Lekoil Inks Agreement With Optimum Petroleum Over OPL 310 Licence

Lekoil Ltd on Friday said it has signed an agreement with Optimum Petroleum Development Co to progress the Ogo discovery at the offshore OPL 310 licence in Nigeria.

Optimum is Lekoil’s partner and operates the block, and the two have agreed to “progress appraisal and development programme activities at the Ogo discovery”, targeting a two-well programme in the next 12 to 18 months.

The well programme is subject to ministry approval for an extension of the licence and to the two parties obtaining funding.

Lekoil has been fighting to get consent for a 23% interest in the block since 2016 but has had no luck.

Instead of pursuing the stake, both Optimum and Lekoil have agreed the stake will be used “as a potential funding and security vehicle for the accelerated development of the block by an industry partner or a third party that elects to farm-in to the block to fund field development”.

While the agreement does not cover the USD13 million Lekoil already paid for the 23% stake, Optimum and Lekoil are working on a resolution, including allocating the stake to a possible funding partner.

Under the agreement, a payment structure has been put in place for the approximately USD3.0 million worth of previously outstanding arrears payable by Lekoil to Optimum. So far, Lekoil has paid USD1.0 million of this and the rest will be paid by mid-October.

Lekoil will also pay a USD5.0 million operators fee to Optimum regarding Lekoil’s 17% participating interest.

Lekoil will also make production repayments to Optimum and just under half of the USD20 million due to the Nigerian government for OPL 310’s conversion to an oil mining licence and when the project reaches first oil.

Lekoil will also pay a fee to the Ministry of Petroleum Resources for the licence extension as well as 43% of the capital and operating expenses of the block to first oil.

Lekan Akinyanmi, chief executive of Lekoil, said: “We are pleased to have come to an understanding with Optimum, the operator of the OPL 310 Block. We look forward to working closely with them to unlock significant value for our investors and all stakeholders, not only with the appraisal potential identified at Ogo, but also with the other promising exploration leads readily identifiable in the OPL310 block. We would like to thank all our shareholders for their continued patience and support through this prolonged process, and we feel confident this support will be well rewarded in the future.”

Shares in Lekoil were up 1.8% at 6.30 pence in London on Friday morning.