Oil price drop pushes Lekoil into cost-cutting mode

Africa-focused oil and gas company Lekoil has approved the immediate and accelerated implementation of the company’s general and administrative (G&A) cost-reduction measures due to the significant drop in oil prices.

Lekoil said on Friday that these measures were targeting an annual reduction of $8 million or at least 40 per cent in G&A costs, which is inclusive of a reduction in staff numbers.

The company has already started the immediate execution of these measures, which will be completed within the next four to six weeks.

According to Lekoil, production from Otakikpo field for the rest of this year will be unaffected by these measures.

The company also said in the announcement that the payment of $2 million to Optimum Petroleum, the operator of the OPL 310 License off Nigeria, to cover the portion of sunk costs and consent fees had been completed. The sum was set to be paid on or before March 20.

Lekan Akinyanmi, Lekoil’s CEO, said: “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.“