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CALGARY, ALBERTA--(Marketwire - June 18, 2009)
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THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE
SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.
Heritage Oil Limited (LSE:HOIL), an independent upstream exploration
and production company, announces an operational update to accompany
its Annual General Meeting, taking place at 3:00 pm (BST) today at 22
Grenville Street, St. Helier, Jersey.
Highlights
- Proposed acquisition of Genel Energy to create a leading company in
the Kurdistan Region of Iraq announced 9 June 2009
- Recent placing of 25.4 million new ordinary shares at 520p per share
raising Pounds Sterling 132 million
- Second phase of testing to begin on Miran West structure in July 2009
- High impact exploration and appraisal programme to commence in Block
1, Uganda in Q4
Proposed Acquisition
As previously announced on 9 June 2009, Heritage Oil has entered into a
non-binding Memorandum of Understanding ("MoU") with Genel
Enerji A.S. The MoU is subject to various conditions, including the
execution of binding documentation, and relates to the proposed
acquisition (the "Proposed Acquisition") of Genel Energy
International Limited ("Genel"), a private independent oil
and gas exploration and production ("E&P") company, which
holds licences in Kurdistan. The Proposed Acquisition would be paid for
by the issue of 260 million new ordinary shares of Heritage Oil. It is
anticipated that following the Proposed Acquisition, the Company, as
enlarged by the acquisition of Genel ("the Enlarged Group")
will be re-named HeritaGE Oil plc.
Genel is a private, independent E&P company in Turkey, and was
awarded its first licence in Kurdistan in 2002. Genel has interests in
two producing oil fields, being the joint operator of the Taq Taq field
holding a 55% working interest (44% participating interest) as well as
having a 25% working interest in the Tawke field. In addition, Genel
owns 25% of the Miran licence (the balance of which is owned by
Heritage), 40% of the Duhok licence, 40% of the Barbahar licence and a
20% interest in the Chia Surkh licence. Genel also owns the right to
develop the Taq Taq Petroleum Refinery. This refinery in Kurdistan is
primarily being built through the phased construction and operation of
a 60,000 barrels of oil per day ("bbl/d") refinery in the
vicinity of the Taq Taq and Miran oil fields. The phased construction
of the refinery is expected to be completed by 2012 with 40,000 bbl/d
expected to be operational in 2011.
Heritage Oil's management believe that the Proposed Acquisition will
offer considerable shareholder value as it will create a prominent Main
Market, London listed production company which should have the
financial capacity to bring into production its enlarged development
and exploration portfolio, create the infrastructure for the
development of the Taq Taq and Miran assets in Kurdistan, while also
generating significant cash flow following the commencement of oil
exports on 1 June 2009. Net production to the Enlarged Group from
Kurdistan is currently approximately 30,000 bbl/d and is estimated to
be around 43,000 bbl/d by year end 2009, which should generate
significant cash flow. Cash flow generation should provide the
financial flexibility to fast-track development of other assets within
the Enlarged Group's portfolio.
The MoU is not legally binding in respect of its principal terms and,
therefore, execution of binding documentation in relation to the
Proposed Acquisition is subject to a number of conditions, as outlined
in Heritage Oil's announcement on 9 June 2009. Accordingly, there can
be no assurances that the Proposed Acquisition will complete or that it
will complete on the terms outlined in the announcement of 9 June 2009.
Based on current information, management expects the Enlarged Group to
have estimated proved and probable reserves of approximately 300
million barrels of oil with multi-billion barrels of oil potential.
It is expected that the prospectus and circular will be sent to
Heritage Oil shareholders in August 2009 and there will be a general
meeting in September 2009.
Equity Placing
On 15 June Heritage Oil raised gross proceeds of Pounds Sterling 132
million from an equity placing of 25.4 million new ordinary shares at
the placing price of 520p per share, which represented a 2.9% premium
to the closing price on 12 June 2009. Funds from the placing will be
used to accelerate development of the core areas of focus, namely
Uganda and Kurdistan, for work programmes on these and other assets and
for general corporate purposes.
The placing was not conditional on the completion of the Proposed
Acquisition and nor were the terms of the Proposed Acquisition affected
by the Placing. If the Proposed Acquisition was to complete, the
Enlarged Group expects to use the proceeds of the Placing to fast track
development of its assets in Kurdistan, increasing production,
generating early cash flow for the Enlarged Group and continuing the
exploration, appraisal and development programmes in Uganda. In
addition, the Enlarged Group will consider investment in a pipeline
extension from Taq Taq and Miran to the export pipeline and seek to
fast-track the construction of the Taq Taq Petroleum Refinery.
Other Operations
The initial testing of the Miran West-1 well, in Kurdistan, concluded
in May 2009 and it is expected that the second phase of testing will
begin in July 2009. A further well is planned to be drilled on the
Miran licence following completion of the test programme.
A further multi-well, high impact exploration and appraisal drilling
programme is planned to commence in Block 1, Uganda, in the fourth
quarter of this year.
Tony Buckingham, Chief Executive Officer, commented:
"These are exciting times for Heritage and our shareholders as we
are on the cusp of creating a new regional giant focused on Uganda and
Kurdistan. Our recent placing ensures that we have sufficient funding
to accelerate our programmes in these prolific areas and continue to
transform Heritage."
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 and Russia.
- Heritage has producing properties in Oman and Russia and exploration
projects in Uganda, the Kurdistan Region of Iraq, the Democratic
Republic of Congo, Malta, Pakistan, Tanzania and Mali.
- For further information please refer to our website at www.heritageoilltd.com.
If you would prefer to receive press releases via email please contact
Lindsay Carpenter (lindsay@chfir.com) and specify "Heritage
press releases" in the subject line.
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.
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