Payments to Optimum Petroleum Development Company

Source: www.gulfoilandgas.com 12/11/2020, Location: Africa

LEKOIL, the oil and gas exploration and production company with a focus on Nigeria and West Africa, announces that its wholly owned subsidiary, Mayfair Assets and Trusts Limited ("Mayfair") has received a letter from Optimum Petroleum Development Company ("Optimum"), the Operator of the OPL 310 Licence, communicating its enforcement of the default clause which specifies the conditions for establishing default contained within the Cost and Revenue Sharing Agreement ("CRSA").

Optimum have conveyed its enforcement of the default clause, as payments of US$6.6 million, to cover the portion of sunk costs and consent fees, have not been received by 30 November 2020. In addition to these fees, Optimum highlighted that Mayfair, has also not made payments in excess of US$1.0 million to cover general and administrative costs for the year as agreed within the CRSA. Pursuant to the CRSA, the default clause stipulates that, following a cure period, if a default has occurred, Optimum and Mayfair shall jointly seek and agree on a buyer to whom Mayfair's 17.14% Participating Interest as well as all the financial obligations within OPL 310 will be transferred.

The Company continues to discuss with Optimum, a deferment of these payments as the Company intends to focus its financial and other resources in support of securing funding for the second phase of the Otakikpo development as well as the Ogo appraisal programme. The Company, working with Optimum, has identified and engaged an appropriate rig for the appraisal drilling where the service provider has accepted the result of the early performed site survey. Due to a good working relationship between the Parties, the Company has in the past been able to receive multiple extensions on outstanding payments and remains hopeful of a mutually acceptable solution being reached between the Parties. To finance the appraisal programme, the Company has explored and is in constructive discussions with potential financiers to provide a combination of cost effective vendor and alternative financing solutions. A further update will be provided to shareholders when appropriate.


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