LEKOIL, the oil and gas exploration and production company with a focus on Nigeria and West Africa has committed to delivering greater value to its shareholders in the next two years. This commitment was made following the release of the company’s final audited results for the year ended 31, December 2019.
In the 2019 financial year, production at the Otakikpo field averaged 5,305 bopd and a plan to commence a five to seven well drilling programme that will increase production to around gross 15,000 to 20,000 bopd is already in motion. The company further renewed the Otakikpo Field Licence within the year.
Providing operational update about OPL 310, Lekoil noted that funding discussions are currently underway with industry partners. The company executed a legally binding Cost and Revenue Sharing Agreement to progress with appraisal and development programme activities at the OGO discovery.
In order to diversify its portfolio of assets, LEKOIL acquired 45% participating interest in a Production Sharing Contract related to OPL 276 from Newcross Petroleum Limited. Preliminary resource estimates by Newcross, based on four wells resulting in four discoveries, reported gross recoverable volumes of 29 million barrels of oil and 333 Bcf of gas, upside of 33 million barrels of oil and 476 Bcf of gas (recoverable). LEKOIL intends to farm-down a portion of its interest following a detailed prospect and lead risking study.
In 2019, Lekoil recorded equity crude sales proceeds of $42.0 million. Total production from the Otakikpo marginal field for the year stood at 759,666 barrels net to LEKOIL Nigeria. The Group lifted 677,788 barrels for the year 2019, realizing an average sales price of approximately $62 per barrel. However, loss for the year stood at $12.0 million compared to $7.8 million in 2018.
In the 2020 financial year, the company is targeting an immediate reduction of at least 40% in general and administrative expenses annually following the significant drop in oil prices in the first half of the year.
Commenting on the financial results, Lekan Akinyanmi, LEKOIL’s CEO, noted that “The priority for 2020 is to advance towards the start of the drilling programmes at both Otakikpo and Ogo in OPL 310. The next two years will prove to be transformative and provide key catalysts for value appreciation for shareholders through the drill bit as we advance in building a leading Africa-focused exploration and production business.”