Akrake Petroleum Benin has struck first oil from the AK-2H well at the Sèmè Field Block 1 offshore Benin — a milestone achievement that comes shadowed by a deepening financial crisis at the parent company level that could threaten the entire project’s future.
The well, completed with a 1,405-metre horizontal section that traversed roughly 950 metres of oil-saturated sandstone in the H6 reservoir of the Abeokuta Formation, was drilled by Akrake, an indirect subsidiary of Rex International Holding. Commercial production from the AK-2H well is expected to commence within the next two weeks, according to Lime Petroleum, which is Akrake’s parent entity.
But the achievement is mired in trouble. Lime Petroleum revealed that drilling operations ran into significant technical complications, resulting in materially higher costs and a production delay of more than three months. The cost overruns have had a “material adverse effect” on the company’s financial position, and Lime has now engaged legal counsel to conduct a comprehensive strategic and financial review.
Options on the table include potential mergers or asset sales, amendments to existing debt facilities, and a broader financial restructuring. The company warned it cannot guarantee the process will succeed outside of a formal restructuring proceeding and cautioned that, without a timely recapitalization, it may be unable to meet its financial obligations as they fall due.
Akrake holds approximately a 76% working interest in the Sèmè Field Block 1. The government of Benin holds 15%, while Octogone Trading holds the remaining 9%.
Source: oedigital.com