High Level Summary - Lekoil · General Manager, Corporate Security at Shell in Nigeria Has held...

SHAPING THE FUTURE OF OIL EXPLORATION

AND PRODUCTION IN AFRICA

JUNE 2018

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

▪ an indigenous Nigerian upstream company,

focused on Africa

▪ have a producing asset, with material

near-term upside at low cash breakeven

▪ opened a world-class basin with

transformational oil and gas potential

▪ have a highly experienced technical team

▪ focus on cost discipline and efficiency

▪ are positioned to create midstream value

via our Gas & Power franchise

▪ aim to create value through the cycle

INVESTOR PRESENTATION | JUNE 2018 1

6,000 BOPD

Gross production numbers* by year-end 2019

5 BN BOE, STOIIP (OPL325)

163 MMBLS (OTAKIKPO)

Introduction

…a True ‘E&P’ Company

We are…

20,000 BOPD

2019 PRODUCTION TARGETCURRENT PRODUCTIONEXPLORATION UPSIDE APPRAISAL ASSET

774 MMBLS (OGO)

OPL310


2015LEKOIL as an ‘E’

2018LEKOIL as an ‘E&P’

81p Share Price 18p

$100 Brent Crude $75

30% OPL310Economic Interest

70%†

NA ProductionAt Otakikpo

~6,000 bpod

$505mm Market Cap* $129mm

As We Progress: A Tale of Two Markets

Source: Bloomberg, Company data

*July 2, 2014 GBP-USD FX at 1.72; June 19, 2018 GBP-USD FX at 1.32 † subject to 22.86% ministerial consent representing 40% economic interest



2013

IPO on AIM raising

$50million; farmed in for a 17.14% working interest

and 30% economic

interest in OPL310

Follow-on equity of $120

million

Acquisition of 40%

participating

interest in Otakikpo

Marginal Field

2014

Equity placing of

$38million

2015

First oil at Otakikpo

ahead of schedule

and exceeding

expectations

Acquisition of 62%

economic interest

in OPL 325

Equity placing of

$12.4million

$28 million of debt

capital raise

2016

Oil flowing at the

Otakikpo Marginal

Field to onshore

storage tanks

Raised a $15million

advance payment

facility from Shell

Received Ministerial

Consent for 17.14%

participating interest in

OPL 310

Otakikpo Production

Reaches 7,600 bopd

2017

Executed offtake

agreement with Shell

Western & Trading

Exported the first cargo of

crude from the Otakikpo

Marginal Field

Significant discovery at

Ogo (OPL 310) from

Ogo-1 well

Equity placing of

$46million

2018

3D seismic acquisition at

Otakikpo begins

Focus shifts to Phase Two at

Otakikpo targeting 20,000

bopd

CPR on OPL325 released

showing Oil-In-Place volumes

of 5bn barrels; intention to

farm-down

Accomplishments, Five Years Later


Acquisition of additional

22.86% working interest

(40% economic interest) in

OPL310*

* - subject to Ministerial Consent

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICASHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

OTAKIKPO MARGINAL FIELD

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA INVESTOR PRESENTATION | JUNE 2018 5

From the Beginning:

Swampland to Production in <2 years


▪ Adjacent to shoreline with multiple crude

evacuation options

▪ Company controlled infrastructure

(no Trans Forcados pipeline exposure)

