15 Sep 2016 07:00
15 September 2016
LEKOIL Limited
("LEKOIL" or the "Company")
Operational Update and Increase of FBN Facility
LEKOIL (AIM: LEK), the oil and gas exploration and development company with a focus on West Africa, announces an update on the operations at Otakikpo and its existing FBN Capital Limited ("FBN") facility.
Otakikpo Operational Update
In addition to Otakikpo-002, Otakikpo-003 has now been completed and the rig has been demobilized. With Otakikpo-003 complete, the Company has four production strings ready for production. Onshore facilities are complete while welding and installation work continues to progress on the offshore pipeline. The Company expects commercial production to begin at Otakikpo in the next few weeks. The Company is targeting production of 10,000 bopd by year-end 2016 and will then proceed to phase two of the Otakikpo Field Development Plan, bringing aggregate production to a target of 20,000 bopd by the end of 2017, subject to requisite approvals.
FBN Facility Update
LEKOIL has increased the 2 billion Naira tranche of its two tranche facility arrangement with FBN, announced on 20 June 2016, to 4.5 billion Naira (totalling approximately US$14.8 million at the current Central Bank of Nigeria exchange rate of 305NGN:1USD). The terms of the facility, including the US$10 million tranche, announced concurrently on 20 June 2016, remain unchanged. The proceeds from the increase, along with cash on hand, are being used to complete infrastructure at Otakikpo prior to the commencement of commercial production.
Following the completion of this transaction, LEKOIL has total debt facilities on its Otakikpo oil field of:
· US$24.8 million two-tranche facility with FBN, which includes the previously refinanced US$10 million facility and the now upsized 4.5 billion Naira-denominated tranches. The Company has fully drawn on this facility.
· 5 billion Naira facility with Sterling Bank plc (approximately US$16.4 million). The Company has drawn down 1 billion Naira on this facility (or US$3.3 million)
The Company has the flexibility to pay a portion of its costs in Naira, and expects to draw down on these Naira facilities as needed. Both facilities from FBN and Sterling feature no pre-payment penalty.
For further information, please visit www.lekoil.com or contact:
Lekoil Limited Alfred Castaneda, Investor Relations Hamilton Esi, Corporate Communications
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+44 20 3434 5800 +44 20 7920 3150 |
Strand Hanson Limited (Financial & Nominated Adviser) James Harris / James Spinney / Ritchie Balmer
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+44 20 7409 3494
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Mirabaud Securities LLP (Joint Broker) Peter Krens / Edward Haig-Thomas
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+44 20 7878 3362 / +44 20 7878 3447 |
BMO Capital Markets (Joint Broker) Jeremy Low / Neil Haycock / Thomas Rider
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+44 20 7236 1010 |
Tavistock (Financial PR) Simon Hudson / Barney Hayward / Merlin Marr-Johnson |
+44 20 7920 3150 |
Background to Otakikpo
Otakikpo is sited in a coastal swamp location in oil mining lease (OML) 11, adjacent to the shoreline in the south-eastern part of the Niger Delta. Lekoil Nigeria exercises the rights and benefits of its 40% Participating and Economic interest in Otakikpo via the Farm-in Agreement and Joint Operating Agreement signed on 17 May 2014 with Green Energy International Limited ("GEIL").
The Company holds 90% of the economic interests in Lekoil Nigeria. Lekoil Limited's economic interest in Otakikpo therefore equates to 36%. The Otakikpo Joint Venture (Lekoil as Financial and Technical Partner to GEIL) began operations in December 2014. Ministerial consent was granted by the Honourable Minister of Petroleum Resources of Nigeria in June 2015.
The Otakikpo Field Development Plan consists of two phases. Phase 1 comprises the recompletions of two wells, Otakikpo-002 and Otakikpo-003, with the installation of an Early Production Facility of 10,000 bopd capacity and export via shuttle tanker. Phase 2 covers the subsequent incremental development of the rest of the field with a new Central Processing Facility and seven new wells expected to come on stream during 2017.
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