Lekoil : Otakikpo Update

RNS Number : 4599Q

Lekoil Limited

21 October 2019

21 October 2019

LEKOIL Limited

("LEKOIL" or the "Company")

Otakikpo Update

Phase Two Development Project Sanctioned and Renewal of Marginal Field License

LEKOIL (AIM: LEK), the Africa-focused oil and gas explora on, development and produc on company, is pleased to announce that the Otakikpo Joint Venture (the "Joint Venture" or "JV") between Green Energy Interna onal Limited ("GEIL") and LEKOIL (with LEKOIL as Technical Partner) has sanc oned Phase Two of the Otakikpo field development plan (as described below), following the successful comple on of an independent third party competent persons report ("CPR"), and technical and environmental, social, health and safety ("ESHS") due diligence, commissioned and undertaken by Standard Chartered Bank. Following the project sanc on, the JV is now finalising heads of terms with "Anchor" engineering, procurement, construction and commissioning vendors for cost and schedule certainty to allow Standard Chartered Bank to close project financing as well as complete preparation for project execution.

The Joint Venture has also renewed the Otakikpo Marginal Field license for twenty (20) years ("Renewal"), following the payment to the Department of Petroleum Resources (DPR) the sum of US$1 million for the license Renewal fee (US$400,000 net to LEKOIL).

• er evalua ng the exis ng infrastructure at Otakikpo, Schlumberger, in its role as non-financial, technical partner has assessed the capacity of the infrastructure to be capable of producing 10,000 bopd (4,000 bopd net to LEKOIL Nigeria) and, with some debo lenecking, up to 12,000 bopd gross (4,800 bopd net to LEKOIL Nigeria). Subject to closing of, inter alia, the project financing, the Joint Venture expects the first two wells of the phased development plan to bring produc on up to this level. The Joint Venture an cipates adding this incremental produc on by year end 2020.

As announced on 1 July 2019, the Joint Venture signed a non-binding Memorandum of Understanding ("MOU") with Schlumberger and a trading subsidiary of a major interna onal oil company that has been opera ng in Nigeria for more than half a century ("Major Oil Company"). The MOU covers a comprehensive infrastructure sharing and drilling programme around a group of marginal field assets in OML11. Under the terms of the MOU, the Major Oil Company will provide funding to the Joint Venture alongside the other funding partners, subject to comple on of due diligence which is ongoing, entry into defini ve documenta on and final investment decision. The Joint Venture will seek to enter into an exclusive o ake agreement with the Major Oil Company for the sale of crude produced pursuant to this project.

The consor um of GEIL, LEKOIL and Schlumberger will form a mul disciplinary project management team in which Schlumberger will act solely as a technical partner to provide oilfield services and project management services to assist in ramping up produc on and long-term field management. The project scope also involves the construc on of a terminal for evacua on. Financing discussions are progressing, with interest confirmed from key poten al financing parties and further announcements will be made in due course.

For further informa on on the MOU and the phased development plan, please refer to the Company's RNS of 1 July 2019.

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

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

Tavistock (Financial PR)

+44 20 7920 3150

Simon Hudson / Barney Hayward / Charles Vivian

Background to Otakikpo

Otakikpo is sited in a coastal swamp location in oil mining lease (OML) 11, adjacent to the shoreline in the southeastern part of the Niger Delta. LEKOIL Nigeria exercises the rights and benefits of its 40% Participating and Economic interest in Otakikpo via the Farm-in Agreement and Joint Operating Agreement signed on 17 May 2014 with Green Energy International Limited ("GEIL"), the Operator.

The Company holds 90% of the economic interests in LEKOIL Nigeria. LEKOIL Limited's economic interest in Otakikpo therefore equates to 36%. The Otakikpo Joint Venture began operations in December 2014. Ministerial consent was granted by the Honourable Minister of Petroleum Resources of Nigeria in June 2015. Commercial production started in February 2017.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.comor visit www.rns.com.

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