LEKOIL (AIM: LEK), the oil and gas exploration and production company with a focus on West Africa, provides an update on the status of its applications to receive Ministerial Consent for its original 17.14% farm-in stake in OPL 310, completed in 2013 (the "Initial Interest"), and its further 22.86% interest in OPL 310 acquired in December 2015 via the acquisition of the entire issued share capital of AIOGL (the "Further Interest"). Together, these stakes give LEKOIL a consolidated1 40% participating interest and a 70% economic interest in OPL 310.
The Initial Interest was acquired from Afren PLC via a farm-in whereby the Company agreed to pay US$50 million towards an exploration well on OPL 310. The Honourable Minister of State, Petroleum Resources (the "Minister") granted consent, as announced on 22 November 2016, for this Initial Interest in the third quarter of 2016. However, that consent was conveyed to LEKOIL via a letter that included encumbrances outside of the Minister's approval. Following further engagements with both the Minister and the Department of Petroleum Resources (DPR), LEKOIL is expecting a revised letter of conveyance without conditions to be received shortly.
While the share purchase of AIOGL is in accordance with the Companies and Allied Matters Act, the Company has applied for Ministerial Consent for the Further Interest in compliance with recent changes in regulatory practices. The necessary due diligence exercise to be undertaken by the DPR in relation to this has been rescheduled and we are awaiting the notification of a new date.
1. Note: LEKOIL's consolidated interest in OPL 310 is held through two subsidiaries, Lekoil Nigeria Limited ("Lekoil Nigeria") and Lekoil 310 Limited. The Company's interest in Lekoil Nigeria remains unchanged from the date of admission to trading on AIM. Lekoil 310 Limited is a wholly owned subsidiary of the Company.