Lekoil Announces Interim Results 2020

Source: www.gulfoilandgas.com 10/30/2020, Location: Africa

LEKOIL, the oil and gas exploration and production company with a focus on Nigeria and West Africa, reports its unaudited interim results for the six months ended 30 June 2020.

Operational Highlights
- Otakikpo production averaged 5,676 bopd gross with 2,271 bopd net to LEKOIL Nigeria;
- As at 30 June 2020, the Group's share of equity crude was 408,800 barrels. The latest lifting is currently ongoing with US$4.0 million cash proceeds expected to be received by the Company;
- Phase Two plans are underway, subject to securing funding, for the drilling of up to seven wells where the first two wells are expected to increase gross production to 10,000 bopd;
- Successful completion of site survey operation on OPL 310;
- With most of the preparatory work concluded for the Ogo appraisal drilling programme and well locations selected, funding discussions are currently underway with industry partners.

Financial Highlights
- Net loss for the period of US$7.9 million (30 June 2019: loss of US$5.2 million);
- Significantly lowered general and administrative expenses, and as a result reduced current monthly run rate to approximately US$1.0 million;
- Period end cash and bank balances of US$4.6 million (31 December 2019: US$2.7 million);
- As at 30 June 2020, total outstanding debt financing, net of cash, stood at US$15.6 million (31 December 2019: US$16.5 million);
- Total cash balance as at 30 September 2020 of US$2.9 million, with US$1.3 million recognised as restricted cash.

Post reporting period events
- Renewed the offtake agreement with Shell Western Supply and Trading Limited for two years and included the provision of a US$3.5 million prepayment facility to aid short term liquidity. The facility, which is repayable from future crude oil liftings, has a tenor of five months and charges a market margin over LIBOR;
- Restructured the existing three interest-bearing term bank loans into one secured loan with FBNQuest Merchant Bank. The restructuring provided an extension of loan tenor with new term loan maturity date of 31 March 2024 representing an increase on the average maturity of the three existing bank loans by 15 months;
- Executed in conjunction with Green Energy International Limited ("GEIL"), the Operator of the Otakikpo Marginal Field, definitive agreements for the next phase of the Otakikpo marginal field development, which are made up of service agreements with Schlumberger, covering the comprehensive infrastructure upgrades and field management services in relation to the planned upstream drilling programme.

Lekan Akinyanmi, LEKOIL's CEO, commented, "Despite the challenges of the first six months of the year, we have navigated this demanding period with steady production and cashflow generation from Otakikpo while implementing a range of significant cost reduction initiatives across our operations. We are excited and encouraged by the interest received and the progress made towards raising the requisite financing to develop our high quality portfolio of assets and delivering on our drive to unlock the significant value that exists within them. We remain committed to creating value and generating attractive returns for our shareholders, our partners, employees and all our stakeholders."

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