

The Group had cash and short-term investments of $61.7 million at 30 June 2014 compared to $5.9 million at 30 June 2013.

Summary statement of financial position

The Group's non-current assets increased from $37.0 million at 30 June 2013 to $118.9 million at 30 June 2013, reflecting expenditures on the Ogo field and expenditure on the Otakikpo marginal field. Current assets represent the Group's cash resources and other receivables, which increased from $8.0 million as at 30 June 2013 to $62.5 million as at 30 June 2013, reflecting equity capital raised in the period, less capital and other expenditures. Current liabilities are principally trade and other accounts payable which increased from $1.2 million to $3.3 million as at 30 June 2014.

Dividend

The Directors do not recommend the payment of a dividend for the period ended 30 June 2014.

Accounting policies

The Group's significant accounting policies and details of the significant judgments and critical accounting estimates are consistent with those used in the last annual financial statements.

Liquidity risk management and going concern

The Group closely monitors and manages its liquidity risk. Cash forecasts are regularly produced and sensitivities run for different scenarios including changes in timing of developments and cost overruns of exploration activity. At 30 June 2014, the Group had liquid resources of approximately $61.7 million, in the form of cash and short-term investments, which are available to meet ongoing capital, operating and administrative expenditure. The Group's forecasts, taking into account reasonably possible changes as described above, show that the Group expects to have sufficient financial resources for the 12 months from the date of approval of the 2014 Interim Financial Statements. At the present time, the Group does not have any debt.

David Robinson

Chief Financial Officer

30 September 2014

Independent Auditor's report on review of condensed interim financial information 

To the Members of Lekoil Limited

Introduction

We have reviewed the accompanying condensed consolidated statement of financial position of Lekoil Limited ("the Company") as at 30 June 2014, and the condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the six month period then ended, and notes to the interim financial information ("the condensed consolidated financial information"). The Directors are responsible for the preparation and presentation of this condensed consolidated interim financial information in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. Our responsibility is to express a conclusion on this condensed consolidated interim financial information based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of consolidated interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial information as at 30 June 2014 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Signed

Chibuzor N. Anyanechi, FCA

FRC/2013/ICAN/00000000789

For: KPMG Professional Services

Chartered Accountants

September 2014

Lagos, Nigeria

Condensed consolidated statement of financial position

For the six months ended 30th June 2014

Condensed consolidated statement of profit or loss and other comprehensive income

Condensed consolidated statement of changes in equity

Condensed consolidated statements of cash flows

Notes to the condensed consolidated interim financial statements

1. Reporting entity

Lekoil Limited (the "Company") is a company domiciled in the Cayman Islands. The address of the Company's registered office is Intertrust Group, 190 Elgin Avenue, Georgetown, Grand Cayman, Cayman Islands. These condensed consolidated interim financial statements (interim financial statements) as at and for the six months ended 30 June 2014 comprise the Company and its subsidiaries (together referred to as the "Group"). The Group's principal activity is exploration and production of oil and gas.

2. Basis of Preparation

Statement of compliance

These interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 December 2013.

These interim financial statements were authorised for issue by the Company's Board of Directors on 29 September 2014.

3. Use of judgements and estimates

In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2013.

4. Measurement of fair values

The Group has an established control framework with respect to the measurement of fair values. The Chief Financial Officer (CFO) has overall responsibility for overseeing significant fair value measurements, including Level 3 fair values, and reports directly to the Board of Directors.

The CFO regularly review significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation expert assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which such valuations should be classified.

Significant valuation issues are reported to the Group's Audit Committee.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

5. Significant accounting policies

The accounting policies applied in these condensed consolidated interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2013.

6. Operating segments

The Group operates predominantly in the oil and gas industry. As at the year end, the Group had operational activities in only one geographical segment, Nigeria.

Geographical information

In presenting information on the basis of geographical segments, segment assets are based on the geographical location of the assets.

Non-current assets

In US Dollars

Non-current assets presented consist of property, plant & equipment and Exploration & Evaluation assets.

7. Property, Plant and Equipment

In US Dollars

The movement on this account was as follows:

8. Exploration and Evaluation (E&E) asset

E & E asset represents the Group's oil mineral rights acquisition and exploration costs.

OPL 310 is a license granted to Optimum Petroleum Development Limited (Optimum) by the Nigerian Government on 3 February 1992 for an initial term of five years. The initial term of the OPL 310 license expired in 1997 and there was a lag between the expiration of the initial term and the revalidation. On 19 February 2009, the Department of Petroleum Resources in Nigeria, acting on behalf of the Minister for Petroleum Resources confirmed the re-allocation of OPL 310 to Optimum with effect from 11 February 2009 for a period of ten years. The license will therefore expire on 10 February 2019.