▪ Reserves and resources from CPR currently

exclude Otakikpo South prospect

▪ 3D seismic in progress, scheduled to be

completed in June 2018

Otakikpo Overview

Producing Marginal Field40% Working Interest, 88% Economic Interest*

*During Cost Recovery; **LEKOIL internal estimate

▪ Ramp up towards

20,000 bopd▪ Reserves & resources

▪ 1P+ 1C at 47mmbbls

▪ 2P+ 2C at 56.60mmbbls

▪ 3P+ 3C at 66.20mmbbls


▪ 20,000 bopd

production level can be sustained for at

least four years once

reached**


• 3 previously drilled wells with hydrocarbons encountered

at multiple intervals

Otakikpo CPR Estimate AGR TRACS

Otakikpo Actual FLOW TESTS

Otakikpo 02Final Dual Completion

Schematic

Otakikpo 03Final Dual Completion

Schematic

Otakikpo: Flow Per Zone

1,500bopd

per zone

Otak - 02 Otak - 03

FAULT

C5 – 6,404 bopd

C6 – 5,684 bopd

E1 – 5,703 bopd

C5

E1

Indicates currently

producing zones


Otakikpo Infrastructure Schematic

Currently

Surge Vessel 01

12,0006,000

6,000

<4,000

10,000

6,000

<4,000

Transfer Pumps

10,000Heat Exchanger

Prod. Sep-01 Tanks

120,000

70,000

Export Pumps

20,000

PLEM

Shuttle Tanker 25,000Well

s

6,000 bpd

LACT Unit

20,000

22,000

20,000

Gas flare

HP & LP

Test Sep-02

Offtake Partner

Lifting proceeds made to LEKOIL within 30 days of lifting from IMA

TerminalPrice realized at a ~$1 premium to Brent


10,000 – System Capacity

6,000 – Current utilization

Legend

Fuel Gas Scrubber


OFFSHOREOPL310 AND OPL325


The Next

Big Thing(s)?

Follow the

West African

Transform Margin

Source: IHS Markit

1.7 billion boerecoverable


900 million boerecoverable

777 million boerecoverable



▪ Located in the Dahomey Basin that runs along

the West African Transform Margin covering

area of 1,900 km2 with gross risked prospective

resources of >774mmboe

▪ Shallow water asset close to Lagos and existing

gas infrastructure

▪ LEKOIL commissioned a basin study in April 2013 and identified promising plays and

fairways and additional upside potential is

expected from other identified syn-rift leads

within the block

▪ LEKOIL farmed-in to Afren’s interest in February

2013 and acquired the balance of its interest

in December 2015

▪ Received Ministerial Consent in June 2017 to

complete the transfer of 17.14% participating

interest acquired in OPL 310

OPL 310 Overview

Contains the ‘’Ogo’’ World Class Discovery

40% Working Interest*, 70% Economic Interest

*Subject to 22.86% remaining Ministerial consent



OPL 310 – Ogo Field Overview

▪ OPL310: 1,895 km2 in water depths of 200 – 7,400 ft

▪ Ogo Field: 360 km2 in water depths of 200 – 3,000 ft

• Located 30 km offshore Lagos within Dahomey

geological basin

• Proximity to Lagos and a city with robust gas demand

Post Rift Sequence

▪ Four-way dip/fault dependent closures

• Turonian and Cenomanian: OIL bearing

• Albian: GAS CONDENSATE bearing

Syn Rift Sequence

▪ Half grabens in Syn rift

• Syn Rif: GAS CONDENSATE bearing



Depth Structure map of

Top Syn-Rift Unconformity

OGO – 1

OGO – 4

OGO – 2 OGO – 3



Seismic Cross Section,

potential Ogo well locations

NW SE

OGO – 1 & 2 (282ft)

OGO – 3 & 4 (320ft)


