Lekoil Limited MOU with GE Oil & Gas for Ogo Field in OPL 310 (2757B)
03 April 2017 - 4:05PM
UK Regulatory
TIDMLEK
RNS Number : 2757B
Lekoil Limited
03 April 2017
3 April 2017
LEKOIL Limited
("LEKOIL" or the "Company")
Memorandum of Understanding Signed with General Electric for Ogo
Work Programme in OPL310
LEKOIL (AIM: LEK), the oil and gas exploration and production
company with a focus on West Africa, is pleased to announce it has
signed a Memorandum of Understanding ("MOU") with GE Oil & Gas
("GE"), a subsidiary of General Electric Company (NYSE: GE) for the
development of a work programme for the Ogo field in OPL310.
As part of the activities towards the development of the field,
LEKOIL will leverage GE Oil & Gas equipment and technical
expertise.
LEKOIL is currently in discussions with other potential partners
for the financing of the OPL310 appraisal programme, which includes
an appraisal well, which is expected to spud by year-end 2017 or in
early 2018.
Following the successful completion of the appraisal phase, and
subject to the fulfilment of a number of conditions including a
positive well result, GE Oil & Gas, through a consortium SPV,
and LEKOIL through its funding partners, intend to invest funds
towards the full field development capital of the project. LEKOIL
estimates this cost to be US$400m for full field oil development
and US$600m for subsequent upstream gas field development.
GE Oil & Gas is expected to receive a percentage of LEKOIL's
future cash flows from the Ogo Field, as well as the ability to
supply its products and provide technical expertise throughout the
life of the project. LEKOIL's 40% participating interest in OPL310
will remain intact and unaffected by the terms of the MOU.
Lekan Akinyanmi, CEO of LEKOIL said,
"OPL 310 contains the world-class Ogo field discovery and is
another exciting asset in the LEKOIL portfolio. We are pleased to
announce this MOU with GE Oil & Gas which marks the first step
in our aim to fully develop the Ogo field.
"The agreement brings a world-class resource to OPL310 and
significantly reduces LEKOIL's cost of capital to bring the field
into production.
"As we have previously announced, we are still in the process of
securing ministerial consent for the remainder of the OPL310
acquisition and we remain confident that we will receive all the
necessary approvals prior to the start of the appraisal
programme."
For further information, please visit www.lekoil.com or
contact:
LEKOIL Limited
Alfred Castaneda, Investor
Relations +44 20 7920 3150
Hamilton Esi, Corporate Communications +44 20 7920 3150
Strand Hanson Limited (Financial
& Nominated Adviser)
James Harris / James Spinney
/ Ritchie Balmer +44 20 7409 3494
Mirabaud Securities LLP (Joint
Broker) +44 20 7878 3362 / +44
Peter Krens / Edward Haig-Thomas 20 7878 3447
BMO Capital Markets (Joint
Broker)
Vicary Gibbs / Neil Haycock
/ Thomas Rider +44 20 7236 1010
Tavistock (Financial PR)
Simon Hudson / Barney Hayward
/ Merlin Marr-Johnson +44 20 7920 3150
Background on OPL310
On 1 February 2013, Mayfair Assets and Trust Limited, a wholly
owned subsidiary of Lekoil Nigeria Limited, farmed into Afren
Investments Oil and Gas (Nigeria) Limited's interest in OPL 310 for
a 17.14% participating interest and 30% economic interest.
Later that year the first exploration well (Ogo-1) drilled by
the OPL 310 partners - then consisting of Optimum, LEKOIL Limited
and Afren Plc - 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.
Based on 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.
On 31 July 2015, Afren Plc, the parent company of Afren Oil
& Gas that held interests in the OPL 310 licence, was put into
administration and its assets put up for sale. LEKOIL Limited moved
quickly to protect its interests in OPL 310 by beginning
discussions with the administrator of Afren Plc for the potential
acquisition of its subsidiary interests in OPL 310. On 25 November
2015, the Company entered into an agreement with the administrator
of Afren Plc and Afren Nigeria Holding Limited to acquire the
shares of Afren Oil & Gas which held a 22.86% participating
interest in OPL 310 for a total consideration of US$13 million.
Application for Ministerial Consent for this interest has been made
and is pending.
-ends-
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The company news service from the London Stock Exchange
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