LEK.L Regulatory News (LEK)

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.

26 June 2019

LEKOIL Limited

("LEKOIL" or the "Company")

Competent Persons Report on Otakikpo Marginal Field in OML 11Significant Upgrade to 2P Reserves and Resources

LEKOIL (AIM: LEK), the oil and gas exploration and development company with a focus on Nigeria and West Africa more generally, is pleased to announce that the Company has finalised an updated Competent Person's Report ("CPR") detailing recoverable volumes expected within the Otakikpo Marginal Field ("Otakikpo") in OML 11. The Company is pleased to announce a significant upgrade to 2P oil reserves estimates and prospective resources (unrisked) for LEKOIL Nigeria's 40 per cent participating interest in the field. The CPR, prepared by McDaniel Associates & Consultants Ltd. ("McDaniel"), focuses on the Company's discovered conventional oil accumulations only. The Company expects to see the field's significant gas resources reflected in a future update to the CPR. McDaniel carried out a comprehensive review of the surface and subsurface data provided by LEKOIL following the completion of 3D seismic acquisition onsite. This supersedes the previous CPR completed on Otakikpo by AGR Tracs International Ltd ("AGR Tracs") in 2015.

The effective date of the CPR is 1 February 2019. Summary Reserves and Resources tables are shown below.

Both the McDaniel and AGR Tracs reports are available to download for reference from the LEKOIL website www.lekoil.com

Highlights of CPR Recoverable Volumes figures:

· 48.6 million barrels (MMbbl) Gross 2P reserves (previous CPR 15.0 MMbbl); 19.42 MMbbl net to LEKOIL Nigeria

· 331.6 million barrels of Gross aggregate stock tank oil in place (STOIIP) prospective volumes on a P50, unrisked basis, mean estimate (previous CPR 163.0 MMbbl), of which 132.6 MMbbl is net to Lekoil Nigeria

· 2P NPV10 of US$226 million, after income taxes, net to LEKOIL Nigeria

Lekan Akinyanmi, CEO of LEKOIL said, "We are very pleased that McDaniel's review has further confirmed our view of the attractiveness and future potential of the Otakikpo project. This CPR doubles the estimates for unrisked oil resources net to LEKOIL Nigeria and reinforces the economics of the development. We now look forward, subject to securing the necessary funding, to the multi-well drilling programme aimed at increasing production to approximately gross 15,000 to 20,000 bopd."

CPR Summary Reserve and Resource Tables

Table 1.1 Gross and Net Reserves (in MMbbl):

Table 1.2 Gross and Net Contingent Resources (in MMbbl):

Table 1.3 Gross and Net Prospective Resources (in MMbbl):

Table 1.4 Net Present Value After Income Taxes (in US$ million)

Net to LEKOIL Nigeria (40 per cent participating interest)

Table 1.5 Summary of Total Petroleum Initially in Place - Property Gross Values

Prospective Resources - OOIP

1) There is no certainty that any portion of the prospective resources will be discovered. If discovered, there is no certainty that it will be economically viable or technically feasible to produce any portion of the resources.

2) The risked resources are partially risked prospective resources that have been risked for chance of discovery, but have not been risked for the chance of development.

3) Sub-Total and Total based on the probabilistic aggregation of zones within a prospect and arithmetic aggregation of the individual prospects to the Sub-Total and Total level.

4) The Unrisked Total is not representative of the Portfolio Unrisked Total and is provided to give an indication of the resource range assuming all the prospects are successful.

5) Volumes listed are full life volumes, prior to any cutoffs due to economics.

CPR Detail

McDaniel conducted a review of all available seismic, log, and general geological data provided by LEKOIL and Schlumberger for existing wells in the Otakikpo Field and identified eight drillable structures to which prospective resources have been assigned. All of the prospects have been estimated probabilistically using a Monte-Carlo simulation given the high degree of uncertainty in the various input parameters to arrive at assigned prospective resources.

Review by qualified person:

Samuel Olotu, Executive Vice President, Technical and technical expert for the Company, has reviewed and approved the technical information contained within this announcement in his capacity as a qualified person under the AIM Rules. Mr. Olotu holds a BSc degree in Geology and an MSc in Geophysics from the University of Ibadan, and has over 20 years' experience in the oil and gas industry (ranging from asset management, field development, reservoir management and seismic data processing and interpretation) in Nigeria, Europe, Middle-East and Asia. He is a member of the Society of Petroleum Engineers, Society of Exploration Geophysicists, the National Association of Petroleum Explorationists and the Nigerian Mining and Geosciences Society.

For further information, please visit www.lekoil.com or contact:

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 Operator.

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 began operations in December 2014. Ministerial consent was granted by the Honourable Minister of Petroleum Resources of Nigeria in June 2015. Commercial production started in February 2017.

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