N OVEMBER 2018 Introduction We are an indigenous Nigerian upstream - - PowerPoint PPT Presentation

SHAPING THE FUTURE OF OIL EXPLORATION

AND PRODUCTION IN AFRICA

NOVEMBER 2018

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

▪ an indigenous Nigerian upstream company, focused on Africa ▪ have a producing asset, with material near-term upside at low cash breakeven ▪ opened a world-class basin with transformational oil and gas potential ▪ have a highly experienced technical team ▪ focus on cost discipline and efficiency ▪ are positioned to create midstream value via our Gas & Power franchise ▪ aim to create value through the cycle

INVESTOR PRESENTATION | NOVEMBER 2018 1

6,000 BOPD

Gross production numbers* by year-end 2019

5 BN BOE, STOIIP (OPL325) 163 MMBLS (OTAKIKPO)

Introduction

…a True ‘E&P’ Company We are…

20,000 BOPD

2019 PRODUCTION TARGET CURRENT GROSS PRODUCTION EXPLORATION UPSIDE APPRAISAL ASSET

774 MMBLS (OGO)

(542 MMBLS NET) OPL310

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

Corporate Strategy

INVESTOR PRESENTATION | NOVEMBER 2018 2

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

Current Asset Base

*Acquisition subject to ministerial consent

Otakikpo

20.4 mmbls net |56.6 mmbls gross 2P + 2C resources 65.2 mmbls net | 163.0 mmbls gross, STOIIP upside

OPL310

541.8 mmboe net | 774.0 mmboe gross prospective resources*

OPL325

5 -6 billion boe STOIIP**

**Third party estimate by Lumina Geophysical

+

INVESTOR PRESENTATION | NOVEMBER 2018 3

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

2015

LEKOIL as an ‘E’

2018

LEKOIL as an ‘E&P’ 81p Share Price 13p $100 Brent Crude $75 30% OPL310

Economic Interest

70%†

NA

Net Production

At Otakikpo

2,400 bpod

$505mm Market Cap* $92mm

As We Progress: A Tale of Two Markets

Source: Bloomberg, Company data *July 2, 2014 GBP-USD FX at 1.72; November 1, 2018 GBP-USD FX at 1.29 † subject to 22.86% ministerial consent representing 40% economic interest

INVESTOR PRESENTATION | NOVEMBER 2018 4

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

30 Jun 2018 30 Jun 2017

Revenue* $22.4 million $6.9 million Cash Balance $9.8 million $6.4 million Net debt** $15.9 million $33.4 million Trade payables $20.1 million $35.3 million G&A Expenses ($8.8 million) ($9.0 million) Operating profit / (loss) in the period $3.0 million ($13.7 million) Profit / (loss) per share $0.002 ($0.024)

Interim Financial Highlights

Strengthening Financial Position

Source: Company data *Represents 40% entitlement crude, excludes cost recovery crude **Short and long term debt – cash, different vs last reported

INVESTOR PRESENTATION | NOVEMBER 2018 5

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA 2013

 IPO on AIM raising

$50million; farmed in for a 17.14% working interest and 30% economic interest in OPL310

 Follow-on equity of $120

million

 Acquisition of 40%

participating interest in Otakikpo Marginal Field 2014

 Equity placing of

$38million 2015

 First oil at Otakikpo

ahead of schedule and exceeding expectations

 Acquisition of 62%

economic interest in OPL 325

 Equity placing of

$12.4million

 $28 million of debt

capital raise 2016

 Oil flowing at the

Otakikpo Marginal Field to onshore storage tanks

 Raised a $15million

advance payment facility from Shell

 Received Ministerial

Consent for 17.14% participating interest in OPL 310

 Otakikpo Production

Reaches 7,600 bopd gross 2017

 Executed offtake

agreement with Shell Western & Trading

 Exported the first cargo of

crude from the Otakikpo Marginal Field

 Significant discovery at

Ogo (OPL 310) from Ogo-1 well

 Equity placing of

$46million 2018

 3D seismic acquisition at

Otakikpo begins

 Focus shifts to Phase Two at

Otakikpo targeting 20,000 bopd

 CPR on OPL325 released

showing Oil-In-Place volumes

• f 5bn barrels; intention to

farm-down

Accomplishments, Five Years Later

 Acquisition of additional

22.86% working interest (40% economic interest) in OPL310*

* - subject to Ministerial Consent

INVESTOR PRESENTATION | NOVEMBER 2018 6

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

OTAKIKPO UPDATE

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

▪ Adjacent to shoreline with multiple crude evacuation options ▪ Company controlled infrastructure (no Trans Forcados pipeline exposure) ▪ Reserves and resources from CPR currently exclude Otakikpo South prospect ▪ 3D seismic processing and interpretation in progress

