Page 10 - AfrOil Week 35 2019

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“This is a huge moment for Springfield Group and, I believe, for Ghana,” he remarked. “Deepwater drilling has never been carried about by an independent African energy com- pany, and we are incredibly proud to be on the cusp of being the rst to do so.”
Meanwhile, Erik Ronsberg, the CEO of Stena Drilling, voiced his approval of the contract. “We’re absolutely delighted to have signed a contract with Spring eld Exploration
& Production Ltd and very grateful for SEP’s con dence in our company,” he said.
Ronsberg also highlighted his compa- ny’s commitment to hiring local residents for Ghanaian projects. “We have worked in Ghana for several years now, building our Ghana- ian crew complement on Stena Forth to over 50%, so [we are] thrilled to be playing a part in Ghana’s exciting future together with an inspir- ing company like Spring eld,” he declared. ™
NEWS IN BRIEF
LEKOIL: Joint update with OPL 310 Operator
LEKOIL, the Africa-focused oil and gas explo- ration, development and production company, is pleased to announce it has reached a resolu- tion with Optimum Petroleum Development Company, its partner on and the Operator of OPL 310.
e company has executed a legally binding agreement with Optimum to progress appraisal and development programme activities at the Ogo discovery, which sits within the block. Optimum and LEKOIL are initially targeting a two-well programme over the next twelve to eighteen months, subject to: i) receiving an extension of the OPL 310 licence from the Min- istry of Petroleum Resources for the block; and ii) the parties securing the necessary funding for the programme.
LEKOIL and Optimum have agreed to drill two additional appraisal-development wells, contingent on the results of the initial two well appraisal campaign and the associated extended well tests to be undertaken. All wells will be designed to be compatible with an early produc- tion scheme.
Both Optimum and LEKOIL have agreed to progress the appraisal of the block and conver- sion to an Oil Mining Licence, as soon as practi- cable. Assuming a successful appraisal, a full eld development programme will be undertaken and embarked upon by LEKOIL and Optimum with an industry partner, discussions on which are at an advanced stage.
Assuming granted, which is at the discretion of the Department of Petroleum Resources, the OPL to OML conversion is expected to extend the licence by 20 years.
Further to previous announcements, there has been an ongoing dispute as to the legitimate ownership of a 22.86 per cent stake in OPL 310. is dispute has been the principal reason that development of the block has been delayed. Rather than pursue this matter further, the par- ties have agreed to use the 22.86% equity stake in the Block as a potential funding and security vehicle for the accelerated development of the block by an industry partner or a third party that elects to farm-in to the block to fund eld development (both the industry partner and the
third party being referred to herein as a funding partner).
The potential funding partner may be sourced by either LEKOIL or Optimum.
Although the agreement does not address the recovery of the US$13 million considera- tion previously paid by LEKOIL with respect to the acquisition of the shares of Afren Oil & Gas (Nigeria) Limited (“AOGNL”) in 2015 (which held the 22.86 per cent. participating interest in OPL310), LEKOIL is working with Optimum on a resolution of this matter alongside the possi- ble allocation of the 22.86 per cent to a potential Funding Partner and remains hopeful that an agreement can be reached.
Pursuant to the Agreement, a payment struc- ture for previously outstanding G&A arrears payable by LEKOIL to Optimum in the amount of approximately US$3.0m has been agreed, with approximately US$1m having been paid to date, with the balance to be paid by mid October 2019.
LEKOIL will also pay Optimum US$5.0m for an Operator’s fee in regard to LEKOIL’s 17.14 per cent participating interest upon receipt of the extension.
The agreement also makes provision for LEKOIL to pay Optimum certain production prepayments from the proceeds of a continu- ous sale of crude oil produced from Ogo, such amounts being subject to 2P reserves or aggres- sive production milestones being achieved. e payments, once due, include a US$10m per year payment for ve years following completion of a successful well (being a well capable of produc- ing 5,000 BBL/d of Crude Oil).
Further, LEKOIL has agreed to pay (a) 42.85% of $10mn payable to the Nigerian Gov- ernment on conversion of OPL 310 to an OML and (b) 42.85% of $10mn to the Nigerian Gov- ernment on reaching rst oil. e balance of the two $10mn payments will be made by the poten- tial funding partner.
Upon receipt of the extension, LEKOIL will also pay the Ministry of Petroleum Resources the fee to be prescribed by the Minister of Petro- leum Resources with respect to the extension, the quantum of which is expected to within nor- mal parameters for a fee associated with a license
extension.
In addition, LEKOIL will, subject to securing
funding, cover 42.85% of the capital expendi- tures and operating expenses of the block to rst oil, being its 17.14% pro rata of an aggregate 40% participating interest held by it and the potential Funding Partner. e potential Funding Partner will cover the remaining 57.15% of the capital expenditures.
All payments set out above made to or on behalf of Optimum are cost recoverable to LEKOIL. Whilst LEKOIL hopes to have secured a Funding Partner in short order and therefore progressing appraisal and development activ- ities at pace, LEKOIL will be required to fund payments 1 and 2 within approximately the next six months. LEKOIL expects to fund these payments from a combination of existing cash resources, cash from future production and drawdown on available debt facilities.
LEKOIL and Optimum are committed to working constructively together and will be aligned in mutually increasing value for LEKOIL shareholders.
Further updates in relation to the Agreement and the Extension will be published as required. Lekan Akinyanmi, LEKOIL’s CEO, com- mented:“We are pleased to have come to an understanding with Optimum, the operator of the OPL 310 Block. We look forward to working closely with them to unlock signi cant value for our investors and all stakeholders, not only with the appraisal potential identi ed at Ogo, but also with the other promising exploration leads read- ily identi able in the OPL310 Block. We would like to thank all our shareholders for their con- tinued patience and support through this pro- longed process, and we feel con dent that this
support will be well rewarded in the future.” Yusuf K. N’jie, Managing Director, Optimum Petroleum, commented: “We are pleased to be moving forward alongside our partner, LEKOIL, toward the appraisal and development of OPL 310 and look forward to a successful campaign, achieving our collective objectives for the bene t
of our respective stakeholders.”
LEKOIL, August 30 2019
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Week 35 03•September•2019