DAHOMEY BASIN OPL 310

LEKOIL commissioned a regional basin study and identified the Dahomey Basin block OPL 310 as a key target.

In 2013, we invested $50M in drilling an appraisal well and sidetrack targeting Eko, Agege and the Syn-rift prospects. The result was a significant discovery in the Ogo prospect.

Based on data from the vertical and side track wells, revised estimates for the P50 gross recoverable resources attributable to LEKOIL from the Ogo field were identified as being 232 mmboe (P50) from gross recoverable resources of 774 mmboe. This far exceeds the expected pre-drill estimate of 202 mmboe.

Additionally, Syn-rift leads identified within OPL 310 are expected to contain light oil or condensate-rich gas, and further shallow water leads are being explored. Seismic processing and interpretation is now complete, to be followed by an appraisal well.

December 2015

Lekoil agrees to acquire Afren’s 22.86% participating interest (40% economic interest) in OPL 310, increasing LEKOIL’s consolidated participating interest from 17.14% to 40%, subject to Ministerial Consent, and will become the technical and financial partner. Optimum Petroleum Development Company, the operator and local partner in OPL 310, retains a 60% participating interest.

The OPL 310 Acquisition allows the OPL 310 partners to progress with exploration activities and field appraisal planning, following a delay caused by Afren’s insolvency and administration processes.

August 2019 – Full alignment with the Nigerian Government and JV partners

On March 28, 2019, the Federal High Court, sitting in Ikoyi, Lagos State, Nigeria ruled that LEKOIL’s purported acquisition of shares in Afren Investment Oil and Gas (Nigeria) Limited (“AIOGNL”) and by that, the 22.86% interest in OPL 310, is inchoate and invalid given that the Company is yet to obtain Ministerial Consent in respect of the transfer of the said shares. The Judge also ruled that pursuant to Articles 13.1.4 and 13.1.5 of the Joint Operating Agreement (“JOA”) between Optimum and AIOGNL, Optimum’s consent is required to effect a transfer of AIOGNL’s interest in OPL 310, or any part thereof, to LEKOIL. The 17.14% interest in OPL 310, held through Mayfair Assets & Trusts Limited, was not affected by the ruling.

The implication of the Judge’s pronouncement that LEKOIL 310 Limited (a subsidiary of LEKOIL) has not acquired the shares of AIOGNL is that pending receipt of Ministerial consent to the acquisition, AIOGNL retains its 22.86% participating interest in OPL 310.

LEKOIL 310 Limited had initially filed an appeal against the decision of the Federal High Court but decided to withdraw legal action following receipt of a letter dated 8 May 2019 from the Ministry of Petroleum Resources relating to an application for an extension (re-award) to the OPL 310 Licence (the “Letter”). The Letter stated that the Government has noted that the OPL 310 Licence expired on 10 February 2019 and ownership of OPL 310 has accordingly reverted to the Government in line with Petroleum Act. The Letter further set out that the re-award would not be considered by the Honourable Minister of Petroleum Resources (“HMPR”) until such point as the suit filed by LEKOIL against the HMPR is withdrawn by LEKOIL and the other parties. Failure by LEKOIL and others to withdraw the suit within 30 days of the Letter forecloses any consideration of re-award to Optimum Petroleum Development Limited, LEKOIL and their affiliates or subsidiaries.

LEKOIL 310 Limited decided to withdraw legal action on 16 May 2019. On 30 August 2019, Optimum and LEKOIL jointly announced the execution of a legally binding Cost and Revenue Sharing Agreement (“CRSA”) to progress. the appraisal and development programme activities at the Ogo discovery and conversion to an Oil Mining Licence (“OML”). In a letter dated 4 September 2019, the Federal Government of Nigeria and the Ministry of Petroleum Resources approved the extension of the OPL 310 Licence for three years, subject to the holders of the Licence paying an extension fee of US$7.5 million. LEKOIL paid the extension fee on behalf of the holders of the Licence and received a confirmation that the Licence is in force for an extended period to 2 August 2022.