Lekoil : Further update on Facility Agreement and Trading

RNS Number : 6631Z

Lekoil Limited

13 January 2020

13 January 2020

Lekoil Limited

("LEKOIL" or the "Company")

Further update in relation to Facility Agreement and Restoration of Trading

Following the Company's announcement earlier today, the Company is now in a posi on to advise that, based on all informa on currently available to Lekoil, the loan agreement announced on 2 January 2020 by the Company, purportedly with the Qatar Investment Authority ("QIA") (the "Facility Agreement" or the "Transac on") seems to have been entered into by the Company with individuals who have constructed a complex facade in order to masquerade as representatives of the QIA (the "Counterparties").

The Company will be contac ng the relevant authori es across a number of jurisdic ons without delay, with regard to what appears to be an a empt to defraud Lekoil, and would like to thank the QIA for drawing this ma er to the Company's advisers' a en on on 12 January 2020, who then immediately made contact with the QIA to establish the facts of the situation.

Lekoil's due diligence on the par es involved in the Transac on included, inter alia, mee ngs with individuals who, the Company now understands falsely presented their creden als as QIA representa ves and interac on with individuals purpor ng to be carrying out legal and technical due diligence on behalf of the QIA (again, falsely). In addi on, at the behest of the Company's Non-Execu ve Directors, a third party due diligence report, based predominately on open source informa on, was commissioned by Lekoil on Seawave Invest Limited ("Seawave") in its capacity as introducer of the Counterpar es and lead adviser to the Company in rela on to the Facility Agreement. In addi on to the work of its in-house specialists, Lekoil also sought advice in rela on to the Transac on from its retained UK legal counsel.

As such, while Lekoil seeks to establish, alongside its legal counsel and Nominated Adviser, the full facts of this ma er, 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. As set out in more detail below, an Investigation Committee has been constituted on the matter.

Lekoil confirms that its financial exposure associated with the Facility Agreement is limited to approximately US$600,000 (being the amounts paid in good faith as ini al arrangement fees to Seawave, and the Company's associated legal fees) and can also confirm that there have been no monies paid by Lekoil to the Counterpar es. Any further fees due pursuant to the Transac on (which, for the avoidance of doubt, will not be paid) would only have been payable upon drawdown of funds.

Whilst Lekoil will take all reasonable ac ons to recover the fees paid to Seawave, there can be no guarantee that such attempts will be successful.

Lekoil con nues to generate posi ve cash flow at the opera onal level and will seek alterna ve funding for the future development of OPL 310 as a priority, including reac va ng other exis ng funding discussions. The drilling of an appraisal well within OPL 310 is s ll expected to occur within the tenure of the license which expires on the 2 August 2022. As previously announced on 30 August 2019, Lekoil is required to pay Op mum Petroleum Development Company Limited ("Op mum") sunk costs and consent fees by February 2020 - a payment es mated at c. US$10 million. LEKOIL is also required to show its ability by February 2020 to raise 42.86 per cent. of the drilling costs for one appraisal well, which is es mated to be c.US$28 million. Failure to make this payment on me may result in Lekoil and Op mum jointly seeking, and agreeing on, a willing buyer to whom the transfer of Lekoil's 17.14% par cipa ng interest in OPL 310, as well as all the financial obligations related to OPL 310, can be made.

The Company further confirms that no capital commitments have been made based on an cipated drawdowns, and that the Company will cover the cost of the site survey (es mated at c. US$4 million) on OPL 310 as announced on 10 January 2020 from a mixture of existing cash resources and income from operations at Otakikpo.

As at 31 December 2019, the Company had cash at the bank of approximately US$2.7 million, which takes into account the US$600,000 already paid in rela on to the Transac on. No material further payments have been made in rela on to the Transac on subsequent to that date, and the Company expects to receive the cash proceeds from an oil li ing which was expected to occur in December 2019 and has now been scheduled to be included as part of the li ings for January 2020, further bolstering its cash resources.

Company can confirm that no payments have been made to Mr Akinyanmi or any other Lekoil employee, director or representative in relation to the Transaction.

Investigation Committee

The Board has appointed Mark Simmonds and Tony Hawkins, who are Independent Non-Execu ve Directors of the

Company, to inves gate the origina on and execu on of the Facility Agreement, what steps can be taken to retrieve any monies already paid in associa on with the Transac on and the Company's wider corporate governance practices.

The Company notes that Mr Simmonds and Mr Hawkins were appointed to the Board a er the signature of the Facility Agreement and did not have any connec on with the origina on or execu on of the Transac on, making them suitable, in the wider Board's opinion, to lead a fully independent review. They will be assisted by third party forensic investigators and legal counsel, as appropriate.

Further announcements with regard to this matter will be made as and when required.

Restoration of Trading

The Company's shares were suspended from trading on AIM at 7.37 a.m. today pending clarifica on on the situa on. Accordingly, the release of this announcement facilitates li ing of the suspension, and trading on AIM of the Company's shares is expected to recommence from 7.30 a.m. tomorrow.

For further information, please visit www.lekoil.comor contact:

The informa on contained within this announcement is deemed by the Company to cons tute inside informa on s pulated under the Market A buse Regula on (EU) No. 596/2014. Upon the publica on of this announcement via the Regulatory Informa on Service, this inside information is now considered to be in the public domain.

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