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LekOil unveils significant upgrade to Otakikpo field

Published: 16:50 23 Sep 2014 AEST

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LekOil (LON:LEK) has revealed a significant upgrade to the size of the Otakikpo marginal field, offshore Nigeria.

Otakikpo is now estimated to contain 56.75mln barrels of oil, up from the prior estimate of 36mln barrels.

It is the result of a new competent person's report (CPR) produced by consultant AGR TRACS International, which was commissioned following the acquisition of the acreage through a deal in May.

This included an economic evaluation - based on oil prices of US$80mln, US$100 and US$120 - which indicates Otakikpo is a “robust project”.

Otakikpo is located in a swamp, near existing shoreline infrastructure, while the broader acreage position spans both onshore and shallow water offshore areas.

AGR TRACS also assessed four onshore exploration prospects that are estimated to have 162.8mln barrels of oil in place.

LekOil, meanwhile, said it sees additional prospectivity in shallow waters in the southern part of the acreage. This area will be the subject of further studies and appraisal in the future.

"As the technical & financial partner [in the venture], we are very pleased that AGR TRAC's review has confirmed our initial view of the attractiveness of the Otakikpo project,” said chief executive Lekan Akinyanmi.

“This CPR increases estimated unrisked oil resources net to Lekoil by over 45% and has reinforced the economics of the development.

“This is a robust project that will provide us with near term production, cash flow and exploration upside as we continue to pursue our wider goal of becoming a much larger, Africa-focused E&P company."

In May, LekOil’s 90% owned LekOil Nigeria subsidiary agreed to acquire 40% of Otakikpo, paying up to US$11mln in cash, and commit to spending US$67mln on field development.

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