Nigeria-focused Oil Company Lekoil a Nigerian indigenous exploration and production company has of recent announced reduction of its workforce numbers which is believed to be unconnected with the prevalence of global covid 19 pandemic but as part of the “immediate and accelerated” implementation of the company’s general and administrative (“G&A”) cost reduction measures.
“These measures are targeting an annual reduction of US$8.0 million or at least 40% in G&A costs, which is inclusive of a reduction in staff numbers. The Company has commenced the immediate execution of these measures which will be completed within the next four to six weeks,” Lekoil said.
Irrespective of further details on the above affect, the company emphasized that its production from field off Nigeria would not be affected by cost reduction decision as takenby the company. On its commitment to its financial obligations, Lekoil also confirmed that it has paid the first installment for its share of the costs at the OPL 310 block offshore Nigeria to operator Optimum. The first of two payment installations as stated in the agreement, the company said it has paid the sum of 2 million as due to pay to Optimum Petroleum to cover “sunk costs and consent fees” for the OPL 310 offshore block.
In view of the agreement signed in January, Lekoil was to pay $2 million by March 20, and another $7.6 million by May 2, for a total of $9,6 million to Optimum, or risk losing its stake in the block containing the Ogo discovery.
Sequel to the payment installations, Lekoil is subjected to until July 2020, to provide evidence of ability to fund its share of the drilling costs in the block.
“We have kept our commitments on our world-class asset, OPL 310, despite the detrimental effects of the COVID-19 pandemic on the global economy and the subsequent fall in oil price. With the implementation of our cost reduction measures, we believe we are in a good position to navigate this challenging period.” Lekan Akinyanmi, LEKOIL’s CEO, commented.