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Otakikpo – Second phase

Phase 2 new central processing facility, new seismic studies and five additional wells will lead to the production of 15,000-20,000 bopd.
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Low cost of production

Low cost of production. Break even point <US$30 per bbl
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Otakikpo marginal field

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.

As a result of the revision to anticipated production levels, the Otakikpo -002 and -003 wells have been reclassified as “Reserves –Approved for Development”. For the next phase of development, targeting a gross production of 15,000 to 20,000 bopd (6,000 to 8,000 bopd net to LEKOIL), definitive agreements have been executed which are made up of service agreements with Schlumberger and 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 gross project capital expenditures (“capex”) estimated at US$110.0 million
  • Drilling of the first two wells, estimated at US$25.0 million, to increase gross production to approximately 10,000 bopd which can be accommodated by existing infrastructure

As a result of the work put into the tendering process, LEKOIL has driven down the cost of production, resulting in a break-even point of less than $30 per bbl (life of field basis). By continuing to explore new ways of reducing production costs we increase the long term viability of the field – even in a low-price climate.

In addition, four exploration prospects within the onshore part of the Otakikpo acreage have revealed Stock Tank Oil Initially In Place (STOIIP) ranges. These are estimated to contain potential gross aggregate volumes of 331.6 mmbbl, with further potential in the southern (shallow water) portion of the field. We continue to analyse and evaluate these areas. The income from the field will be used to fund ongoing activities elsewhere in our portfolio.

 

Asset overview  
Asset stage Production
LEKOIL stake 40 per cent interest acquired from Green Energy
Reserves Recoverable resource estimates of 56.75mmbbls
LEKOIL operating status Technical and financial partner
Transaction status requirements
  • Farm-in fee of $7M (implied $0.5/bbl acquisition price)
  • Production bonus of $4M to be paid after production commencement and ministerial consent.
  • Production bonus of $4M to be paid after production commencement and ministerial consent.
  • License terms include commitment to develop a small scale gas utilization project.