July 13, 2020

Lekoil announced that the Otakikpo Joint Venture which is made up of Green Energy International Limited, the Operator of the Otakikpo Marginal Field, and the Technical Partner, Lekoil Oil and Gas Investments Limited (LOGL), in which the Company has a 90 per cent. economic interest, has executed definitive agreements for the next phase of the Otakikpo marginal field development.
Further to the execution of a non-binding Memorandum of Understanding, the Otakikpo JV has executed additional service agreements with Schlumberger which cover the comprehensive infrastructure upgrades and field management services in relation to the planned upstream drilling programme.
The upstream drilling programme consists of the following:
• Phased drilling of up to seven new wells in Otakikpo with project capital expenditures estimated at US$110.0 million, of which LOGL is expected to provide funding of US$44.0 million.
• Drilling of the first two wells, estimated at US$25.0 million (US$10.0 million net to LOGL), is expected to increase gross production to approximately 10,000 bopd from the current gross rates of 5,755 bopd. Existing infrastructure at Otakikpo is capable of accomodating this incremental production.
• As a result of the lower oil price environment and a change of project scope by the Otakikpo JV and other project stakeholders, these project capex estimates are a reduction of approximately 35% on previous estimates of US$170.0 million (US$68.0 million net to LOGL) as announced on 1 July 2019.
• LOGL expects to raise, according to its participating interest, its own portion of the required funding for the first two wells from a combination of offtake financing from a subsidiary of a major international oil company and cashflow from existing production. Funding for subsequent wells is expected to come from the cashflow generated by incremental production.
• Rig mobilisation is expected to occur as soon as the partners of the Joint Venture have both raised funding for the first two wells, according to their respective participating interest.
The Otakikpo JV has also entered into a field management services agreement with Schlumberger in respect of the overall exploration, appraisal, evaluation, exploitation, development, production and associated activities of the Otakikpo marginal field (FMSA). The FMSA also manages the relationship between the parties in relation to certain services including the operation, management and, where applicable, decommissioning, of the fields and infrastructure. In accordance with the FMSA, GEIL, LOGL and Schlumberger will form a multidisciplinary project management team in which Schlumberger will act as project execution manager to provide oilfield services and project management services to assist in ramping up production and long-term field management.
Situated in a swamp in OML 11, Otakikpo commenced continuous production in Q1 2017. Three wells drilled in the field encountered hydrocarbons in multiple intervals. 2D and 3D seismic analysis revealed reserve estimates considerably in excess of those available at the time of acquisition in May 2014.
(Source and image: Lekoil)