LPH hits first oil in Benin but warns of formal restructuring risk

Drilling delays and cost overruns strain the group’s financial position.

Lime Petroleum Holding AS (LPH), a subsidiary of Rex International, has achieved first oil from the AK-2H well in Benin’s Sèmè Field Block 1, but drilling delays and cost overruns have strained its finances and heightened restructuring risk.

Production from the well is expected to commence within the next two weeks, according to a bourse filing dated 19 February.

However, drilling operations encountered significant technical complications, resulting in a material increase in costs and a production delay of more than three months.

Such developments have had a material adverse effect on its financial position, said Rex International.

The company cautioned that there can be no assurance that the process will result in a transaction or outcome outside a formal restructuring proceeding.

It added that in the absence of a timely and comprehensive recapitalisation or restructuring solution, it may be unable to meet its financial obligations as they fall due.

Meanwhile, LPH has appointed ABG Sundal Collier as financial adviser and Arntzen Grette as legal counsel to undertake a comprehensive strategic and financial review.

The mandate includes evaluating alternatives to strengthen its balance sheet and secure a sustainable capital structure. Moreover, the LPH is in dialogue with creditors, suppliers and other key stakeholders.

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