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Lekoil shares surge as it secures funding for Ogo drilling
2nd Jan 2020 11:14
(Sharecast News) - Nigeria and West Africa-focussed oil and gas exploration and production company Lekoil announced on Thursday that it has secured funding for the appraisal drilling and initial development programme activities on the Ogo field within OPL 310.
The AIM-traded firm said its wholly-owned subsidiary Lekoil 310 has entered into a binding loan agreement with the Qatar Investment Authority, the sovereign wealth fund of the State of Qatar, for $184m.
It said the Facility would be disbursed in five tranches over 11 months, with the first drawdown intended to occur in February.
The company said it was "looking forward" to providing further details on the intended work programme "in short order".
It explained that the tranching of the drawdown of funds under the terms of the facility was expected to enable Lekoil to meet the costs commitments under the envisioned work programme as and when they arose.
The facility, which has a tenure of seven years from the date of first disbursement, was secured against the shares and assets of Lekoil 310 and Mayfair Assets and Trust, and included a moratorium on both the interest and principal repayments starting from the date of the facility until six months after the beginning of commercial sale from the field.
Repayment of the principal and interest would occur following that, in equal installments, on a semi-annual basis.
Lekoil said it held its interest in OPL 310 through Mayfair and Lekoil 310, and added that the facility was not secured against any of its other assets or interests, including its interest in the producing Otakikpo marginal field.
The annual interest rate payable on amounts drawn under the facility would be 3.72%, with an upfront fee of 2.75% of the amount drawn under the facility, which would be payable upon drawdown.
A debt service reserve account would be established 12 months after the end of the moratorium period, with a one-off amount equal to six months of debt service standing to its credit.
The company said it would be required to meet a number of covenants on an ongoing basis in order for the facility to remain in good standing, and adhere to QIA's policies on procurement, environment and social responsibility and anti-corruption.
It said the facility would subject to event of default clauses, and a provision that the employment of the company's CEO could not be terminated without good cause during the term of the facility.
The facility was arranged by Seawave Invest - an independent consultancy firm specialising in cross-border transactions with an exclusive focus on Africa.
After deducting the commission payable to Seawave by Lekoil for arranging the facility, and the upfront fee payable by Lekoil to the QIA, the net proceeds of the facility available to the company totalled around $174.3m.
Looking at the Ogo field, the company said that following the drilling of Ogo-1 and Ogo-1 ST in 2013, which encountered hydrocarbons within the SynRift and PostRift, Lekoil and the operator of the OPL 310 license, Optimum Petroleum, were envisaging a two-well programme with the objective of obtaining dynamic flow data from well test, while preserving the drilled wells as producers.
It said first well spud could occur in the second half of 2020.
As a condition to the provision of the facility, chief executive officer Lekan Akinyanmi was pledging his full holding of 39,138,601 shares in the company as part of the security package for the facility.
In connection with the pledge, Akinyanmi would be compensated with a one-time fee of $1.84m, which would be off set against the existing director loan made by the company in December 2014 of $1.7m.
That meant the CEO would be fully discharged and released from his obligation to repay the director loan to the company, with the balance paid to the CEO.
If the pledged shares were foreclosed on, the firm said it would issue to the CEO a number of new ordinary shares of nominal value $0.00005 each in its capital, equal to the number of the pledged shares.
In connection with securing the facility, Akinyanmi said he would also be granted an award of up to 30 million new ordinary shares, to be issued at nil cost and allotted in five equal instalments if and when its ordinary share price reached a number of hurdles, being 20p, 25p, 30p, 35p and 40p per share.
Each of those share price hurdles needed to be satisfied by the seventh anniversary of the grant of the award shares, and each share price hurdle would need to have been met for a minimum period of 30 consecutive dealing days.
"Following the recent achievements of the OPL 310 license extension and the securing of funding for the appraisal drilling and development programme, we are delighted to have made strong progress, as promised, towards the start of the appraisal drilling programme on Ogo," said Lekan Akinyanmi.
