LEKOIL Acquires Participating Interest in OPL276

LEKOIL (AIM: LEK), the oil and gas exploration and development company with a focus on Nigeria and West Africa more generally, has agreed to acquire, subject to the receipt of the required consents, via Lekoil 276 Limited (“Lekoil 276” which is a 100 per cent. owned subsidiary of Lekoil Nigeria), a 45 per cent. participating interest in the Production Sharing Contract (“PSC”) in relation to the Oil Prospecting Licence 276, covering a territory located onshore in the eastern Niger Delta basin (the “Licence”).

The agreed acquisition, from Newcross Petroleum Limited (“Newcross”), is for a total staged consideration of US$5million (the “Consideration”), which is payable subject to the milestones listed in the highlights below (the “Acquisition”). Lekoil 276 will also enter into an Interim Governance Agreement with Newcross and Albright Waves Petroleum Development Limited (“Albright”) setting out the terms on which Lekoil 276 will provide technical support to the PSC.

The Acquisition is consistent with the Company’s continuing strategy to assemble a balanced portfolio of oil and gas interests, which already include production (Otakikpo), appraisal (OPL310) and high impact exploration assets in known basins (OPL325).

The Licence is covered by approximately 150 sq. km of 3D seismic, shot in 2008 by BGP Inc., a subsidiary of China National Petroleum Company (CNPC), as well as various 2D seismic surveys. It is in close proximity to three existing producing fields, all less than 20 kilometres away:

· Effiat-Abana in OML114

· Stubb Creek straddling OML13 and the Licence

· Uquo in OML67

Newcross has previously identified ten prospects and seven leads in the area covered by the Licence. Four wells have been drilled in the License area, resulting in four discoveries (two oil and two gas):

· Uda; drilled in 1972 (oil & gas discovery)

· Okposo-East; drilled in 1980 (oil & gas discovery)

· Mbo; drilled in 1990 (gas discovery)

· Davy Bank; drilled in 1986 (gas discovery)

Preliminary resource estimates by Newcross, based on data from these four wells, 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 has verified these estimates internally, but also intends to commission an independent Competent Persons Report in due course.

LEKOIL sees a clear opportunity for re-entering one or more of these discovery wells, with the potential for rapid monetization of resources due to existing export facilities nearby.

The Company expects to finance the Acquisition and the costs of the future asset work programme (the “Programme”) with a combination of its existing financial resources and a financing solution with a strategic industry partner – discussions about which have already commenced.

Source / More : LEKOIL Limited


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