Lekoil has signed service agreements with Schlumberger for drilling on the Otakikpo field, although it is continuing work on the financing.
The joint venture on the marginal field has set out plans for a phased drilling of up to seven new wells, at a cost of $110 million. The partners have benefited from costs falling, with capital expenditure down from $170mn.
Lekoil’s share of spending will be $44mn under the plan, down from $68mn. The company is working on the Otakikpo field via a 90% stake in Lekoil Oil and Gas Investments. This is in the joint venture with Green Energy International.
“We continue to make progress towards our ambitions to drill additional wells and unlock further value for all stakeholders from Otakikpo,” said Lekoil’s CEO Lekan Akinyanmi.
“We are pleased to be working with Schlumberger, a world class project execution service provider, and we are committed to advancing this exciting and transformative project that is aimed at increasing the value and cash generation abilities of the field.”
Drilling the first two wells should roughly double production, from 5,755 barrels per day to around 10,000 bpd. These will cost $25mn. This additional oil will go to existing infrastructure on the field.
Lekoil’s share, of $10mn, will come from offtake financing and cash flow from existing production. The additional production will then finance subsequent wells.
As soon as the partners have secured the cash, a rig for the first two wells can be provided.
Schlumberger will act as project execution manager, providing oilfield services and project management. The service company will receive fees for the secondment of its personnel and a project implementation fee.
Partners on Otakikpo have agreed a deal with Integrated Hydrocarbon Infrastructure. Green Energy will own this special purpose company to handle shared infrastructure.
The company will build facilities outside Otakikpo to handle crude from this field and others in OML 11.