Project Profile
Location: OML 11, adjacent to shoreline, Eastern part of the Niger Delta, offshore Nigeria
Reserves: 20.4 million barrels (2P)
Targeted Production:10,000 bopd by end of 2017
Current production: 5,000 bopd,
Start-up year: December 2016
Lekoil Oil and Gas Investments, a wholly owned subsidiary of Lekoil Nigeria, has agreed to acquire a 40 per cent participating interest and economic interest in the Otakikpo Marginal Field from Green Energy International. The Company holds ninety per cent of the economic interests in Lekoil Nigeria.
Otakikpo lies in a swamp location, in oil mining lease (OML) 11, offshore Nigeria, adjacent to shoreline in the Eastern part of the Niger Delta. OML 11 is held by Nigerian National Petroleum Corporation, The Shell Petroleum Development Company of Nigeria Limited, Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited. The Otakikpo Marginal Field was awarded to the Farmor by the Department of Petroleum Resources in 2011. The award also included a commitment to develop a small scale gas utilisation project within 30 months of commencement of production. Lekoil Oil and Gas entered into a farm-in agreement with the Farmor, effective 17 May 2014. As consideration for the assignment of the Interest, Lekoil Oil and Gas is required to pay a signature bonus of US$7 million to the Farmor and, contingent on production and receipt of ministerial consent to the transfer of the participating interest, a production bonus of US$4 million.
In addition, Lekoil Oil and Gas is required to fund an initial work programme agreed with the Farmor for re-entry of the existing wells and all costs until commencement of production, with a base case estimate of approx. US$67 million. Lekoil Oil and Gas\' expenditure on the initial work programme (\'IWP\') shall be recovered preferentially from 88 per cent of production cash flow from Otakikpo. The completion of the transfer of the 40 per cent participating interest from the Farmor to Lekoil Oil and Gas is contingent on the approval of the Head-Farmors and the Nigerian Minister of Petroleum Resources. Otakikpo has partial 2-D seismic coverage with a limited amount of 3-D acquired over the southern area. Three wells have been drilled in the field and hydrocarbons were encountered in multiple intervals. The field is close to existing infrastructure for the delivery of crude to market. As a marginal field, Otakikpo will benefit from attractive fiscal terms, principally a 55% tax rate on net income.
Operators:
Green Energy International: Operator with 60% interest
Lekoil: 40% interest
Contractors:
AGR TRACS International: Competent Persons Report (\'CPR\') on the Otakikpo Marginal Field covering the recent progress on the project following approval, in early December 2014.