Heritage Oil sells interest and gets loan with Genel - UPDATE
Heritage Oil, an independent upstream exploration and production company, has delighted its investors by securing a 294m dollar loan as part of an agreement to sell a 26 per cent interest in the Miran Block in the Kurdistan Region of Iraq to Genel.
Heritage Oil, an independent upstream exploration and production company, has delighted its investors by securing a 294m dollar loan as part of an agreement to sell a 26 per cent interest in the Miran Block in the Kurdistan Region of Iraq to Genel.
The loan will be provided by Genel to Heritage on completion of the sale, easing worries over future funding.
The sale of the interest, along with a corresponding interest in the related joint operating agreement, will earn Heritage $156m.
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The combined proceeds of the sale and the loan will be used to partially fund the proposed acquisition of OML 30, a producing oil mining lease offshore Nigeria, as well as to continue the exploration, appraisal and development of the company's existing portfolio, fund further potential acquisitions and as general working capital.
Tony Buckingham, Chief Executive Officer, 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."
The sale values the the entire interest, which is held by Heritage's wholly owned subsidiary, Heritage Energy Middle East, at $450m and is set to be completed on Wednesday.
Following completion of the sale, Heritage, through its interest in HEME, will hold a 49% interest in the Miran production sharing contract and Genel will hold the remaining 51%. According to the terms of the agreement, Genel and HEME will act as joint operators in relation to the Miran Block, operating according to the amended Miran joint operating agreement to reflect the new joint operatorship structure.
The loan will carry an interest rate of 8% and will have a fixed term ending either 15 months after the date of completion of a previously announced acquisition by Heritage of an interest in OML 30 in Nigeria, or February 6th 2014, whichever is earlier.
Following the election of either Heritage or Genel, and subsequent to the approval by shareholders, repayment will be made through the transfer of the entire issued share capital of HEME, through which the sale was made, to Genel, which would then hold a 100% interest in the Miran production sharing contract and Miran joint operating agreement.
NR
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