Heritage to sell key Iraq oil block
London, August 22, 2012
Heritage Oil, a London-listed oil and gas exploration company, said it will sell part of a gas block and borrow money from Genel Energy to raise $450 million, easing concerns about how it will fund oilfield purchases in Nigeria.
Heritage Oil shares jumped 15 per cent after the company said it will sell a 26 per cent stake in Miran Block in Iraq's autonomous Kurdistan region to Genel and will take a $294 million loan from the company.
Commenting on the move, CEO Tony Buckingham said, 'We believe this sale and loan financing crystallises significant value for shareholders, demonstrating our ability to invest in and monetise assets at an appropriate stage.'
'The proceeds provide significant financial flexibility allowing us to fund the proposed acquisition of OML 30 without any rights issue or other additional capital requirement from, or potential dilution to, our existing shareholders,' he added.
The cash will partly fund Heritage Oil's acquisition of a stake in Nigeria's OML 30 oilfield assets announced last month.
'Miran sale price is attractive, but the cash is more welcome,' BMO Capital Markets' Al Stanton said.
Heritage Oil earlier planned to fund a portion of the OML 30 deal through a rights issue.
'There is no need to proceed with the rights (issue) and any capital raising is dropped,' Heritage Oil chief financial officer Paul Atherton said yesterday.
The company will sell the Miran Block stake and an interest in a related joint operating agreement for $156 million, which would increase Genel's holding in the block to 51 per cent.-Reuters and TradeArabia News Service