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Lekoil - OPL 310 Project Update

LEKOIL (AIM: LEK), the oil and gas exploration and production company with a focus on Nigeria and West Africa, is pleased to announce that, further to the Company's announcement on 13 January 2020, it has reached an agreement with Optimum Petroleum Development Company ("Optimum"), the Operator of the OPL 310 License, on deferring the Company's financial and operational obligations due during February 2020 pursuant to the Cost Recovery and Sharing Agreement executed between LEKOIL and Optimum in August 2019.


As previously announced, pursuant to the Cost Recovery and Sharing Agreement, LEKOIL was required to pay a portion of Optimum's sunk costs and consent fees (previously estimated at US$10.0 million) as well as provide evidence of its ability to fund 42.86 per cent. of the costs and expenses for the drilling of the first appraisal well during February 2020 (estimated at a further US$28 million).


Optimum and LEKOIL have agreed the final payment of US$9.6 million to Optimum which covers sunk costs and consent fees as follows:


·      The sum of US$2.0 million to be paid on or before 20 March 2020.


·      The sum of US$7.6 million to be paid on or before 2 May 2020.


Optimum and LEKOIL have also agreed that the obligation for LEKOIL to provide evidence of its ability to fund 42.86 per cent. of the costs and expenses for the drilling of the first appraisal well on OPL 310 be deferred until July 2020.


Engr. Yusuf K. N'jie, Managing Director, Optimum Petroleum Development Company, commented, "We are pleased to continue to support LEKOIL by deferring their obligations which were due this quarter. We remain confident in LEKOIL's ability to by July this year, raise the financing that is required for the commencement of the appraisal drilling programme for OPL 310 which we truly believe is a world class strategic asset."


Lekan Akinyanmi, LEKOIL's CEO, commented, "We remain excited about the opportunities of OPL 310 and are focused on securing the necessary funding under the revised schedule. We are grateful for the support and commitment shown by our partner Optimum, the Operator of the OPL 310 License. This alignment with our partner is crucial in unlocking significant value for all our investors and stakeholders."


Investigation into OPL 310 Facility Agreement


As announced on 13 January 2020, an Investigation Committee has been set up to investigate the origination and execution of the Facility Agreement (as defined in that announcement), what steps can be taken to retrieve monies already paid in association with the transaction and the Company's wider corporate governance practices. The investigation continues and the Company will provide an update once the investigation has concluded.

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