Lekoil, Optimum agree to progress activities at Ogo discovery

Lekoil and Optimum Petroleum Development Co. have agreed to progress appraisal and development activities at the Ogo discovery near shore western Nigeria amid an ongoing dispute as to the legitimate ownership of a 2.86% stake in the license.

Lekoil and Optimum Petroleum Development Co., its partner in and operator of OPL 310, have agreed to progress appraisal and development activities at the Ogo light oil discovery near shore western Nigeria amid an ongoing dispute as to the legitimate ownership of a 22.86% stake in the license (OGJ Online, June 26, 2013).

The companies will initially target a 2-well program over the 12-18 months—subject to receiving an extension of the OPL 310 license from the Ministry of Petroleum Resources and the companies securing necessary funding for the program. The companies agreed to drill two additional appraisal-development wells, contingent on the results of the initial 2-well appraisal campaign and the associated extended well tests to be undertaken. All wells will be designed to be compatible with an early production scheme.

An ongoing dispute as to the legitimate ownership of a 22.86% stake in OPL 310 has delayed development on the block. The companies have agreed to use the equity stake as a potential funding and security vehicle for accelerated development by an industry partner or a third party that elects to farm-in. The companies continue to discuss a $13 million consideration paid by Lekoil for the 22.86% interest of Afren Oil & Gas (Nigeria) Ltd. in 2015.

Pursuant to the agreement, a payment structure for previously outstanding G&A arrears payable by Lekoil to Optimum in the amount of $3 million has been agreed, with $1 million having been paid to date, with the balance to be paid by mid-October of this year.

The agreement also provides for Lekoil to pay Optimum certain production prepayments from the proceeds of a continuous sale of crude oil produced from Ogo, such amounts being subject to 2P reserves or certain production milestones. The payments include a $10 million/yr payment for 5 years following completion of a successful well (capable of producing 5,000 b/d of crude oil).

Further, Lekoil has agreed to pay 42.85% of $10 million payable to the Nigerian Government on conversion of OPL 310 to an OML, and 42.85% of $10 million to the Nigerian Government on reaching first oil. The balance of the two $10 million payments will be made by the potential funding partner.

Upon receipt of the extension, Lekoil also will pay the Ministry of Petroleum Resources the fee to be prescribed by the Minister of Petroleum Resources in respect of the extension.

 

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