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Lekoil Seeks $100m for Drilling Ogo Field

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Nigerian oil company Lekoil plans to raise around $100 million for drilling its Ogo field. The company reached a deferred payment agreement earlier this year to keep its stake in ONL 310, where Ogo is sited, after it discovered that a plan loan agreement with the Qatar Investment Authority, was an “elaborate fraud”.

Chief Executive Lekan Akinyanmi said the company has been able to finance most of its drilling at the Ogo field with proceeds from Otakikpo and that drilling will start at Ogo once the company can raise the money.

Lekoil is exploring arrangements for a mix of vendor financing and direct investments in the asset, which the company believes is the most cost-effective way to raise funds for the project. A total investment of $1 billion is expected to be spent on the Ogo field throughout its life cycle.

The company’s strategy is that the Ogo field should raise its own capital so that Lekoil can raise its cash reserves and pay dividends in a few years. Lekoil also plans to cut expenses by 40 per cent due to this year’s coronavirus-induced slump in oil prices.

Otakikpo, Lekoil’s producing field, pumped an average of 5,305 barrels per day (bpd) last year, freeing up $15-$16 million in cash.

Lekoil posted a loss of $12 million for 2019 compared with $7.8 million in 2018. The company’s cash reserves dropped from $10.4 million to $2.7 million in the same period.

Lekoil’s shares traded at £2.46 pence per share on Friday.

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