CALGARY, ALBERTA--(Marketwire - May 18, 2011) -
THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.
Heritage Oil Plc (News - Market indicators)(LSE:HOIL) ("Heritage" or the "Company"), an independent upstream exploration and production company, issues its Interim Management Statement for the period from 1 January 2011 to 17 May 2011, in accordance with reporting requirements of the EU Transparency Directive.
Highlights
- Rig contract to drill the Miran West-3 well in the Miran Block, Kurdistan, was signed in April and the well is scheduled to spud in July 2011
- Exploration drilling to commence on Miran East in Q4 2011
- 3D seismic survey over the entire Miran structure is ongoing
- 2D seismic survey is planned to cover southern parts of the Miran Block
- Work programmes progressing in Tanzania, Mali and Malta
- Development scenarios are being reviewed for Kurdistan which include phased development of oil, condensate and gas to satisfy local markets/end users and address export options
- Drilling operations have commenced on the first horizontal well in the Zapadno Chumpasskoye Field, Russia, which is expected to provide a material increase in production
- Production in the first quarter of 2011 averaged 431 bopd
- Share buy back programme has begun with 2,070,631 Ordinary Shares acquired to date and held in treasury
- Arbitration proceedings have commenced in London against the Government of the Republic of Uganda (the "Ugandan Government")
- Annual General Meeting to be held on 20 June 2011
EXPLORATION ASSETS
Kurdistan Region of Iraq
The Miran West-3 well is scheduled to spud in July and will take an estimated 160 days to drill and test. The well is targeting flanks of the Jurassic structure, with the benefit of the current 3D seismic survey. The well will further appraise Upper and Lower Cretaceous reservoirs whilst drilling to its primary Jurassic objective, with an estimated total depth of approximately 3,800 metres. The well bore will be angled to increase the frequency of fracture penetration and is to be orientated to maximise interception of open fractures. A comprehensive testing programme is planned, targeting numerous potential reservoir horizons.
Heritage currently plans to have two rigs drilling in Kurdistan before the end of the year. On completion of the Miran West-3 well the rig will move to drill the Miran West-4 appraisal well. A second rig is being sourced to drill the Miran East-1 exploration well in the fourth quarter of this year.
Seismic Acquisition
Heritage is currently acquiring 730 square kilometres of 3D seismic across the Miran Block to help define further appraisal drilling locations and fully exploit fracture networks. The processing of an initial data set is being fast-tracked to enable early interpretation of the main body of the 3D dataset.
In addition, 180 kilometres of new 2D seismic data will be acquired within the Block during the summer of 2011 to define other potential prospects.
Gas Monetisation and Development of the Miran Field
As announced in April 2011, discussions with the Kurdistan Regional Government ("KRG") are ongoing over fast-tracked phased development of the Miran Field. The KRG has outlined its favoured development scenarios for gas utilisation. The initial priority will be to satisfy local gas demand by supplying produced gas, on commercial terms, to local power stations and other end-users in the Sulymaniyah region in 2013. Early production of the gas will also result in early associated condensate and oil production. This will be followed by export of gas to Turkey/Europe and full production of oil and condensate zones through full development of the field.
Heritage has engaged consultants to evaluate the facilities required for both early production and full field development of Miran. As part of this engagement, consultants are also evaluating the oil and gas pipelines required to tie Miran into the existing and planned pipeline systems.
Other Assets
Acquisition of 300 square kilometres of 3D seismic data offshore Tanzania completed in January 2011. Data is currently being processed with a view to establishing a potential drilling location. 2D seismic data acquisition in Mali is progressing well and initial results of processing show good quality data and confirm the current plan to drill an initial well early in 2012. In Malta, Heritage is planning the acquisition of 1,000 kilometres of 2D seismic data which is expected to commence in July. Planning for drilling in Pakistan continues.
PRODUCING ASSET
Russia
Production for the first quarter 2011 averaged 431 bopd, 12% lower than in the fourth quarter 2010. A temporary problem with power generation, that has since been rectified, caused the decrease in production. Further development work is being undertaken in 2011 and drilling operations have now commenced on a horizontal well. This is the first horizontal well to be drilled in the licence and is expected to achieve a material increase in production. Drilling and completion activities are scheduled to take 60 days.
CORPORATE
As at 31 March 2011, Heritage had a cash position of more than $570 million, excluding amounts related to the tax dispute of approximately $405 million, which is more than sufficient to cover the current 2011 work programme.
On 26 April, Heritage announced the commencement of a share buy back programme of up to $100 million. To date 2,070,631 Ordinary Shares have been bought back and are held in treasury. Consequently Heritage has 286,210,299 Ordinary Shares in issue (excluding treasury shares) as well as 2,953,508 exchangeable shares of no par value of Heritage Oil Corporation each carrying one voting right in Heritage.
The total number of voting rights in Heritage, excluding treasury shares as at 17 May 2011, is 289,163,807.
As announced on 16 May 2011, Heritage Oil & Gas Limited ("HOGL"), a wholly owned subsidiary of Heritage, has commenced arbitration proceedings in London against the Ugandan Government. HOGL is seeking a decision requiring, among other things, the return of approximately $405 million currently on deposit with the Ugandan Revenue Authority or in escrow with Standard Chartered Bank following HOGL's sale of its interests in Blocks 1 and 3A in Uganda on 26 July 2010.
ANNUAL GENERAL MEETING
The 2011 Annual General Meeting will be held on Monday, 20 June 2011, at 3.00pm at 22 Grenville Street, St Helier, Jersey.
Tony Buckingham, Chief Executive Officer, commented:
"We are making operational progress across our portfolio with a focus on work programmes in Kurdistan being accelerated and expanded and fast track development options being considered and discussed with the KRG. We also continue to evaluate new opportunities in existing and new areas that have the potential to generate significant shareholder value."
Notes to Editors
- Heritage is listed on the Main Market of the London Stock Exchange and is a constituent of the FTSE 250 Index. The trading symbol is HOIL. Heritage has a further listing on the Toronto Stock Exchange (News - Market indicators).
- Heritage is an independent upstream exploration and production company engaged in the exploration for, and the development, production and acquisition of, oil and gas in its core areas of Africa, the Middle East and Russia.
- Heritage has a producing property in Russia and exploration projects in the Kurdistan Region of Iraq, the Democratic Republic of Congo, Malta, Pakistan, Tanzania and Mali.
- All dollars are US$ unless otherwise stated.
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FORWARD-LOOKING INFORMATION:
Except for statements of historical fact, all statements in this news release – including, without limitation, statements regarding production estimates and future plans and objectives of Heritage – constitute forward-looking information that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from those anticipated in such statements. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as: risks relating to estimates of reserves and recoveries; production and operating cost assumptions; development risks and costs; the risk of commodity price fluctuations; political and regulatory risks; and other risks and uncertainties as disclosed under the heading "Risk Factors" in its Prospectus and elsewhere in Heritage documents filed from time-to-time with the London Stock Exchange and other regulatory authorities. Further, any forward-looking information is made only as of a certain date and the Company undertakes no obligation to update any forward-looking information or statements to reflect events or circumstances after the date on which such statement is made or reflect the occurrence of unanticipated events, except as may be required by applicable securities laws. New factors emerge from time to time, and it is not possible for management of the Company to predict all of these factors and to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking information.
