TIDMLEK
RNS Number : 1975R
Lekoil Limited
26 June 2020
26 June 2020
Lekoil Limited
("LEKOIL" or the "Company")
Extension of annual results filing deadline and trading
update
LEKOIL (AIM: LEK), the oil and gas exploration and production
company with a focus on Nigeria and West Africa, announces that it
has requested, and received, from AIM Regulation (further to
guidance provided by it in Inside AIM on 26 March 2020) a
three-month extension to the filing deadline for its audited
financial results for the year ended 31 December 2019. The
extension, which allows the Company until 30 September 2020 to
finalise and publish its 2019 Audited Annual Results, was sought
due to the disruptions of working practices, particularly for the
Company's auditors, caused by the COVID-19 pandemic.
The Company intends to publish its 2019 Audited Annual Results
in advance of 30 September 2020, with the current target of July
2020. In the meantime, the Company is pleased to provide the
following trading and operational update.
Key summary
-- Implemented general and administrative (G&A") cost
reduction measures (including reduced headcount, office space and
service provider costs) with annual run rate of US$10.0 million
from the second half of this year
-- As at 31 May 2020, Group borrowings of US$17.5 million, with
cash balance of US$0.7 million. As at 25 June 2020, the Group had a
cash balance of US$3.4 million
-- Constructive discussions regarding restructuring of current
loans to reduce quarterly amortisation ongoing
-- Renewed offtake agreement with Shell Western Supply and
Trading Limited for at least another year with potential to extend
for a further year following the provision of a prepayment
facility
-- Average production for the first five months of the year was
5,755 bopd gross with 2,302 bopd net to LEKOIL Oil and Gas
Investments Limited ("LOGL"). LOGL is a wholly owned subsidiary of
Lekoil Nigeria Limited, which the Company has a 90 per cent.
economic interest
-- LOGL lifted 372,136 barrels in equity crude this year through
its nominated offtaker, Shell Western Supply and Trading Limited.
The last lifting occurred on 25 May 2020 with cash proceeds of
US$2.7 million received by the Company on 25 June 2020. The next
lifting, of a similar quantity, is expected to occur in mid July
2020.
-- Successful completion of site survey on OPL 310
Corporate Update
The Company is pleased to announce that it has renewed its
offtake agreement with Shell Western Supply and Trading Limited
which was due to expire in the second quarter of this year. The
offtake agreement has been renewed for a year with the possibility
to renew for a further additional year following the provision of a
prepayment facility.
Following the approval from the Board for an immediate and
accelerated implementation of the Company's general and
administrative ("G&A") cost reduction initiatives as announced
on 3 April 2020, the Company has significantly reduced staff
numbers, office space and service provider costs. With the
implementation of these initiatives, the Company expects an annual
run rate G&A of US$10.0 million from the second half of this
year. The Company continues to work with its key partners to
explore cost reduction initiatives within operations such that
during this reduced oil price environment, further flexibility in
liquidity is achieved without disrupting production
performance.
As at 31 May 2020, the Group had cash and bank balance of US$
0.7 million, and debt of US$17.5 million. As at 25 June 2022, the
Group had cash and bank balance of US$3.4 million.
