Lekoil challenges validity of agreement termination letter

Nigeria and West Africa-focussed gas exploration and production company Lekoil announced on Wednesday that Mayfair Assets and Trusts, in which it has a 90% economic interest, had received a letter from Optimum Petroleum Development Company, the operator of the OPL 310 licence, proposing to terminate the cost and revenue sharing agreement on the licence.

The AIM-traded firm had announced on 11 December that Optimum had conveyed its enforcement of the default clause within the agreement.

Under the agreement, the default clause stipulated that, following a cure period, if a default had occurred, Optimum and Mayfair could jointly seek and agree on a buyer to whom Mayfair's 17.14% participating interest as well as the financial obligation within OPL 310 would be transferred.

Mayfair would also be entitled to a full reimbursement of all amounts due to it, as a result of past costs spent on the asset, from future production proceeds from OPL 310.

“The company believes that this further letter proposing to terminate the agreement is not valid, as the relevant provisions of the agreement have not been adhered to by Optimum,” the company said in its statement.

“The company will engage with Optimum to ensure that the appropriate steps outlined in the agreement are followed, and is also seeking legal advice on the matter.

“Further updates to shareholders will be provided in due course.”