Heritage announces the successful completion of the transformational acquisition of a major interest in OML 30, Nigeria
Monday, Nov 12, 2012
Following the announcement of the proposed acquisition of OML 30 on 2 July 2012 and overwhelming support from Heritage shareholders at an extraordinary meeting on 30 August 2012, Heritage announces that Shoreline Natural Resources Limited ("Shoreline"), a special purpose private Nigerian company formed between a subsidiary of Heritage and a local Nigerian partner, Shoreline Power Company Limited ("Shoreline Power"), has successfully completed the acquisition of a 45% participating interest in a producing oil mining licence in Nigeria ("OML 30"), together with a 45% interest in other assets under the joint operating agreement for OML 30 (the "Acquisition Assets"), for a total cash consideration of US$850 million, net of costs (the "Acquisition"). In addition, Shoreline has paid a transfer tax of US$10.625 million, being 1.25% of the value of the consideration payable for the Acquisition, to the Federal Government of Nigeria, pursuant to the provisions of Paragraph 15 of the First Schedule to the Petroleum Act of Nigeria. The tax was paid by Shoreline on behalf of the assignors, in accordance with the Sale and Purchase Agreement. The remaining 55% participating interest is held by the Nigerian Petroleum Development Company ("NPDC"), a subsidiary of the Nigerian National Petroleum Corporation ("NNPC").

The Acquisition

OML 30 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, and the Acquisition Assets include a 45% interest in the segment of the Trans Forcados pipeline between the Eriemu Manifold and the Forcados River Manifold (the "OML 30 Trans Forcados Pipeline Segment").

The Acquisition provides a significant increase to the net proved and probable reserves of Heritage which increase from 65 mmbbls to 412 mmbbls, based on the competent person's report produced by RPS Energy and included in the Company's prospectus published on 6 August 2012 in connection with the Acquisition. It is expected that the year end production exit rate for Heritage will increase to c.11,350 bopd, compared to an average production for the Company over 2011 of 673 bopd. This is based on Heritage's participating interest in Shoreline, assuming the exercise of an option by Shoreline Power to acquire a 30% participating interest in Shoreline (the "SP Option").

There is the potential to both increase and stabilise production in the near term through refurbishing infrastructure and re-starting non-producing existing wells. Additionally, existing wells can be worked over to improve completions and gas lift can be installed in a number of existing wells without artificial lift. In the longer term, drilling will target additional reservoir intervals which will provide a further increase in production levels. It is expected that OML 30 will be cash generative immediately.

The Acquisition provides Heritage with exposure to Nigeria with proved reserves of c.37.2 billion barrels, the largest in Sub-Saharan Africa, the second largest in Africa and the tenth largest in the world(7). Nigeria is the largest African oil producer with c.2.5 mmbbls per day(8) and has established infrastructure from over 50 years of oil production. The country has a large number of discovered but undeveloped fields with significant potential. The Acquisition and partnership with Shoreline Power enhances Heritage's profile in the country and creates a platform for further growth in this prolific hydrocarbon region.

Source: Marketwire

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