Shoreline and Heritage Oil has agreed to buy a stake in a string of Nigerian oilfield assets, known as OML 30, in a deal which Heritage said yesterday would diversify its portfolio and significantly increase its production capabilities.
Heritage and its Nigerian partner, Shoreline Power, have agreed to buy a 45 per cent stake in OML 30 from oil majors Shell, Total and ENI.
They would also buy a further 45 per cent stake in other assets under the joint operating agreement for OML 30, which includes a segment of the Trans Forcados pipeline, for a total cash consideration of $850 million, net of costs.
“The acquisition of OML 30 is transformational for Heritage, providing a material change in production and reserves,” Heritage Chief Executive, Tony Buckingham said in a statement.
Nigeria is Africa’s leading oil producer. Heritage said the OML 30 deal would increase its net production to around 11,350 barrels of oil per day (bopd) from 605 at present.
The acquisition would be financed by a $550 million secured bridge finance facility provided by Standard Bank of South Africa, and an underwritten rights issue raising proceeds of up to $370 million.
Heritage added that the acquisition would be structured as a reverse takeover, meaning that shares in Heritage Oil would be suspended from July 2.
Mr. Kola Karim, Chief Executive Officer of Shoreline Energy International, commented: “This is a major development for Shoreline, taking us into the upstream oil and gas sector at such a significant time when the Nigerian government is promoting active participation from indigenous companies. Shoreline, along with Heritage’s strong technical team and upstream experience will become one of the leading indigenous oil producing companies in Nigeria. This will strengthen our existing network of relationships with the local communities, local government and authorities in the oil producing areas of Nigeria.”
“Shoreline will inaugurate capacity developments and training programmes ensuring we add value and develop close relationships with local communities and other stakeholders in the delta region.”
Mr. Paul Atherton, Chief Financial Officer of Heritage Oil Plc, commented: “The acquisition of OML 30 is transformational for Heritage, providing a material change in production and reserves whilst pursuing our strategy of generating shareholder value. 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.
“Heritage is very excited to be participating in the development of OML 30 and entering into Nigeria. We look forward to continuing to build local relationships and partnerships with the communities in the delta region and creating a platform to build a substantial presence in Nigeria.”
Investment bank JP Morgan advised Heritage on the deal.