Heritage Oil Announces Shoreline Power has Exercised Option on Shoreline Natural Resources and Provides Production Update
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Heritage Oil Plc (“Heritage” or the “Company”) (TSX:HOC)(LSE:HOIL), an independent upstream exploration and production company, today announces that, in line with expectations, Shoreline Power Company Limited (“Shoreline Power”) has exercised its option to acquire a 30% economic interest in Shoreline Natural Resources Limited (“Shoreline”) and Heritage will receive over US$100 million in January 2013. Shoreline owns a 45% interest in OML 30, Nigeria.
— Over US$100 million to be received by Heritage in January 2013 from
— The proceeds will be used in part as security against the existing
facility to Shoreline and also for general corporate purposes by
— Average field production for OML 30 in November 2012 was 35,704 bopd
gross, 15,665 bopd net to Heritage
— Revenues net to Heritage from OML 30 for November 2012 production are
expected to total approximately US$52 million with final pricing to be
determined following lifting
— Shoreline received payment of US$38.3 million on 27 December 2012
towards proceeds from its first crude lifting in Q1 2013
— Planning and further work has commenced on improvement of the gaslift
system, an area of production optimisation
Tony Buckingham, Chief Executive Officer, commented:
“The acquisition of an interest in OML 30 is proving to be a transformational deal for Heritage, providing significant increases in both production and cash flow. We expect to see production grow further over the coming year as work programme activity increases across the licence following completion of the acquisition in November 2012. We continue to look for opportunities, including within Nigeria, to develop our portfolio of exploration and production assets further.”
Heritage, together with its Nigerian partner, Shoreline Power, established Shoreline, a special purpose private Nigerian company, to acquire a 45% participating interest in OML 30 together with a 45% interest in other assets under the joint operating agreement for OML 30, which includes a 95 kilometre segment of the Trans Forcados pipeline. On 9 November 2012, Heritage announced the successful completion of the acquisition of the 45% interest in OML 30, Nigeria, effective 1 November 2012.
Shoreline was structured with 55% of its equity interest held by Shoreline Power and the remaining 45% held by Heritage, through a wholly owned subsidiary. Shoreline Power had, as previously stated, an option to acquire 30% of Heritage’s interest in Shoreline. This option has now been exercised, in line with expectations, and Heritage is due to receive the exercise price from Shoreline Power of over US$100 million in January 2013 which, in accordance with the bridge facility from Standard Bank, will be used in part as security against the existing facility to Shoreline and also for general corporate purposes. Following completion of the option exercise and continuation of the existing profit share agreement, Heritage’s equity and economic interests in Shoreline will be 31.5% and 68.25%, respectively.
Average field production for OML 30 in November 2012 was 35,704 bopd gross. The net entitlement to Heritage of 15,665 bopd is based on the economic interest which prevailed at that time, before the option exercise.
Shoreline is scheduled to lift November and December OML 30 crude production in the first quarter of 2013. Accordingly, revenues net to Heritage for November 2012 and payable on this first crude lifting are expected to total approximately US$52 million. Shoreline received payment of US$38.3 million on 27 December 2012 towards the first lifting in Q1 2013 at which time the final pricing will be determined.
Planning and further work has commenced on improvement of the gaslift system, which is viewed as an important aspect of production optimisation.
Notes to Editors
— Heritage is listed on the Main Market of the London Stock Exchange and
is a constituent of the FTSE 250 Index. The trading symbol is HOIL.
Heritage has a further listing on the Toronto Stock Exchange (TSX:HOC).
— Heritage is an independent upstream exploration and production company
engaged in the exploration for, and the development, production and
acquisition of, oil and gas in its core areas of Africa, the Middle East
— Heritage has producing assets in Nigeria and Russia, exploration assets
in Malta, Tanzania, Pakistan, Libya and the Democratic Republic of Congo
and an exploration, appraisal and development asset in Kurdistan which
is in the process of being divested.
— OML 30, in Nigeria is located onshore in the delta region, covers 1,097
square kilometres and includes eight producing fields with oil and gas
contained in numerous stacked reservoirs. The licence includes a 45%
interest in the segment of the Trans Forcados pipeline between the
Eriemu Manifold and the Forcados River Manifold.
For further information please refer to www.heritageoilplc.com.
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