Otakikpo Overview Producing Marginal Field

40% Working Interest

*LEKOIL internal estimate

▪ Ramp up towards 20,000 bopd

▪ Reserves & resources ▪ 1P+ 1C at 47mmbbls ▪ 2P+ 2C at 56.60mmbbls ▪ 3P+ 3C at 66.20mmbbls

▪ 20,000 bopd production level can be sustained for at least four years once reached*

INVESTOR PRESENTATION | NOVEMBER 2018 8

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

Otakikpo Infrastructure Schematic

Currently

Surge Vessel 01 12,000 6,000 6,000 <4,000 10,000 6,000 <4,000 Transfer Pumps 10,000 Heat Exchanger Prod. Sep-01 Tanks 120,000 70,000 Export Pumps 20,000 PLEM Shuttle Tanker 25,000 Well s 6,000 bpd LACT Unit 20,000 22,000 20,000 Gas flare HP & LP Test Sep-02

Offtake Partner

Lifting proceeds made to LEKOIL within 30 days of lifting from IMA Terminal

Price realized at a ~$1 premium to Brent

10,000 – System Capacity 6,000 – Current utilization Legend Fuel Gas Scrubber INVESTOR PRESENTATION | NOVEMBER 2018 9

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

OFFSHORE

OPL310 & OPL325

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

The Next Big Thing(s)?

Follow the West African Transform Margin

Source: IHS Markit

1.7 billion boe recoverable 1.6 billion boe recoverable 900 million boe recoverable 777 million boe recoverable 2.3 billion boe recoverable

INVESTOR PRESENTATION | NOVEMBER 2018 11

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

▪ Located in the Dahomey Basin that runs along the West African Transform Margin covering area of 1,900 km2 with gross risked prospective resources of >774mmboe ▪ Shallow water asset close to Lagos and existing gas infrastructure ▪ LEKOIL farmed-in to Afren’s interest in February 2013 and acquired the balance of its interest in December 2015 ▪ Received Ministerial Consent in June 2017 to complete the transfer of 17.14% participating interest acquired in OPL 310 ▪ Applied to the Federal High Court in Nigeria for a Declaration re: remaining 22.86% Ministerial Consent ▪ Working with our partner Optimum Petroleum towards a solution

OPL 310 Overview Contains the ‘’Ogo’’ World Class Discovery

40% Working Interest*, 70% Economic Interest**

*Subject to 22.86% remaining Ministerial consent ** Terms under negotiation

INVESTOR PRESENTATION | NOVEMBER 2018 12

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

Ogo Development Partner: BHGE

Envisioned Capital Program $400m

Full field oil development

$600m

Subsequent upstream gas development

Proposed $1 billion in capital* to first oil

▪ GE to commit funds for full field development capital

* Subject to successful appraisal well and certain conditions Exact total cost of field development from multiple phases, TBD MoU with Pressure Control Systems Nigeria Limited, a GE subsidiary

▪ Will receive a % of LEK’s future cash flows ▪ Ability to leverage GE’s equipment and technical expertise to throughout life of project

INVESTOR PRESENTATION | NOVEMBER 2018 13

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

* Subject to successful appraisal well and certain conditions

Consent Funding Solution CPR Update FDP

Unlocking Value in Ogo

Appraisal Drilling Full Field Development

INVESTOR PRESENTATION | NOVEMBER 2018 14

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

▪ We identified this block as a key target with exploration upside ▪ Highlighted in our proprietary Dahomey Basin study that runs along the Western Side of the Niger Delta ▪ Covering area of 1,200 km2 with estimated gross unrisked prospective resources of 5,067 MMbbls* ▪ Lekoil acquired 88.57% of Ashbert Oil and Gas Limited, the operator of OPL 325, therefore receiving an entitlement to 62 % of the equity of OPL 325