Portfolio Update
Otakikpo
On behalf of the Otakikpo Joint Venture ("Otakikpo JV") which is
made up of Green Energy International Limited ("GEIL"), the
Operator of the Otakikpo Marginal Field, and the Technical Partner,
LEKOIL Oil and Gas Investments Limited ("LOGL"), a member of the
LEKOIL Limited group, an update on operational performance for the
Otakikpo Marginal Field ("Otakikpo") in OML 11 is as follows:
-- Despite the wider impact of COVID-19, operations continue to
run effectively. For the first five months of the year, production
at Otakikpo averaged 5,755 bopd gross with 2,302 bopd net to
LOGL
-- LOGL reported revenue of US$ 13.9 million over the same
period, which represents LOGL's share of crude oil sales from its
Otakikpo operation during the period ("equity crude")
-- LOGL lifted 372,136 barrels in equity crude this year in
three liftings through its nominated offtaker, Shell Western Supply
and Trading Limited ("SWST") (a member of the Royal Dutch Shell plc
group of companies)
-- The third lifting for the year occurred on 25 May 2020, with
cash proceeds of US$2.7 million received by the Company on 25 June
2020 in line with the offtake agreement
-- The next lifting, of a similar quantity, is expected to occur in mid July
-- As at 31 May 2020, LOGL had 75,604 barrels of equity crude stored as inventory
As at 31 May 2020, LOGL has an outstanding balance (including
accrued interest) of interest-bearing term loans
of US$ 17.5 million. This outstanding balance is detailed in the table below:
Lender Facility Type Pricing Maturity Outstanding
Date Balance
FBNQuest Capital Term loan with LIBOR + 10.00% 30-Jun-21 US$ 2.5 million
Limited quarterly repayment
--------------------- --------------- ---------- -----------------
FBNQuest Merchant Term loan with LIBOR + 10.00% 30-Jun-21 US$ 4.3 million
Bank Limited quarterly repayment
--------------------- --------------- ---------- -----------------
FBNQuest Merchant Term loan with LIBOR + 10.00% 24-Oct-23 US$ 10.7 million
Bank Limited quarterly repayment
--------------------- --------------- ---------- -----------------
Total debt outstanding US$17.5 million
-----------------
LOGL is in discussions with its existing lenders to restructure
its current loans with a view to reducing quarterly amortisations
following the extension of the loans. It is expected that these
discussions will be completed before servicing of the next
quarterly payments.
OPL 310
The Company, on behalf of the Optimum Petroleum Development
Company ("Optimum"), the Operator of the OPL 310 License, and
LEKOIL Nigeria Limited, a member of the LEKOIL Limited group,
announces the successful completion of the site survey on OPL
310.
As part of the two-well appraisal programme, the site survey
required to evaluate top-hole drilling, jack-up rig and potential
platform foundation hazards and any seabed obstructions was
successfully completed in the first quarter of this year without
any reported personnel injuries or damage to the environment. All
data acquisition objectives were met during the operations which
were completed before the scheduled expiration of the approval
received to undertake the site survey from the Department of
Petroleum Resources ("DPR"). With the site survey completed,
Optimum and LEKOIL can finalise the selection of the appropriate
rig to commence appraisal drilling.
Lekan Akinyanmi, LEKOIL's CEO, commented, "Cashflows generated
at Otakikpo in conjunction with our significant cost reduction
initiatives have been key for us as we remain committed to creating
value for our shareholders. We will continue to proactively review
options for further cost savings where appropriate. We are working
closely with all our partners, including GEIL and Optimum, in these
challenging times to deliver on our joint ambitions. We thank all
of our shareholders for their continued patience which we have
every confidence will be justified, especially as the wider outlook
improves."
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
For further information, please visit www.lekoil.com or
contact:
LEKOIL Limited
Ore Bajomo, Investor Relations +44 20 7457 2020
Strand Hanson Limited (Financial &
Nominated Adviser)
James Spinney / Ritchie Balmer / Georgia
Langoulant +44 20 7409 3494
Mirabaud Securities Limited (Joint
Broker) +44 20 7878 3362 / +44 20
Peter Krens / Edward Haig-Thomas 7878 3447
Numis Securities Limited (Joint Broker)
John Prior / Emily Morris +44 20 7260 1000
Instinctif (Financial PR) +44 20 7457 2020
Mark Garraway / Dinara Shikhametova lekoil@instinctif.com
/ Sarah Hourahane
Background on Otakikpo
Otakikpo is sited in a coastal swamp location in oil mining
lease ("OML") 11, adjacent to the shoreline in the south-eastern
part of the Niger Delta. LOGL exercises the rights and benefits of
its 40% Participating and Economic interest in Otakikpo through the
Farm-in Agreement and Joint Operating Agreement signed on 17 May
2014 with Green Energy International Limited ("GEIL"), the
Operator. LOGL is a wholly owned subsidiary of Lekoil Nigeria
Limited, which the Company has a 90 per cent. economic interest in.
The Otakikpo JV begun operations in December 2014. Ministerial
consent was granted by the Honourable Minister of Petroleum
Resources of Nigeria in June 2015. Commercial production started in
February 2017.
Background on OPL310
In 2013, the first exploration well (Ogo-1) drilled by the OPL
310 partners - then consisting of Optimum, LEKOIL and Afren - 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. Owing to 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.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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