Lekoil Gets Breathing Space

OE Staff
Wednesday, January 22, 2020

Nigerian oil company Lekoil has been given more time to find funds it needs to contribute for the drilling operation at the OPL 310 block in Nigeria, following a recent funding fiasco with unnamed scammers.

Lekoil was required to pay Optimum Petroleum, the operator of the block, around $10 million for “sunk costs and consent fees” by February 2020. It was also obliged to show its ability by February 2020 to raise 42.86 percent of the drilling costs for one appraisal well, which is estimated to be c.US$28 million.

Otherwise, the company was risking losing its stake in the block containing the Ogo discovery.

Lekoil said Wednesday that Optimum, its partner in the offshore block, had given it more time, both to pay the amount due, and to provide evidence of ability to fund its share of the drilling costs.

Under the new agreement, Lekoil is now expected to pay $2 million by March 20, and the sum of $7.6 million by May 2, 2020, for a total of $9,6 million to Optimum.

Also, Lekoil has been given until July 2020 to prove its ability to fund its share of the OPL 210 appraisal well drilling cost.

Yusuf K. N'jie, Managing Director, Optimum Petroleum Development Company, commented, "We are pleased to continue to support LEKOIL by deferring their obligations which were due this quarter. We remain confident in LEKOIL's ability to by July this year, raise the financing that is required for the commencement of the appraisal drilling program for OPL 310 which we truly believe is a world-class strategic asset."

Fake loan

As reported earlier in January, Lekoil had thought it had secured a $184 million loan from Qatari Investment Authority (QIA), however, a wake-up call came a few days later from the real QIA which questioned the validity of Lekoil's loan announcement.

Lekoil then realized it had been duped into signing a loan deal with entities who "have constructed a complex facade in order to masquerade as representatives of the QIA,” also managing to lose $600,000 in the process. (More on that here).

After uncovering the scam, Lekoil said it would seek alternative funding for the future development of OPL 310 as a priority, including reactivating other existing funding discussions.

Commenting on the new agreement with Optimum, Lekan Akinyanmi, LEKOIL's CEO said on Wednesday: "We remain excited about the opportunities of OPL 310 and are focused on securing the necessary funding under the revised schedule. We are grateful for the support and commitment shown by our partner Optimum, the Operator of the OPL 310 License. This alignment with our partner is crucial in unlocking significant value for all our investors and stakeholders."

Optimum and Lekoil have recently kicked off the site survey ahead of the planned drilling, at the time expected to begin later in 2020. This was before Lekoil had learned it had been scammed. It is not clear if the drilling schedule is now changed.

The OPL 310 offshore block contains the Ogo discovery made in 2013 when oil was struck at Ogo-1 and Ogo-1 ST wells.

Optimum and Lekoil are envisaging a two-well program with the objective of obtaining dynamic flow data from well testing while preserving the drilled wells as producers. 

OPL 310 Block - Image source: Lekoil

Categories: People & Company News Drilling Activity Africa Exploration

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