OPL 325 Overview Promising Asset With Deep Water Turbidite Fan Play

62% Equity Interest

*Third party technical report from Lumina Geophysical

INVESTOR PRESENTATION | NOVEMBER 2018 15

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

Catalyst Calendar

Projected Timeline

Otakikpo OPL310 OPL325

22.86% Ministerial consent Phase Two

Funding Solution

H2 ‘18

Rig mobilization Shoot and process 3D seismic Phase Two Drilling Program

2019

Phase Two Production

• f 20,000 bpd

Appraisal funding solution Development planning with GE Drilling Prospect de-risking Farm-out process Updated CPR

Dates subject to change

2020

INVESTOR PRESENTATION | NOVEMBER 2018 16

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

Solid and Diversified Shareholder Register

LSE AIM: LEK

Source: RD:IR, Bloomberg

MERIDIAN CAPITAL

INVESTOR PRESENTATION | NOVEMBER 2018 17

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

TEAM AND APPENDIX

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

Management Team

▪

Formerly the international Energy Sector Head at AllianceBernstein

▪

Engineering and operational roles within Schlumberger in a career that spanned Nigeria, Egypt, Pakistan, Oman and Scotland

▪

• BSc. in Electronic and Electrical Engineering from

Obafemi Awolowo University Ile-Ife, Nigeria (1991); and an MBA from MIT Sloan

▪

Member of the #1 Institutional Investor- ranked team of analysts covering the oilfield services industry as an Associate Director at UBS Investment Research

Lekan Akinyanmi

Executive Board Member, Chief ExecutiveOfficer

▪

Over 35 years of experience in the industry with Shell and Agip in a career that spanned locations in Nigeria, Italy, The Netherlands and Oman

▪

General Manager, Corporate Security at Shell in Nigeria

▪

Has held various senior management positions (Production Operations and Maintenance Manager, Senior Portfolio Development Manager and General Manager Corporate Security)

Leke Adedipe

Chief OperatingOfficer

▪

Over 20 years experience in varied roles, including most notably CFO of Ophir Energy plc responsible for business strategy and finance

▪

Other natural resources experience includes positions such as interim CFO at ASX-listed Pan Pacific Petroleum and AIM-listed GCM Resources

▪

Bachelor of Economics (major in Accounting) from La Trobe University, Melbourne

▪

Graduate Diploma in Applied Corporate Governance

Lisa Mitchell

Executive Board Member, Chief Financial Officer

INVESTOR PRESENTATION | NOVEMBER 2018 19

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

Management Team (Continued)

▪

Over 25 years experience in the industry with Oil majors and Schlumberger

▪

Former chief geophysicist at Shell

▪

Sound ability in building/leading diverse teams of varying sizes and delivering in a performance- driven environment. Has held responsibilities in Nigeria, Europe, Middle-East and Asia

Sam Olotu

Chief TechnicalOfficer

▪

Leads LEKOIL’s Gas & Power business with a focus on profitably monetizing equity gas in existing assets and also generating new businesses to create a thriving enterprise

▪

Responsible for the stewardship and implementation of LEKOIL’s Corporate Strategy

▪

Over 20 years’ experience in the Oil & Gas industry serving in various commercial and technical leadership roles in Nigeria and Venezuela with Schlumberger, the USA with Hess and Exxon Mobil; and the UAE with Mubadala Petroleum

Shola Adekeye

Managing Director LEKGAS

▪

• BEng. in Mechanical Engineering from University of

Illorin, Kwara, Nigeria (1991); and an MBA from The Wharton School at the University of Pennsylvania INVESTOR PRESENTATION | NOVEMBER 2018 20

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

Management Team (Continued)

Dotun Adejuyigbe

Head of Commercial

▪

Coordinates the commercial, business and strategic planning functions at Lekoil including hydrocarbon marketing and support for corporate finance functions

