Lekoil Ltd has announced that its pretax loss narrowed in 2014 as administrative and finance costs fell and said that, although the company is seeking further opportunities, it is focused on starting production in Nigeria to generate cash to reinvest into the business.
The oil and gas exploration company with operations in Nigeria and Namibia reported a pretax loss of $11.9 million in 2014 compared to a $18.1 million loss in 2013 as general and administrative expenses fell to $11.8 million from $17.5 million and finance costs dropped.
In 2014, Lekoil received $79,949 in finance income, derived from bank interest, compared to only $64,000 a year earlier whilst finance costs fell to $192,223 from $632,228.
At the end of December, Lekoil had a cash balance of $49.2 million. During the year, the company spent a total of $18.5 million in capital expenditure, mainly related to the OPL 310 license and acquisition of a 40 percent interest in Otakikpo Marginal field, both in Nigeria while in 2013, the company spent $101.5 million in capital expenditure.
The company is currently part-funding interpretation and appraisal of the extensive 3D seismic programme over the OPL 310 block and is in discussions with a number of banks regarding the provision of debt facilities for the Otakikpo Marginal field development.
“Given the current low oil price environment and capital constraints for many smaller exploration and production companies, we expect to see many more opportunities over the course of the next 12 months. However, our main focus during 2015 will be on enhancing shareholder value through the development and monetisation of Otakikpo together with the continued appraisal work to further de-risk the Ogo discovery,” said Chief Executive Lekan Akinyanmi.
Given that Lekoil’s Nigerian subsidiaries are classed as indigenous companies in Nigeria, another of its short-term objectives is to look to secure ministerial consent to the Pioneer Tax Status which, if granted, will have “significant fiscal benefits” for the company as production grows.
“The board looks forward to a successful year ahead as Lekoil enters production and looks to generate and grow cash-flow which then can be reinvested back into the business. In parallel with this, we will continue to evaluate other opportunities to grow our asset portfolio further,” said Akinyanmi.