Sea floor depth


Ogo Development Partner: GE

Envisioned Capital Program

$400m Full field oil development

$600m Subsequent upstream gas development

Proposed $1 billion in

capital* for the first phase of the field’s development

▪ GE to commit funds for full field development capital

* Subject to successful appraisal well and certain conditions

Exact total cost of field development from multiple phases, TBD

▪ Will receive a % of LEK’s future cash flows

▪ Ability to leverage GE’s equipment and technical

expertise to throughout life of project

▪ LEK’s 40% equity interest in OPL310 remains intact



* Subject to successful appraisal well and certain conditions

Consent

Funding

Solution

CPR

Update FDP


Unlocking Value in Ogo

Appraisal

Drilling

Full Field

Development


▪ We identified this block as a key target

with exploration upside

▪ Highlighted in our proprietary Dahomey

Basin study that runs along the Western

Side of the Niger Delta

▪ Covering area of 1,200 km2 with

estimated gross unrisked prospective

resources of 5,067 MMbbls*

▪ Lekoil acquired 88.57% of Ashbert Oil

and Gas Limited, the operator of OPL 325, therefore receiving an entitlement to

62 % of the equity of OPL 325

OPL 325 Overview

Promising Asset With Deep Water Turbidite Fan Play

62% Equity Interest

*Third party technical report from Lumina Geophysical



OPL 325 Prospect Detail


Technical report snapshot


Namibia

New Play Concepts / Re-Assessing Prospectivity

▪ Block 2514A relinquished

▪ Focus on non-seismic technologies

to de-risk identified opportunities

and high grade leads



FY 2017 FY 2016

Revenue* $30.8 million –

Year-End Cash Balance $6.9 million $3.3 million

Increase / (Decrease) in Cash $3.6 million ($22.7 million)

G&A Expenses ($17.4 million) ($21.1 million)

Profit / (loss) for the year $6.4 million ($15.8 million)

Profit / (loss) per share $0.01 ($0.03)

Current Production at

Otakikpo~6,000 bopd –

Financial Highlights

Strengthening Financial Position

Source: Company data

*Represents 40% entitlement crude, excludes cost recovery crude



Catalyst CalendarProjected Timeline

Otakikpo

OPL310

OPL325

22.86%Ministerial consent

Phase Two

Funding Solution

H2 ‘18

Rig mobilization

Shoot and process

3D seismicPhase Two

Drilling Program

2019

Phase Two

Production

of 20,000 bpd

Appraisal funding

solution

Development

planning with GE

Drilling

Prospect de-risking Farm-out process

Updated CPR

Dates subject to change


2020


APPENDIX AND TEAM


Corporate Strategy



Diversified Asset Portfolio

*Acquisition subject to ministerial consent

Otakikpo20.4 mmbls net |56.6 mmbls gross 2P + 2C resources

65.2 mmbls net | 163.0 mmbls gross, STOIIP upside

OPL310541.8 mmboe net | 774.0 mmboe gross prospective resources*

OPL3255 -6 billion boe STOIIP**

**Third party estimate by Lumina Geophysical

+



Solid and Diversified Shareholder Register

Institutional

Directors / Retail Other

USA

Europe

LSE AIM: LEK

536,529,893current shares outstanding

Other

RD:IR

MERIDIAN CAPITAL



Management Team

▪ Formerly the international Energy Sector

Head at AllianceBernstein

▪ Engineering and operational roles within

Schlumberger in a career that spanned Nigeria, Egypt, Pakistan, Oman and Scotland

▪ BSc. in Electronic and Electrical Engineering from

Obafemi Awolowo University Ile-Ife, Nigeria (1991);

and an MBA from MIT Sloan

▪ Member of the #1 Institutional Investor-

ranked team of analysts covering the oilfield

services industry as an Associate Director at

UBS Investment Research

Lekan Akinyanmi

Executive Board Member,

Chief Executive Officer

▪ Over 35 years of experience in the industry with

Shell and Agip in a career that spanned locations in Nigeria, Italy, The Netherlands and Oman

▪ General Manager, Corporate Security at

Shell in Nigeria

▪ Has held various senior management positions

(Production Operations and Maintenance

Manager, Senior Portfolio Development Manager

and General Manager Corporate Security)

Leke Adedipe

Chief Operating Officer

▪ Over 20 years experience in varied roles,

including most notably CFO of Ophir Energy plc responsible for business strategy and finance

▪ Other natural resources experience includes

positions such as interim CFO at ASX-listed Pan

Pacific Petroleum and AIM-listed GCM Resources

▪ Bachelor of Economics (major in Accounting)

from La Trobe University, Melbourne

▪ Graduate Diploma in Applied Corporate

Governance

Lisa Mitchell

Executive Board Member,

Chief Financial Officer



Management Team (Continued)

