Heritage Oil Provides an Operational Update
Heritage Oil Plc (“Heritage” or the “Company”) (TSX:HOC)(LSE:HOIL), an independent upstream exploration and production company provides an operational update, that includes unaudited information and may be subject to further review.
— Gross production from the OML 30 licence, Nigeria, has reached over 50,000 bopd
— Average daily net production from Nigeria increased from c.8,150 bopd for the first nine months of the year to an average in Q4 2013 of c.13,300 bopd
— Production started from the Uzere West Field in December 2013
— There were four liftings during Q4 2013 generating revenues net to Heritage of c.$170 million
— All maintenance work over the OML 30 licence progressing as planned
— Total revenues, net to Heritage, for 2013 are c.$465 million
— Cash at year end of c.$190 million
— The Shoreline Option is in the final process of being approved, with cash consideration of $31.5 million expected to be received shortly
— Activity on the exploration portfolio is set to increase over the year with multi-well drilling campaigns planned to begin in the summer for Papua New Guinea and Tanzania
Daily gross production from the OML 30 licence has reached over 50,000 bopd, in part from the benefit from continued maintenance and rehabilitation programmes and as a result of production from the Uzere West Field recommencing in December 2013 after having been shut-in for over two years. Production in Q4 2013 averaged approximately 13,300 bopd net to Heritage.
There were four liftings during Q4 2013 which generated revenues, net to Heritage, of c.$170 million. It is expected that liftings will take place on a monthly basis going forwards. Operational activities and maintenance work continue on the licence as planned with continued installation of gas compressors, statutory inspection and testing of all pressure vessels and inspection of all wellheads and pipelines completed to support well optimisation activities. This should result in further increases in production through the first half of the year prior to the commencement of development drilling in the second half of the year.
Heritage has previously announced that Shoreline Power Company Limited (“Shoreline Power”) had exercised its call option to acquire a 30% economic interest in Shoreline Natural Resources Limited. Completion of the transaction is expected imminently, following which Heritage will have an effective working interest in OML 30 of 30.71%. On completion, Heritage will receive cash of $31.5 million and the balance will be provided by way of an interest bearing, secured loan from Heritage to Shoreline Power.
Production in Russia remained stable during the last quarter of the year averaging c.700 bopd. Preparations continue for further development drilling in 2014.
Initial interpretation of the 2D seismic data acquired in the first quarter of 2013 across the Rukwa licences has been completed. The results indicate that the principal prospectivity lies in the Rukwa South Licence area and as such the Rukwa North Licence area has been relinquished. Focused interpretation over the retained Rukwa South Licence area has resulted in the identification of several prospects, geologically analogous to the Kingfisher discovery in Uganda, for which detailed prospect mapping and evaluation is ongoing.
A geochemical survey of the Kyela licence has been completed and interpretation of the data is proceeding to schedule with results due first quarter of 2014. Infill seismic acquisition, designed to increase the density of the seismic grid to enable the mapping of potential prospects, is planned for the second half of 2014.
A drilling programme across the two licences is planned for 2014/2015.
Papua New Guinea
Processing of the new seismic data, combined with the reprocessing of c.300 kilometres of legacy seismic data over licences PPL 319 and PRL 13 completed in 2013 and data delivery is expected in January 2014. Further seismic data acquisition over leads within the licences will continue in first quarter 2014, in order to firm-up these leads as additional prospects for drilling. Well and logistical planning continues to enable drilling of the Tuyuwopi prospect in 2014.
Government approval of the farm-in to licences PPL 337 and PPL 437 with Kina Petroleum Limited has been received. Two shallow wells are slated for drilling in 2014 on PPL 337, one on the Kwila prospect and one on the Raintree prospect where a Pliocene/Miocene age carbonate reef target is identified. On PPL 437, the identified prospectivity in the licence is within several structural leads identified from the legacy database. Detailed remapping of the existing database is ongoing and the planned 2014 seismic programme will be incorporated into this process with the aim of maturing these leads to prospect status ready for potential drilling within the next two years.
Tony Buckingham, Chief Executive Officer, commented:
“We are delighted to report that gross daily production has increased above 50,000 bopd from OML 30, Nigeria. The increase in production from the licence is in part from the Uzere West Field that recommenced production in December 2013 having been shut-in for over two years. This increased production provides a solid foundation for our targeted growth in 2014. All operations on the OML 30 licence are progressing in line with expectations, providing significant revenues and cash flow to Heritage which will enable the Company to achieve its goal of paying a sustainable dividend stream to shareholders. The exploration portfolio is progressing with multi-well drilling programmes targeted to commence in the summer.”
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