Heritage Oil, Shoreline Power Conclude $100mn Acquisition Deal

02 Jan 2013

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Heritage Oil Plc, an independent upstream exploration and production company, has stated that in line with expectations, Shoreline Power Company Limited had exercised its option to acquire a 30-per-cent economic interest in Shoreline Natural Resources Limited.

Shoreline Natural Resources Limited, a joint venture between Shoreline Power, a private Nigerian energy and infrastructure company and Heritage Oil Plc, a company listed on both the London and Toronto stock exchanges, recently acquired a 45-per-cent interest in Oil Mining Lease (OML) 30 from Shell, Total and Agip.

Heritage Oil said in a statement on Monday that it would receive over $100 million later this month from Shoreline Power as proceeds from the company’s acquisition of a 30-per-cent interest in Shoreline Natural Resources Limited.

Chief Executive Officer of Heritage Oil, Mr. Tony Buckingham, said the acquisition of an interest in OML 30 was proving to be a transformational deal for his company as it has provided significant increases in both production and cash flow.

“We expect to see production grow further over the coming year as work programme activity increases across the licence following completion of the acquisition in November 2012.

“We continue to look for opportunities, including within Nigeria, to develop our portfolio of exploration and production assets further,” he said.

The proceeds from the acquisition will however be used in part as security against the existing facility to Shoreline and also for general corporate purposes by Heritage, in accordance with the bridge facility from the Standard Bank, the company said.

According to the statement, average field production for OML 30 in November 2012 was 35,704 barrels of oil equivalent per day (bopd) gross, with 15,665 bopd accruing to Heritage.

The statement also added that revenues that accrued to Heritage from OML 30 for November 2012 production are expected to total approximately $52 million with the final pricing to be determined following lifting.

Shoreline received payment of $38.3 million on December 27, 2012 towards proceeds from its first crude lifting in the first quarter of 2013.

Heritage, alongside its Nigerian partner, Shoreline Power, had established Shoreline Natural Resources, a special purpose private Nigerian company, to acquire 45 per cent participating interest in OML 30 as well as 45 per cent interest in other assets under the joint operating agreement for OML 30, which includes a 95-kilometre segment of the Trans Forcados pipeline.

On November 9, 2012, Heritage announced the successful completion of the acquisition of 45 per cent interest in OML 30, with effect from November 1, 2012.
Shoreline Natural Resources was structured with 55 per cent of its equity interest held by Shoreline Power and 45 per cent held by Heritage, through a wholly owned subsidiary.

Shoreline Power had the option to acquire 30 per cent of Heritage's interest in Shoreline Natural Resources.

This option has now been exercised and Heritage is due to receive over $100 million from Shoreline Power later this month.

Following the completion of the acquisition and continuation of the existing profit share agreement, Heritage's equity and economic interests in Shoreline will be 31.5 per cent and 68.25per cent, respectively.

Tags: Nigeria, Featured, Business, Heritage Oil, Shoreline Power

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