Lekoil Nigeria's right to the Participatory Interest of 17.14% is subject to ministerial consent to the farm-in agreement. The Board of Directors, on the basis that the ministerial consent will be obtained, is of the opinion that the classification of the farm-in costs as Exploration and Evaluation assets instead of loans and advances is appropriate.

Where ministerial consent is not received, any consideration paid by the Company to Afren will not be refunded, however, the Company will have a right under the Risk and Financial Services Agreement (RFSA) to interests in OPL 310 reserves and production.

Total farm-in costs incurred as at 30 June 2014 is $108,610,984. This amount includes carried interest of $50 million to be recovered in oil.

(ii) Acquisition of interest in Otakikpo marginal field

The addition during the period was due to the Group's share of E & E expenditure in respect of a farm-in agreement with Green Energy Oil and Gas Limited ("GEIL") relating to GEIL's interest in Otakikpo field in OML 11 in Nigeria. Under the terms of the farm-in agreement, the Company is entitled to a participatory and economic Interest of 40%. The Company is to bear the costs of GEIL up to the sum of $70 million (the "Initial Carry Limit") at an interest rate of London Interbank Offer Rate (LIBOR) plus ten percent; and an interest rate of LIBOR plus thirteen percent for GEIL's costs borne by Lekoil in excess of the Initial Carry Limit. The cost is to be recovered upon commencement of production with the Company entitled to 88% of the share of net available production until cost recovery is complete.

Otakikpo is a field covered by the license OML 11 which was initially granted to the Nigerian National Petroleum Corporation ("NNPC"), The Shell Petroleum Development Corporation of Nigeria Limited ("SPDC"), Total E&P Nigeria Limited ("TEPNG") and Nigerian Agip Oil Company Limited ("NAOC") joint venture.

The Company's right to the Participatory Interest of 40% is subject to ministerial consent to the farm-in agreement. The Board of Directors, on the basis that the ministerial consent will be obtained, is of the opinion that the classification of the farm-in costs as Exploration and Evaluation assets instead of loans and advances is appropriate.

Where ministerial consent is not received, GEIL shall indemnify and make Lekoil whole for or against any damage, claims or loss which Lekoil may suffer as a consequence of the non-receipt of the ministerial consent. GEIL shall also be liable to immediately refund to Lekoil all unrecovered GEIL costs and applicable interest payments thereon plus the farm-in signature bonus.

Total farm-in costs incurred as at 30 June 2014 is $7,375,000. These costs include signature bonus of $7 million and carried interest costs amounting to $375,000 to be recovered in oil.

9. Trade and other receivables

10. Capital and reserves

(a) Share capital

On 20 May 2014, the Board of Directors approved the placing of 33,000,000 ordinary shares in the capital of the Company to raise $37.5 million.

(b) Share premium

Share premium represents the excess of amount received over the nominal value of the total issued share capital as at the reporting date. The analysis of this account is as follows:

(c) Other reserves

Other reserves represent non-reciprocal contributions to investees.

11. Non-controlling interest

12. Trade and other payables

13. Revenue

No revenue is reported in these condensed consolidated interim financial statements as the Group is yet to commence production of oil and gas.

14. General and administrative expenses

(a) Operating leases

The Group leases office and residential facilities under cancellable operating leases. Lease payments are made upfront covering the lease period with no additional obligations.

(b) Personnel expenses

15. Share-based payment arrangement

At 30 June 2014, the Group had the following share-based payment arrangements:

Share option scheme (equity-settled)

The Group established a share option scheme that entitles employees, key management personnel and consultants providing employment-type services to purchase shares in the Company. In accordance with the scheme, holders of vested options are entitled to purchase shares at established prices of the shares at the date of grant during a period expiring on the tenth anniversary of the Effective Date i.e. 3 December 2010. The grant dates for awards were 3 December 2010, 1 June 2011, 1 November 2011, 3 June 2012, 19 February 2013, 5 April 2013 and 17 May 2013 based upon a shared understanding of the terms of the awards at that time.

Terms and conditions of share option scheme

The number and weighted average exercise prices of share options is as follows:

During the period ended 30 June 2014, there were no options granted or exercised. The last valuation was carried at 31 December 2013.

Inputs for measurement of grant date fair values

The fair value of each stock option granted was estimated on the date of grant using the Black-Scholes Option Pricing Model for plain vanilla European call options with the following inputs:

Volatility was estimated with reference to empirical data for proxy companies with listed equity.

16. Loss per share

(a) The calculation of basic loss per share has been based on the following loss attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding.

(i) Loss attributable to ordinary shareholders (basic)

(ii) Weighted average number of ordinary shares (basic)

(b) The calculation of diluted loss per share has been based on the following loss attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.