▪

Wide-ranging experience in project management, consulting, private equity, and corporate finance across projects in Africa, Europe, North and South America

▪

Holds an MBA from INSEAD

▪

Award winning and leading Nigerian expert in the geosciences, specializing in sedimentology, geology and geophysics

▪

35+ years of experience in Exploration Geology, at Shell and most recently Head of Geological Services

▪

Member of the Nigerian Mining and Geological Society (NMGS) and a Fellow of the Nigerian Association of Petroleum Explorationists (NAPE)

• Dr. Kehinde Ladipo

Senior ExplorationAdvisor

▪

Responsible for the short-term and strategic funding

• f Lekoil

▪

Formerly from Oando, participating in all debt capital raising and M&A

▪

10+ years of finance and investment banking experience at The Carlyle Group focusing on Sub- Saharan Africa; and at JP Morgan and Credit Suisse focusing on Leveraged Finance in oil & gas

▪

Holds an MBA from INSEAD

Keji Ajayi

Head of Corporate Finance

Alfred Castaneda

Head of Investor Relations

▪

Specialized in international oil & gas equity fund raising at Ladenburg Thalmann and Revere

▪

10+ years of equities and capital markets experience including Lekoil’s 2013 IPO and subsequent equity funding

▪

Member of the #1 Institutional Investor-ranked Oil Services Equity Research team at Morgan Stanley from 2010-2012

▪

Holds a BS in both Accounting and Finance from Fordham University INVESTOR PRESENTATION | NOVEMBER 2018 21

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

From the Beginning: Swampland to Production in <2 years

INVESTOR PRESENTATION | NOVEMBER 2018 22

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

• 3 previously drilled wells with

hydrocarbons encountered at multiple intervals

Otakikpo CPR Estimate AGR TRACS Otakikpo Actual FLOW TESTS

Otakikpo 02

Final Dual Completion Schematic

Otakikpo 03

Final Dual Completion Schematic

Otakikpo: Flow Per Zone

1,500 bopd per zone

Otak - 02 Otak - 03

FAULT

C5 – 6,404 bopd C6 – 5,684 bopd E1 – 5,703 bopd C5 E1

Indicates currently producing zones

INVESTOR PRESENTATION | NOVEMBER 2018 23

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

OPL 310 – Ogo Field Overview

▪ OPL310: 1,895 km2 in water depths of 200 – 7,400 ft ▪ Ogo Field: 360 km2 in water depths of 200 – 3,000 ft

• Located 30 km offshore Lagos within Dahomey

geological basin

• Proximity to Lagos and a city with robust gas demand

Post Rift Sequence ▪ Four-way dip/fault dependent closures

• Turonian and Cenomanian: OIL bearing
• Albian: GAS CONDENSATE bearing

Syn Rift Sequence ▪ Half grabens in Syn rift

• Syn Rif: GAS CONDENSATE bearing

INVESTOR PRESENTATION | NOVEMBER 2018 24

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

BOARD OF DIRECTORS

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

Non-Executive Board Directors

▪

32+ years of oilfield experience including working with Dowell

Schlumberger in Iraq, Abu Dhabi,

Venezuela, Canada, Syria, France and Nigeria

▪

Founder and Managing Director, SOWSCO Well Services – one of Nigeria’s

foremost indigenous oil service firms

▪

Founding member of PETAN

(Petroleum Technology Association of Nigeria) ▪

Member of the audit and remuneration committees of Lekoil

Sam Adegboyega

Chairman of the Board

▪

25 years+ oil industry experience, qualified as a

Chartered Accountant with Arthur Andersen in 1981

▪

Member of the Association of Corporate Treasurers and the Institute of Taxation

▪

Business Development Manager and subsequently Group Treasurer at Enterprise Oil for 11 years

▪

Finance Director of multiple listed E&P companies, including Premier Oil between 1999 and 2005

▪

Managing Director, Head of oil and gas, at the Royal Bank of Scotland in 2007-2008

▪

Worked as a consultant to, and non- executive director of, a number of listed and private E&P companies since 2010 most recently on the board of Hurricane

Exploration Plc

John Van Der Welle

▪

Most recently Chairman of Africa at Schlumberger and was also the President of the Schlumberger Foundation, a non-profit corporate foundation

