Nigeria-focussed Lekoil Limited (LON:LEK) told investors it is expecting continuous commercial production from the Otakikpo field in the fourth quarter.
It is targeting a production rate of 10,000 barrels of oil per day from Phase 1 of the Otakikpo field development plan.
In the company’s own words, it is “on the cusp” of commencing commercial production from the field.
When it comes, it is expected to mark a vital milestone in the group’s “journey to become a self-funding oil and gas exploration and production business”.
The short-term focus is exclusively on ramping up production from Otakikpo, so that cash flow can be subsequently used for further expansions and for the appraisal of the Ogo oil discovery, the company added.
Lekoil noted, in its interim results statement released today, that it has some 25,000 barrels of crude oil stored on site.
In its results the company reported a US$8.1mln loss, and said it had US$7.6mln of cash at the end of June. It has total debt facilities of US$24.8mln, with its two-tranche facility with FBN fully drawn.
Lekan Akinyanmi, Lekoil chief executive, said: "In the current low oil price environment, we have prioritised the allocation of our capital to our production and development assets to generate short-term cash ﬂow and compelling economic returns, focusing on extracting value from the 'stability' zone of our portfolio.
“This means limited expenditure on exploration assets but maintained optionality for the future. Our principal focus for the next twelve months is on delivering our phase 1 production target for Otakikpo, which we expect to hit by year end, and subsequently use that cash flow and strategic partnerships to grow production and develop the other assets in the portfolio."