(i) Loss attributable to ordinary shareholders (basic)

(ii) Weighted-average number of ordinary shares (diluted)

17. Related party transactions

The Company had transactions during the period with the following related parties:

(a) Transactions with key management personnel

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activitites of the Group, directly or indirectly. These are the directors of the Group.

Loans to key management personnel

Unsecured loans to Directors amounted to $49,900 (2013: $49,900). No interest is payable by the key management personnel. At 30 June 2014, the balance outstanding was $49,900 (2013: $49,900) and is included in 'trade and other receivables' (see note 9).

Key management personnel compensation

In addition to their salaries, the Company also provides non-cash benefits to key management personnel, in form of share based payments.

Key management personnel compensation comprised the following:

Details of Directors' remuneration (including fair value of share based payments) earned by each Director of the Company during the period are as follows:

* Resigned 28 June 2014

Key management personnel and director transactions

Directors of the Company control 15.60% (2013: 15.60%) of the voting shares of the Company.

An amount of $64 (2013: $62) representing payment made on behalf of the Company by a Director who is also a shareholder remained outstanding as at 30 June 2014. This amount is included in accounts payable and accruals (Note 12).

(b) Lekoil Limited, Cayman Islands has a Management & Technical Services Agreement with Lekoil Management Corporation (LMC), a consolidated subsidiary, under the terms of which LMC was appointed to provide management, corporate support and technical services. The remuneration to LMC includes reimbursement for charges and operating costs incurred by LMC. At 30 June 2014, the amount to be reimbursed to LMC was $1.60 million (2013: $2.06 million).

18 Group entities

Significant subsidiaries:

Although the Company holds less than 50% ownership interests in Lekoil Nigeria Limited, it has control over the financial and operating policies of the entity and it is entitled to 90% of the benefits related to its operations and net assets based on terms of agreements under which the entity was established. Consequently, the Company consolidates Lekoil Nigeria Limited.

19. Events after the Reporting Date

There have been no events between the reporting date and the date of authorising these financial statements that have not been adjusted for or require disclosure in these financial statements.

20. Financial commitments and contingencies

(a) On 17 October 2011, Lekoil Nigeria Limited signed the Prepayment Agreement relating to a proposed acquisition by Lekoil Nigeria Limited of an interest in another Nigerian field, OPL241 from Oilworld Limited ("Oilworld"). It was proposed that Lekoil Nigeria Limited acquire a 10% participating interest in OPL241 subject to negotiation of a commercial transaction and suitable documentation being agreed (the "OPL241 Acquisition") and certain payments being made by Lekoil Nigeria Limited to Oilworld. Lekoil Nigeria Limited paid a deposit of $1,000,000 on the understanding that this would be held by Oilworld as a deposit and applied by Oilworld towards any subsequent acquisition by Lekoil Nigeria Limited of a 1% participating interest in OPL241. Ministerial Consent would be needed for the transfer of the interests although the OPL241 Acquisition has not been completed and Oilworld is still holding the sum of $1,000,000 as a deposit on the above basis. The Prepayment Agreement also states that, if the OPL241 acquisition did not complete, Lekoil Nigeria Limited would have a right of first refusal over the 10% participating interest in OPL241 held by Oilworld (including the 1% interest to which the $1,000,000 deposit above refers). Oilworld commenced sole risk 3D seismic acquisition in 2013. The amount of $1,000,000 paid is included in exploration and evaluation assets.

(b) Lekoil Limited, Namibia is bound to an agreement for the acquisition of a 77.5% participating interest in the Production Sharing Agreement (PSA) and operatorship in respect of Namibia Blocks 2514A and 2514B with Hallie Investments (Namibia) for the sum of $2.75million, out of which an initial deposit of $69,660 was made. The asset is at the appraisal phase and historical seismic and well data are currently under review. Siesmic acquisitions are expected to commence in 2016. The amount of $69,660 paid is included in exploration and evaluation assets.

(c) Mayfair Assets and Trust Limited is bound to an agreement for the acquisition of a 17.14% participating interest in OPL 310. Mayfair Assets and Trust carried its partners up to a limit of $50million relating to the first exploratory well. Subsequent expenditure beyond the carried interest limit is then borne 42.86% by Mayfair Assets & Trust Limited.

(d) In accordance with the farm-in agreement with Green Energy International Limted (GEIL), Lekoil Oil and Gas Investment Limited will pay GEIL, contingent on production and receipt of ministerial consent, a production bonus of US$4 million.

(e) The Group is yet to commence development and production activities. As a result, no provision has been recognised for assets retirement obligation arising from the Group's oil & gas activities as the Directors cannot reliably estimate the future abandonment costs.

21. Availability of Interim Report

A copy of these results can also be downloaded from the Company's website at www.lekoil.com 

-ends-