Lekoil (LON:LEK) has confirmed that the Otakikpo field, in Nigeria, has now achieved first oil.
The field, located in a ‘shoreline’ location, has begun producing after testing over the weekend.
It started from one of four production strings in the Otakikpo-002 well and flowed at peak rates of 5,703 barrels of oil per day (bopd), which the company highlights as being significantly ahead of expectations.
Indeed, all four strings were supposed to yield 6,000 bopd from the Otakikpo-002 and Otakikpo-003 wells, according to a competent persons report completed earlier this year.
Lekoil’s management now expects production will substantially exceed previous guidance, though it cautioned that further testing and analysis will be required before it gives investors any new guidance.
"We are delighted to announce that Lekoil is now an oil producer.
“We always believed in the potential of Otakikpo but the production rate from the first re-entered well has exceeded our expectations,” said Lekan Akinyanmi, Lekoil’s chief executive.
"However, there is a lot more to be done.”
Otakikpo-002 is now being suspended temporarily to allow completion and testing of another zone for an official well test programme. Oil extracted during this production testing programme will flow into onshore storage tanks.
The company is also now set to start re-entry operations into the Otakikpo-003 well. This well is expected to be online by around the end of this year.
Akinyanmi added: “We expect to finalise the evacuation infrastructure during the official well test period and determine the optimal production rate that maximises value from the two wells."
"Production at Otakikpo represents the first major step in fulfilling our strategy to be the world's leading E&P company focused on Africa and maximising value for our stakeholders and host communities in a sustainable manner.”