▪

30+ years at Schlumberger, holding senior

• perational positions globally, including Vice

President and Global Treasurer, and Managing Director for Nigeria and West Africa

▪

Co-founder of the Petroleum Club of Lagos and serves on a number of boards including Guaranty Trust Bank plc and the Schlumberger Foundation

▪

Holds a BSc in Accounting from the University

• f Ghana, and an MBA from Stanford

University; alumnus of the Oxford Institute for Energy Studies

• H. Adesola Oyinlola

INVESTOR PRESENTATION | NOVEMBER 2018 26

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

Non-Executive Board Directors (Continued)

▪

Global head of the Abu Dhabi Investment Authority’s internal equities department

• verseeing portfolios, risk management and

due-diligence processes

▪

Former Senior Vice President and Portfolio Manager

▪

at Alliance Bernstein, managing multi-billion dollar portfolios in Global and International Large Cap

▪

Growth Equities

▪

Chief Executive Officer & Chief Investment Officer of Alliance Capital Management, South Africa where he created and managed the business and grew assets

▪

to US$2 billion under management

GregoryEckersley

▪

Group CEO of Asset Management Group

▪

(AMG) Limited

▪

Legal practitioner with an LL.M (Public International Law) from Kings College, University of London and a Masters in Business Administration (MBA) with a distinction in Finance from Imperial College, University

▪

• f London

▪

Called to the Nigerian Bar Association in 1989.

▪

Completed several attachments with the following: Caisse Privee Banque, Brussels; Banque Rivaud, Paris; Banque Privee, Geneva

Aisha Mohammed-Oyebode

▪

President of Hunt Refining Company

▪

Former co manager of the Global Research Growth Fund at Alliance Bernstein

▪

Petroleum engineer with Atlantic Richfield Corporation working in reservoir engineering, enhanced oil recovery research, strategic planning and acquisition evaluation

▪

BS in Chemical Engineering from Missouri University of Science and Technology and a MBA from Harvard Business School

Tom Schmitt

INVESTOR PRESENTATION | NOVEMBER 2018 27

SHAPING THE FUTURE OF OIL EXPLORATION & PRODUCTION IN AFRICA

This presentation may contain forward looking statements which involve subjective judgment and analysis and are subject to significant uncertainties, risks and contingencies, including those risk factors associated with the oil and gas businesses, many of which are outside the control of, and may be unknown to LEKOIL. In particular, any forward looking statements speak only as of the date of this presentation, they assume the success of the strategy of LEKOIL and they are subject to significant regulatory, business, competitive and economic uncertainties and risks. No representation, warranty or assurance (express or implied) is given or made in relation to any forward looking statement by any person (including by LEKOIL, any of its related bodies corporate, directors,

• fficers,

employees

• r

their representatives). In particular, no representation, warranty or assurance (express or implied) is given in relation to any underlying assumption or that any forward looking statement will be achieved. Actual future events may vary materially from the forward looking statements and the assumptions on which the forward looking statements are based. Given these uncertainties, readers are cautioned not to place undue reliance on such forward looking statements, and should rely entirely on their own independent enquiries, investigations and advice regarding any information contained in this

• presentation. Any reliance placed by a reader on the information

contained in this presentation is wholly at the reader's own risk. The information in this presentation is provided for informational purposes only and does not take into account the investment objectives, financial situation and needs of any particular investor. Each of LEKOIL and its related bodies corporate and affiliates and their respective directors, partners, employees, agents and advisers disclaim any liability for any direct, indirect or consequential loss or damages suffered by any person as a result of relying on any statement in, or omission from, this presentation. Subject to any continuing obligations under applicable laws, LEKOIL disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements in this presentation to reflect any change in expectations in relation to any forward looking statements

• r any change in events, conditions or circumstances on which any such

statements is based. Nothing in this presentation shall under any circumstances create an implication that there has been no change in the affairs of LEKOIL since the date of this presentation. All other disclosures as in previous presentations apply.

Disclaimer

INVESTOR PRESENTATION | NOVEMBER 2018 28

IR@lekoil.com