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Acquisition of Afren’s Participating Interest in OPL 310

Source: 12/1/2015, Location: Africa

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Lekoil, the oil and gas exploration and production company with a focus on Nigeria and West Africa, has agreed to acquire Afren plc’s entire 22.86% participating interest in OPL 310, which contains the Ogo discovery, for a total cash consideration of US$13 million.

Lekoil Nigeria Limited via its wholly owned subsidiary, Mayfair Assets and Trust Limited, holds a 17.14% participating interest and a 30% economic interest in OPL 310 obtained through a farm-in agreement signed in 2013 with Afren. The OPL 310 Acquisition will be undertaken by a wholly owned subsidiary of the Company, Lekoil 310 Limited.

Following the OPL 310 Acquisition, and prior to the drafting and formalisation of the detailed documentation that follows the signing of the term-sheet with Optimum Petroleum Development Company (“Optimum”), the operator and local partner in OPL 310 which retains a 60% participating interest, Lekoil will hold a consolidated1 participating interest of 40% (pending Nigerian Ministerial Consent (“Ministerial Consent”)) and an economic interest of 70% in OPL 310 and will become the technical and financial partner.

Following the significant oil discovery at Ogo in June 2013, the Company acquired 3D seismic over the remaining 80% of the OPL 310 licence and interpretation of the seismic is ongoing. Following the completion of the deal, the partners will commission and announce a detailed work programme for 2016.

Commenting, Lekan Akinyanmi, Lekoil’s CEO, said, “We have long stated our ambition to become a leading indigenous, risk diversified E&P business focused on Africa in general and Nigeria in particular. We believe that today’s acquisition is a great result for our shareholders. It further demonstrates our ability to build a strong portfolio, and marks the culmination of a busy period in the development of the Company. Lekoil now has a suite of assets at different stages of development, with different teams working on them.

“Otakikpo provides near-term production with excellent expansion potential to 10,000bopd in phase 1; a 2P+2C gross recoverable resource base of 56.6mmboe, as well as additional prospects in the project area with gross P50 STOIP estimates of 163mmboe onshore and significant upside in the shallow water. Capital requirements for expanding production beyond 10,000bopd will be met from a combination of internally generated cash flow, debt financing and offtake arrangements.

“As previously announced, the recent OPL 325 transaction increases the known basin exploration part of the portfolio. For a US$16 million signature bonus, Lekoil has secured a 62% economic interest in a licence hosting very large exploration targets. Lekoil geoscientists have been analysing the potential on this licence for several years and it gives the Company great optionality in the Dahomey basin with limited work obligations.

“Finally, I am delighted to say that today’s acquisition significantly enhances one of the key assets of our portfolio, OPL 310. The licence hosts world class exploration and appraisal potential at the Ogo field and also further upside potential in several other targets. Lekoil has a dedicated geological and geophysical team working on OPL 310 and in the coming months we expect to announce the interpreted results of the 3D seismic survey as well as the work programme as soon as it is approved by the relevant authorities.

“Our near-term focus is to bring Otakikpo into production. From this low-cost operational platform we will then work to de-risk Lekoil’s extraordinary suite of appraisal and exploration assets so as to crystallise value for our investors and for the benefit of all stakeholders”.

For more information about related Opportunities and Key Players visit West Africa Projects

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