Heritage Oil Plc (HOIL) bought a stake in Nigerian oil fields from Royal Dutch Shell Plc (RDSA) and Total SA (FP) for $850 million to bolster production.
Heritage and Nigerian partner Shoreline Power Co. agreed to buy 45 percent in OML 30, an onshore license with about 35,000 barrels of oil output a day. Shares of the Jersey, U.K.-based company are suspended in London because the deal is considered a reverse takeover. It will be funded with a $370 million rights offer and Standard Bank is providing a $550 million bridge loan.
The deal will quadruple St. Helier, Jersey-based Heritage’s reserves and lift output to about 11,350 barrels a day from 605 barrels, giving the company more cash from operations. Heritage has dropped about 73 percent since the start of 2011 after discovering gas instead of oil at its acreage in Kurdistan, northern Iraq.
Heritage shares rose 5.3 percent to 123 pence in London, valuing the company at 317 million pounds ($497 million).
“This is transformational for Heritage,” Chief Financial Officer Paul Atherton said in a phone interview. “There will be more opportunities to acquire acreage in Nigeria, and we have a strategy to be one of the leading institutions in the country.”
The price was “attractive,” Atherton said. Output at the field should rise to 55,000 barrels a day in the short term and reach 145,000 barrels in 2018, he said. The Shoreline venture will generate as much as $200 million a year, Atherton said.
The company isn’t shifting away from other regions and won’t be the operator in Nigeria. Heritage has exploration assets in Kurdistan, Malta, Tanzania, Mali, Pakistan and Libya.
“It’s not a case of taking away the focus,” Atherton said. “It’s a rebalancing of the portfolio. We’ll have a greater proportion of oil, and the deal will be cash-flow generative.”
OML 30 includes eight producing fields and a segment of the Trans-Forcados pipeline, with 850,000 barrel-a-day capacity.
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