Heritage returns on a high

The long wait for shares in oil and gas firm Heritage to start trading again in London ended on Tuesday, with the shares returning from suspension sharply higher.

Having been suspended at 123p back in early July at the time of the announcement of the acquisition of a major interest in an active oil mining lease in Nigeria, the shares hit 147.5p shortly after 09:00 on their return from suspension before easing back a little, following the release of interim results and fund raising plans on Monday.

As revealed in July, the upstream exploration and production company has formed a joint venture, Shoreline Natural Resources, with a local Nigerian partner, Shoreline Power, to acquire a 45% participating interest in OML 30, a producing oil mining lease in Nigeria. The joint venture is also acquiring a 45% interest in other assets under the joint operating agreement for OML 30.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The cost of the acquisition is $850m, net of costs, which will be funded partly by a $550m secured bridge finance facility but also by a fully underwritten rights issue by Heritage.

Details of the rights issue are still a bit sketchy, but the company said it will seek to raise up to $370m and the shares will be issued at a price somewhere between 40% and 45% below the theoretical ex-rights price of the newly issued shares; share prices typically move down after a right issue to take into account the dilution of shares (e.g. number of shares in issue doubles, the share price should theoretically halve).

The actual issue price of the shares will be announced in advance of the Extraordinary General Meeting (EGM) which Heritage Oil has convened in St Helier, Jersey, for August 30th to seek approval of shareholders of all aspects of the proposed acquisition, including the rights issue.

At 10:00, shares in Heritage were up 15.5p to 138.5p.

JH