Heritage Announces The Sale Of Its Oman Holdings For US$28 Million

abarrelfullabarrelfull wrote on 22 Aug 2012 14:01
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8 April 2009

Heritage Oil Limited (LSE: HOIL), an independent upstream exploration and production company, announces it has completed the sale of Eagle Energy (Oman) Limited (“Eagle Energy”), a wholly-owned subsidiary of Heritage, to RAK Petroleum Oman Limited for US$28 million, plus a working capital adjustment of $0.4 million. Eagle Energy holds a 10% interest in Block 8, Oman.

Highlights

  • Sale of Eagle Energy for cash consideration of US$28 million
  • Cash proceeds of US$28 million received and will be reinvested in core activity areas of Uganda and Kurdistan
  • Heritage’s reserves reduced by only 2% with the sale
  • Heritage continues strategy of creating shareholder value through focusing on core assets

The effective date of the transaction is 31 December 2008. The cash consideration of $28 million and a working capital adjustment of $0.4 million have been received. Heritage acquired Eagle Energy, which has a 10% interest in Block 8 offshore Oman, in 1996. Block 8 contains the Bukha field which has been producing since 1994 and the West Bukha field which commenced production in February 2009. Block 8, Oman generated profit of $1.0 million for the year ended 31 December 2007 and had gross assets of $21.1 million as at 30 June 2008, net to Heritage.

RPS Energy estimated Heritage’s proved plus probable reserves as at 31 December 2007 at 62.1 million barrels of oil equivalent (boe), of which 1.7 million boe were attributed to Eagle Energy’s interests in Oman, therefore this sale represents only a 2% reduction in reserves. Sale proceeds, which have already been paid to Heritage, will be used this year to continue the Company’s activities in Kurdistan and Uganda. Over the last 12 months Heritage has had remarkable success with the drill bit in Uganda, including the discovery of the BuffaloGiraffe field which is considered, by management, to be the largest onshore oil discovery in Sub-Saharan Africa in the last two decades.

Tony Buckingham, Chief Executive Officer, commented:
“This transaction demonstrates Heritage’s strategy of realising value for shareholders within the portfolio. A minority interest in a non-operated licence with negligible reserves was no longer considered integral to the portfolio. We believe the cash proceeds from the sale will enable Heritage to generate substantially greater value by focusing resources on its core activity areas in Uganda and the Kurdistan Region of Iraq.”


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