US-based oil and gas exploration company Heritage Oil has entered into an agreement to acquire OML 30 fields for $850 million (£541 million) in a revolutionary move into Africa.
With its Nigerian subsidiary Shoreline Power, Heritage Oil will buy a 45% interest in the OML 30 fields from Shell, Total and Eni in a deal described by the chief executive of Heritage Oil, Tony Buckingham, as “transformational” for the company.
“Heritage is very excited to be participating in the development of OML 30 and entering at an attractive valuation,” said Buckingham, who owns almost a third of Heritage.
“As part of Heritage’s diversified portfolio of exploration, appraisal and development assets, OML 30 is expected to provide significant production and cash flow, thereby de-risking Heritage’s financial profile, and our technical expertise will provide a comparative advantage in creating additional value”, the CEO said.
The company, which also has operations in Libya and Iraq, says the deal represents a “significant opportunity for Heritage to achieve a material change in production and reserves”.
OML 30, which has over 200 wells, currently averages gross production of around 35,000 barrels of oil per day (bopd), increasing Heritage’s net production from 605 bopd to around 11,350 bopd.
The acquisition will be funded by a $550 million (£351 million) loan and an underwritten rights issue of $370 million (£236 million). The remaining 55% of the asset is held by the Nigerian National Petroleum Corporation (NNPC), whose subsidiary Nigerian Petroleum Development Company will take over as operator of OML 30 from Shell.
Heritage shares rose 5.3 percent to 123 pence in London, valuing the company at 317 million pounds ($497 million).
(Source: Bloomberg, The Finance Pages)