Lekoil Limited yesterday said Lekoil Oil and Gas Investments Limited, a subsidiary of Lekoil Nigeria Limited, had agreed to acquire a 40 per cent participating and economic interest in the Otakikpo Marginal Field, offshore Nigeria, from Green Energy International Limited.
Lekoil is an oil and gas exploration and development company with a focus on Nigeria and West Africa.
Otakikpo lies in a swamp location offshore Nigeria, adjacent to shoreline in the eastern part of the Niger Delta.
Under the deal, Lekoil is required to pay US$7 million on signature to Green Energy, and a further US$4 million, contingent on production and receipt of ministerial consent to the transfer of the participating interest.
Lekoil is also required to fund an initial work programme for re-entry of the existing wells and all costs until commencement of production, with a base case estimate of approximately US$67 million.
The company said it believes that Otakikpo could be brought into production within 12 to 18 months of commencement of the work programme.
Lekoil also said it intends to place up to 33 million new shares, or around 10 per cent of the company, with existing and new institutional and other investors, to fund the work programme and for general corporate and working capital purposes.
The company said it expects to fund approximately 70 per cent to 80 per cent of the work programme through a reserve-based lending facility from domestic banks.
The placing will be led by Mirabaud Securities LLP, with UBS Limited as joint bookrunners.
In a separate statement yesterday, Lekoil said it recorded a pre-tax loss of US$18.1 million in 2013, compared with a loss of only US$3.8 million the prior year, due to costs associated with its stock flotation during the year, and US$7.1 million in costs related to the terminated acquisition of an interest in OML 113 site, offshore Nigeria.
Lekoil shares were down 4.0 per cent at 66.25 pence yesterday afternoon.
Lekoil is currently quoted in the London Stock Exchange. Get full details of the deal here