▪ Over 25 years experience in the industry with Oil

majors and Schlumberger

▪ Former chief geophysicist at Shell

▪ Sound ability in building/leading diverse teams of

varying sizes and delivering in a performance-

driven environment. Has held responsibilities in

Nigeria, Europe, Middle-East and Asia

Sam Olotu

Chief Technical Officer

▪ Responsible for managing and overseeing the

Namibian operations

▪ Founding member of Lekoil Namibia and also a

shareholder in the AIM listed holding company,

LEKOIL Limited

▪ Very active in the Namibian economy and holds

interests in various sectors

▪ MBA from St. Thomas University in Minneapolis, MN;

and a Bachelors in Accounting & Finance from

Wartburg College in Waverly, IA

Tashi Shiimi Ya Shiimi

Managing Director

LEKOIL Namibia

▪ Leads LEKOIL’s Gas & Power business with a

focus on profitably monetizing equity gas in

existing assets and also generating new

businesses to create a thriving enterprise

▪ Responsible for the stewardship and

implementation of LEKOIL’s Corporate

Strategy

▪ Over 20 years’ experience in the Oil & Gas

industry serving in various commercial and

technical leadership roles in Nigeria and

Venezuela with Schlumberger, the USA with

Hess and Exxon Mobil; and the UAE with

Mubadala Petroleum

Shola Adekeye

Managing Director

LEKGAS


▪ BEng. in Mechanical Engineering from University of

Illorin, Kwara, Nigeria (1991); and an MBA from The

Wharton School at the University of Pennsylvania


Management Team (Continued)

Dotun Adejuyigbe

Head of Commercial

▪ Coordinates the commercial, business and

strategic planning functions at Lekoil including

hydrocarbon marketing and support for

corporate finance functions

▪ Wide-ranging experience in project

management, consulting, private equity, and

corporate finance across projects in Africa,

Europe, North and South America

▪ Holds an MBA from INSEAD

▪ Award winning and leading Nigerian expert in the

geosciences, specializing in sedimentology,

geology and geophysics

▪ 35+ years of experience in Exploration Geology, at

Shell and most recently Head of Geological

Services

▪ Member of the Nigerian Mining and Geological

Society (NMGS) and a Fellow of the Nigerian

Association of Petroleum Explorationists (NAPE)

Dr. Kehinde Ladipo

Senior Exploration Advisor

▪ Responsible for the short-term and strategic funding

of Lekoil

▪ Formerly from Oando, participating in all debt capital raising and M&A

▪ 10+ years of finance and investment banking

experience at The Carlyle Group focusing on Sub-

Saharan Africa; and at JP Morgan and Credit Suissefocusing on Leveraged Finance in oil & gas

▪ Holds an MBA from INSEAD

Keji Ajayi

Head of Corporate Finance

Alfred Castaneda

Head of Investor Relations

▪ Specialized in international oil & gas equity fund

raising at Ladenburg Thalmann and Revere▪ 10+ years of equities and capital markets

experience including Lekoil’s 2013 IPO and subsequent equity funding

▪ Member of the #1 Institutional Investor-ranked Oil

Services Equity Research team at Morgan Stanley

from 2010-2012

▪ Holds a BS in both Accounting and Finance from

Fordham University



BOARD OF DIRECTORS


Non-Executive Board Directors

▪ 32+ years of oilfield experience

including working with Dowell

Schlumberger in Iraq, Abu Dhabi,

Venezuela, Canada, Syria, France and Nigeria

▪ Founder and Managing Director, SOWSCO

Well Services – one of Nigeria’s

foremost indigenous oil service firms

▪ Founding member of PETAN

(Petroleum Technology Association of

Nigeria)

