Business
Agreements for Otakikpo Drilling Executed
Agreements for Otakikpo Drilling Executed.
About this update from Fenikso Ltd
[{"type":"text","content":"\n \n \n RNS Number : 7862S\n Lekoil Limited\n 13 July 2020\n \n \n \n \n 13\n July 2020\n \n \n \n \n \n Lekoil Limited\n \n \n (\"LEKOIL\" or the \"Company\")\n \n \n Definitive Service Agreements for the Otakikpo Drilling Programme Executed\n \n \n LEKOIL (AIM: LEK), the oil and gas exploration and production company with a focus on Nigeria and West Africa, announces that the Otakikpo Joint Venture (\"Otakikpo JV\") which is made up of Green Energy International Limited (\"GEIL\"), the Operator of the Otakikpo Marginal Field, and the Technical Partner, LEKOIL Oil and Gas Investments Limited (\"LOGL\"), in which the Company has a 90 per cent. economic interest, has executed definitive agreements for the next phase of the Otakikpo marginal field development.\n \n \n Further to the execution of a non-binding Memorandum of Understanding (\"MOU\")[1], the Otakikpo JV has executed additional service agreements with Schlumberger which cover the comprehensive infrastructure upgrades and field management services in relation to the planned upstream drilling programme.\n \n \n The upstream drilling programme consists of the following:\n \n \n · \n Phased drilling of up to seven new wells in Otakikpo \n with project capital expenditures (\"capex\") estimated at US$110.0 million, of which LOGL is expected to provide funding of US$44.0 million.\n \n \n · \n Drilling of the first two wells, estimated at US$25.0 million (US$10.0 million net to LOGL), is expected to increase gross production to approximately 10,000 bopd from the current gross rates of 5,755 bopd. Existing infrastructure at Otakikpo is capable of accomodating this incremental production.\n \n \n · \n As a result of the lower oil price environment and a change of project scope by the Otakikpo JV and other project stakeholders, these project capex \n estimates are a reduction of approximately 35% on previous estimates of US$170.0 million (US$68.0 million net to LOGL) as announced on 1 July 2019.\n \n \n · \n LOGL expects to raise, according to its participating interest, its own portion of the required funding for the first two wells from a combination of offtake financing from a subsidiary of a major international oil company and cashflow from existing production. Funding for subsequent wells is expected to come from the cashflow generated by incremental production...