Lagos — Embattled Lekoil may lose its grip over Oil Prospecting License, OPL 310 owing to the current turbulent rocking its search for funds to develop the asset.
Just last September, the firm announced that the federal government and the Ministry of Petroleum Resources had approved the extension of OPL 310’s exploration license for three years after it paid an extension fee of US$7.5m it got from a mix of existing financial resources and a loan.
Although it had hoped to convert OPL N310 into an Oil Mining License, OML however, with current raging storm against its name as a result of the $184 scam loan, the firm now battles to first save its head- no fund is currently in sight, and time is already ticking over the asset.
Currently, the firm has no alternative funding to kickstart exploration and then follow up with a full field development, FFD programme as earlier anticipated- this could lead to losing the asset.
No fund lender is ready to stick out its neck just yet as the legal battle with the fake Qatar Investment Authority QIA could linger into the three years for the expiration of the OPL license.
The company is already in debt as it also borrowed to fund the $600,000, including costs and a fee already paid to Seawave Invest Ltd. for arranging the non-existent loan.
Lekoil’s stock dropped to a record low in London after it announced it had fallen victim to the scam on Jan. 13. The firm had refused to comment on this matter while an investigation is underway.
Lekoil’s Chief Executive Officer Lekan Akinyanmi who negotiated the loan with the fake QIA executives, in a statement, said the company had been dealing with “individuals who have constructed a complex facade in order to masquerade as representatives of the QIA.”
Akinyanmi started his career as a field engineer with Schlumberger before getting an MBA from the Massachusetts Institute of Technology and moving into finance. He worked for UBS Investment Research and later headed AllianceBernstein LP‘s international energy sector.
He was introduced to the fake QIA investors early last year by Bismark Abrafi, managing partner for Seawave, according to information gathered. Akinyanmi, alongside the company’s interim chief financial officer, Greg Eckersley, who previously worked as the global head of internal equities for the Abu Dhabi Investment Authority then flew to Istanbul and other locations in the Middle East to iron out details of the deal.
The QIA based in Accra, Ghana is yet to comment on the matter until it had conducted its own investigation, however, a Bloomberg reporter who had visited Seawave’s office, on the first floor of a modern building last week, found the place empty.
Law firm, Norton Rose Fulbright LLP had advised Lekoil on the documentation needed for the deal with the fake QIA.
Lekoil had on January 2, announced that it secured a $184million loan from QIA to fund the appraisal drilling and initial development programme activities on the Ogo field within OPL 310.
With the current doubts cast on the agreement by QIA, Lekoil had refused to comment, instead, said it is seeking to establish, alongside its legal counsel and nominated adviser, the full facts of the matter.
“The Facility Agreement can no longer be considered to be legally binding or enforceable and it should, therefore, be assumed that none of the funding, as set out in the announcement of 2 January 2020, will be forthcoming”, a statement sent to SweetcrudeReports had said.
Although it said it continues to generate positive cash flows at the operational and corporate level, and will seek alternative funding for the future development of OPL 310 as a priority, however, SweetcrudeReports learnt no funding for the oil field development is in sight at the moment.
Lekoil is required to provide 42.86% of the cost of drilling and pay Optimum Petroleum Development Company Limited sunk costs and consent fees by February 2020 – a payment estimated at US$38 million.
February is just around the corner yet no funding is forthcoming.
Failure to make this payment on time may result in Lekoil and Optimum jointly seeking and agreeing on a willing buyer to whom the transfer of Lekoil’s 17.14% participating interest in OPL 310, as well as all the financial obligations related to OPL 310 can be made.
If the firm does not get timely funding and eventually transfers its interest in the asset, then, it would no longer hold any share in what it had laboured over for years now.
Although the company said no capital commitments have been made based on anticipated drawdowns, and that the company will cover the cost of the site survey (estimated at US$4 million) on OPL 310 from a mixture of existing cash resources and income from operations at Otakikpo, yet, the end result would not give it substantial hold on the asset as it would if it came up with full funding.