Lekoil to Raise $100m to Drill Ogo Oilfield

By Adedapo Adesanya

Lagos based energy company, Lekoil Limited, is looking to raise the sum of $100 million in order to start drilling its Ogo oilfield after major setbacks.

This was made known by Lekoil’s Chief Executive Officer, Mr Lekan Akinyanmi, who noted that the energy company financed much of the preparation work in Ogo with returns realised from its Otakikpo producing field, adding that the company will start drilling work in Ogo as soon as it raises the needed money.

The company had earlier in the year discovered that a planned $184 million intended to maintain its stake in Oil Mining Lease (OML) 310 on the Dahomey Basin, where the field is located, was fraudulent.

Mr Akinyemi noted that the company was in the market for a combination of both vendor financing and direct investment, an approach that was described as the most cost-effective approach to financing the drilling.

He also said that he expects the oilfield to gulp $1 billion for its development throughout its life cycle.

He said, “We want Ogo to raise its own capital so that we can actually start to build cash…and maybe in a few years start to pay dividends.”

The Lekoil chief also added that Otakikpo; Lekoil’s other oilfield, produced 5,305 barrels per day on an average last year, and yielded a total of $15-16 million in free cash.

This is coming at a crucial period as the company’s shares listed on the London Stock Exchange plunged in January after the company revealed details about the loan earlier believed to be from the Qatar Investment Authority (QIA) but was later found out to be a facade.

On January 12, Lekoil reported to the market that the negotiations and deal had not been carried out with QIA. This deceit was revealed when legitimate QIA figures contacted Lekoil and its intermediaries.

But by that point, the company had paid out around $600,000 to Seawave Invest, which had acted as an intermediary in securing the alleged QIA financing, and lawyer fees.

Lekoil posted a $12 million loss in the financial year 2019, compared to a 7.8 million loss in Q2 according to results published this week. The company’s cash balances dropped to $2.7 million from $10.4 million.

The company also said it was planning to achieve a 40 per cent reduction in its annual administrative and general expenses owing to the oil price crash this year.