LEKOIL (AIM: LEK), the Africa focused oil and gas exploration and production company with interests in Nigeria and Namibia, announces its final audited results for the year to 31 December 2017. 

Operational

Otakikpo 

• Continuous commercial production and cash flow generation at Otakikpo;
• Otakikpo production increased to 7,600 barrels of oil per day (bopd) in December, ending the year continuously over 7,000 bopd and having produced approximately 1.56 million barrels (bbls) of oil;
• 1,448,911 gross barrels exported (1,188,732 barrels net to LEKOIL), with crude selling at a premium to Brent.
• 12 month average production from May 2017 to May 2018 was 5,547 bopd;
• The Otakikpo project has now recorded over 1.27 million hours with no lost time injuries;
• 3D seismic acquisition programme to cover the entire Otakikpo area commenced in February 2018 with results expected to be available in Q3 2018 and which will be followed by an updated CPR; and
• Planning for Phase 2 field development underway, targeting 20,000 bopd to be reached in 2020, subject to securing additional funding from industry sources.

 OPL 310 

• Planning for a two well appraisal drilling programme of Ogo underway, with long lead time items ordered (such as well heads and oil country tubular goods ("OCTG");
• MoU signed with GE Oil & Gas for the full field development of Ogo; and
• Receipt of Ministerial Consent for the transfer of initial 17.14% participating interest on OPL310 farm-in, application made in March 2018 to the Federal High Court in Nigeria for a declaration that is expected to expedite the consent process for the second, 22.86%, tranche.

OPL 325 

• Independent Technical Evaluation Report, completed in January 2018, confirms the block prospectivity;
• Geophysical evaluation of approx. 800 sq km of 3D seismic data identified eleven prospects and leads on the block. It is estimated to contain potential gross aggregate Oil-in-Place volumes of over 5,700 mmbbls, as an un-risked, Best Estimate case; and
• Farm out process to be initiated following a prospect/lead risking study, which is expected to commence this year.

Namibia

• Relinquished block 2514A during H2 2017; and
• Updating de-risking for 2514B and data sharing opportunities with others which will aid in improving understanding of the regional basin.

Financial

• Revenues of US$30.8 million (2016: nil)
• Cost of sales of US$15.9 million (2016: nil)
• Profit for the year US$6.5 million (2016: loss of US$15.8 million)
• Profit per share of US$0.01 (2016: loss per share of US$0.03)
• Period end cash of $6.9 million; cash at end April 2018 of $5.9 million; (2016 year-end cash of US $3.3 million)

Outlook

• Increasing Otakikpo production volumes towards 20,000 bopd targeted to be reached in 2020;
• Secure finance to appraise and test Ogo discovery in OPL 310; and
• Initiate farm out process for OPL 325.

 Samuel Adegboyega, Chairman, said, 
"To our great satisfaction, 2017 saw LEKOIL's first commercial production, and first crude oil sales. These are perhaps the most important milestones in the history of the Company, and represent the fruits of efforts that have been ongoing since LEKOIL's inception in 2010."
 
Lekan Akinyanmi, Lekoil's CEO, added, 
"Our priority for 2018 is to continue to grow production volumes and profitability at Otakikpo.  In tandem, we will aim to progress the appraisal and development of our Ogo discovery in OPL 310.  Once we receive the second Ministerial Consent, we plan to finalise funding plans for an appraisal drilling programme.  The programme will comprise  two wells which will include flow testing.  Our aim is to secure enough information to enable the partners to take a Final Investment Decision in 2019 and then to proceed with development in partnership with GE Oil & Gas."