"We will continue to work closely with our partner and the Operator of the OPL 310 License, Optimum Petroleum, as we pursue value for our shareholders."
At 1112 GMT, shares in Lekoil were up 28.39% at 5.97p.
The AIM-traded firm said its wholly-owned subsidiary Lekoil 310 has entered into a binding loan agreement with the Qatar Investment Authority, the sovereign wealth fund of the State of Qatar, for $184m.
It said the Facility would be disbursed in five tranches over 11 months, with the first drawdown intended to occur in February.
The company said it was "looking forward" to providing further details on the intended work programme "in short order".
It explained that the tranching of the drawdown of funds under the terms of the facility was expected to enable Lekoil to meet the costs commitments under the envisioned work programme as and when they arose.
The facility, which has a tenure of seven years from the date of first disbursement, was secured against the shares and assets of Lekoil 310 and Mayfair Assets and Trust, and included a moratorium on both the interest and principal repayments starting from the date of the facility until six months after the beginning of commercial sale from the field.
Repayment of the principal and interest would occur following that, in equal installments, on a semi-annual basis.
Lekoil said it held its interest in OPL 310 through Mayfair and Lekoil 310, and added that the facility was not secured against any of its other assets or interests, including its interest in the producing Otakikpo marginal field.
The annual interest rate payable on amounts drawn under the facility would be 3.72%, with an upfront fee of 2.75% of the amount drawn under the facility, which would be payable upon drawdown.
A debt service reserve account would be established 12 months after the end of the moratorium period, with a one-off amount equal to six months of debt service standing to its credit.
The company said it would be required to meet a number of covenants on an ongoing basis in order for the facility to remain in good standing, and adhere to QIA's policies on procurement, environment and social responsibility and anti-corruption.
It said the facility would subject to event of default clauses, and a provision that the employment of the company's CEO could not be terminated without good cause during the term of the facility.
The facility was arranged by Seawave Invest - an independent consultancy firm specialising in cross-border transactions with an exclusive focus on Africa.
After deducting the commission payable to Seawave by Lekoil for arranging the facility, and the upfront fee payable by Lekoil to the QIA, the net proceeds of the facility available to the company totalled around $174.3m.
Looking at the Ogo field, the company said that following the drilling of Ogo-1 and Ogo-1 ST in 2013, which encountered hydrocarbons within the SynRift and PostRift, Lekoil and the operator of the OPL 310 license, Optimum Petroleum, were envisaging a two-well programme with the objective of obtaining dynamic flow data from well test, while preserving the drilled wells as producers.
It said first well spud could occur in the second half of 2020.
As a condition to the provision of the facility, chief executive officer Lekan Akinyanmi was pledging his full holding of 39,138,601 shares in the company as part of the security package for the facility.
In connection with the pledge, Akinyanmi would be compensated with a one-time fee of $1.84m, which would be off set against the existing director loan made by the company in December 2014 of $1.7m.
That meant the CEO would be fully discharged and released from his obligation to repay the director loan to the company, with the balance paid to the CEO.
If the pledged shares were foreclosed on, the firm said it would issue to the CEO a number of new ordinary shares of nominal value $0.00005 each in its capital, equal to the number of the pledged shares.
In connection with securing the facility, Akinyanmi said he would also be granted an award of up to 30 million new ordinary shares, to be issued at nil cost and allotted in five equal instalments if and when its ordinary share price reached a number of hurdles, being 20p, 25p, 30p, 35p and 40p per share.
Each of those share price hurdles needed to be satisfied by the seventh anniversary of the grant of the award shares, and each share price hurdle would need to have been met for a minimum period of 30 consecutive dealing days.
"Following the recent achievements of the OPL 310 license extension and the securing of funding for the appraisal drilling and development programme, we are delighted to have made strong progress, as promised, towards the start of the appraisal drilling programme on Ogo," said Lekan Akinyanmi.
"We will continue to work closely with our partner and the Operator of the OPL 310 License, Optimum Petroleum, as we pursue value for our shareholders."
At 1112 GMT, shares in Lekoil were up 28.39% at 5.97p.