Africa-focused oil and gas exploration and production company Lekoil and partner Green Energy have secured approvals for well re-entry on the Otakikpo Marginal Field in OML 11, offshore Nigeria and adjacent to the eastern part of the Niger Delta
Lekoil is the technical and financial partner in the Otakikpo project with 40 per cent.
The explorer has also commenced a phased re-entry plan, fully funded with cash on hand, to reach production.
Earlier this year, Lekoil had announced that it expected to begin production at the well in the second half of 2015.
“Based on the updated phased approach, we are pleased to announce that production is now expected in the first half of 2015, six months ahead of the previous schedule,” it added.
Under the terms of the acquisition of the interest in Otakikpo Marginal Field, Lekoil will fund costs to first oil and be entitled to recover this expenditure preferentially.
Lekoil CEO Lekan Akinyanmi said, “We are now ahead of schedule to achieve our target of first production from Otakikpo Marginal Field, which is value enhancing despite the depressed oil price, during the first half of 2015.
“Based on our internal analysis and assumptions, which incorporate the AGR TRACS CPR data, the company will breakeven at an oil price of less than US$30 per barrel (life of field basis) with the lifetime unit costs being in the mid to low double digits. The indicative costs to first oil are substantially lower than expected due to more favourable service costs in the tenders received so far. Contracting has commenced for the rig, well services and production facilities construction. Rig mobilisation is initially expected within Q1 2015 at the same time as construction and the subsequent commissioning of production facilities.”
In September 2014, the company had announced a significant upgrade to 2C oil reserves estimates for Lekoil Nigeria’s 40 per cent. Lekoil holds 90 per cent of the economic interests in Lekoil Nigeria.
AGR TRACS carried out a comprehensive review of the surface and subsurface data provided by Lekoil. Following the review, AGR TRACS reported that the gross unrisked 2C contingent resources for Otakikpo Marginal Field were estimated to be 56.75mn barrels.
This was more than the 36mn barrels of gross oil resources in the most recent 2C resource estimates available at the time of the company’s acquisition of the interest in the field in May 2014.
In addition, stock tank oil initially-in-place (STOIIP) ranges have been estimated by AGR TRACS for four exploration prospects within the onshore part of the Otakikpo acreage and, in total, have been estimated (on a P50, unrisked basis) to contain potential gross aggregate oil-in-place volumes of 162.8mn barrels, Lekoil added.