It’s been a rough ride for Aim-traded Lekoil (LEK), the Nigeria-focused oil producer. Since we last looked at the company in 2016, the share price has continued its downward spiral from over 20p to the current 3.4p, even as the company has gone into production at the Otakikpo operation and investors gave the thumbs up to 2018 numbers, which arrived just before the regulatory cut-off.
Three years ago, the company expected gross production from Otakikpo to hit 10,000 barrels of oil per day (bopd) by the end of 2016. In 2018, actual gross production was half of this, and Lekoil’s share was 2,076bopd, at an underlying cost of $23 ($18) a barrel.
The company swung from a $14m pre-tax loss in 2017 to a pre-tax profit of $2.3m in 2018, although this was wiped out by a $10.1m tax hit during the period, which resulted in a 2¢ a share loss in 2018.
Chief executive Olalekan Akinyanmi said the plan for 2019 is to triple or quadruple Otakikpo’s average daily production to 15,000-20,000bopd, although the company does not yet have the cash for this. The board is taking a 25 per cent pay cut because of the “delay in key initiatives” alongside a general cost-cutting move. Mr Akinyanmi took home $1.7m in 2017, including a $500,000 bonus.