▪ Member of the audit and

remuneration committees of Lekoil

Sam Adegboyega

Chairman of the Board

▪ 25 years+ oil industry experience, qualified as a

Chartered Accountant with Arthur

Andersen in 1981

▪ Member of the Association of Corporate

Treasurers and the Institute of Taxation

▪ Business Development Manager and

subsequently Group Treasurer at Enterprise Oil for 11 years

▪ Finance Director of multiple listed E&P

companies, including Premier Oil between

1999 and 2005

▪ Managing Director, Head of oil and gas, at

the Royal Bank of Scotland in 2007-2008

▪ Worked as a consultant to, and non-

executive director of, a number of listed and

private E&P companies since 2010 most

recently on the board of Hurricane

Exploration Plc

John Van Der Welle

▪ Most recently Chairman of Africa at

Schlumberger and was also the President of

the Schlumberger Foundation, a non-profit

corporate foundation

▪ 30+ years at Schlumberger, holding senior

operational positions globally, including Vice

President and Global Treasurer, and

Managing Director for Nigeria and West

Africa

▪ Co-founder of the Petroleum Club of Lagos

and serves on a number of boards including

Guaranty Trust Bank plc and the

Schlumberger Foundation

▪ Holds a BSc in Accounting from the University

of Ghana, and an MBA from Stanford

University; alumnus of the Oxford Institute for

Energy Studies

H. Adesola Oyinlola



Non-Executive Board Directors (Continued)

▪ Global head of the Abu Dhabi Investment

Authority’s internal equities department

overseeing portfolios, risk management and

due-diligence processes

▪ Former Senior Vice President and Portfolio

Manager

▪ at Alliance Bernstein, managing multi-billion

dollar portfolios in Global and International

Large Cap

▪ Growth Equities

▪ Chief Executive Officer & Chief Investment

Officer of Alliance Capital Management,

South Africa where he created and

managed the business and grew assets

▪ to US$2 billion under management

Gregory Eckersley

▪ Group CEO of Asset Management Group

▪ (AMG) Limited

▪ Legal practitioner with an LL.M (Public

International Law) from Kings College,

University of London and a Masters in Business

Administration (MBA) with a distinction in

Finance from Imperial College, University

▪ of London

▪ Called to the Nigerian Bar Association in

1989.

▪ Completed several attachments with the

following: Caisse Privee Banque, Brussels;

Banque Rivaud, Paris; Banque Privee,

Geneva

Aisha

Mohammed-Oyebode

▪ President of Hunt Refining Company

▪ Former co manager of the Global Research

Growth Fund at Alliance Bernstein

▪ Petroleum engineer with Atlantic Richfield

Corporation working in reservoir

engineering, enhanced oil recovery

research, strategic planning and acquisition

evaluation

▪ BS in Chemical Engineering from Missouri

University of Science and Technology and a

MBA from Harvard Business School

Tom Schmitt



This presentation may contain forward looking statements which involve

subjective judgment and analysis and are subject to significant

uncertainties, risks and contingencies, including those risk factors

associated with the oil and gas businesses, many of which are outside the

control of, and may be unknown to LEKOIL. In particular, any forward

looking statements speak only as of the date of this presentation, they

assume the success of the strategy of LEKOIL and they are subject to

significant regulatory, business, competitive and economic uncertainties

and risks.

No representation, warranty or assurance (express or implied) is given or

made in relation to any forward looking statement by any person

(including by LEKOIL, any of its related bodies corporate, directors,

officers, employees or their representatives). In particular, no

representation, warranty or assurance (express or implied) is given in

relation to any underlying assumption or that any forward looking

statement will be achieved. Actual future events may vary materially

from the forward looking statements and the assumptions on which the

forward looking statements are based. Given these uncertainties, readers

are cautioned not to place undue reliance on such forward looking

statements, and should rely entirely on their own independent enquiries,

investigations and advice regarding any information contained in this

presentation. Any reliance placed by a reader on the information

contained in this presentation is wholly at the reader's own risk. The

information in this presentation is provided for informational purposes only

and does not take into account the investment objectives, financial

situation and needs of any particular investor. Each of LEKOIL and its

related bodies corporate and affiliates and their respective directors,

partners, employees, agents and advisers disclaim any liability for any

direct, indirect or consequential loss or damages suffered by any person

as a result of relying on any statement in, or omission from, this

presentation.

Subject to any continuing obligations under applicable laws, LEKOIL

disclaims any obligation or undertaking to disseminate any updates or

revisions to any forward looking statements in this presentation to reflect

any change in expectations in relation to any forward looking statements

or any change in events, conditions or circumstances on which any such

statements is based. Nothing in this presentation shall under any

circumstances create an implication that there has been no change in

the affairs of LEKOIL since the date of this presentation. All other

disclosures as in previous presentations apply.

Disclaimer


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