Lekoil gushes higher after announcing first oil

Shares in AIM-listed Lekoil rocketed after it announced the start of oil production from the Otakikpo Marginal Field in the south-eastern part of the Niger Delta.

The oil and gas exploration group said that following the successful re-entry of the Otakikpo-002 well, first oil flowed to surface late on Saturday with production testing being conducted over the weekend.

Lekoil said the well produced from only the first of four planned production strings, and flowed oil at various choke sizes for over 24 hours at a peak rate of 5,703 barrels of oil per day at a 36/64 inch choke, significantly ahead of expectations.

Further operational details will be made available at the company's half-year results, which will be published by 30 September 2015.

Chief executive officer Lekan Akinyanmi said: “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. This is a real achievement for the Otakikpo Joint Venture.

"However, there is a lot more to be done. We expect to finalize the evacuation infrastructure during the official well test period and determine the optimal production rate that maximises value from the two wells."

At 0905 BST, Lekoil shares were up 21.1% at 25.75p.