Lekoil in Trading Halt After Funding Deal Query

Illustration; Image by MQ-Illustrations / Adobe Stock
Illustration; Image by MQ-Illustrations / Adobe Stock

London-listed oil company Lekoil has suspended trading of its shares after the Qatari Investment Authority questioned the validity of its recently announced funding agreement.

Lekoil, focused on oil and gas activities in Africa, earlier in January said it had secured $184 million (gross) of funding for the appraisal drilling and initial development program activities on the Ogo field, in the OPL 310 block, offshore Nigeria. The loan, Lekoil said at the time, will be provided by the Qatar Investment Authority, the sovereign wealth fund of the State of Qatar.

However, Lekoil on Monday, January 13, said its advisers had been approached by representatives of the Qatari Investment Authority “questioning the validity of the loan agreement announced on 2 January 2020.”

"Lekoil is urgently seeking to establish, alongside its legal counsel and Nominated Adviser, the full facts of this matter, and pending this clarification, the Company has requested that its ordinary shares be suspended from trading on AIM with immediate effect, and this took place at 7.37 a.m. today," Lekoil said Monday morning.

"Lekoil confirms that its financial exposure associated with the Facility Agreement currently stands at approximately US$600,000, being the amounts paid in good faith as an initial arrangement fee to Seawave Invest Limited, in its capacity as introducer to those purporting to be the QIA and lead adviser to the Company in relation to the Facility Agreement, and associated legal fees. There have been no monies paid to the presumed counterparty,” Lekoil said, adding that further updates would be made as and when appropriate.

To remind, Optimum and Lekoil, partners in the Ogo project offshore Nigeria, last week kicked off a site survey at the location ahead of the planned drilling expected later this year.

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.

In conjunction with this appraisal drilling plan, the site survey is required for the assessment of top-hole drilling, jack-up rig, and potential platform foundation hazards and any seabed obstructions. Lekoil has previously said that the first well spud could occur in the second half of this year.

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