www.heritageoilltd.com
Heritage Oil's strategy is to acquire and invest oil and gas properties throughout the world, with a particular emphasis on Africa, the Middle East, Russia, and the CIS. The company currently has interests in Russia, Uganda, Oman, Iraq, The Democratic Republic of Congo, Mali, Malta, Pakistan and Tanzania.
Heritage Oil pleased with Kurdistan progress, looks at acquisitions with $700m cash
Upstream exploration and production company Heritage Oil (LON:HOIL) is actively looking for acquisitions with a balance sheet of US$700 million after disposing of its Ugandan assets.
In its interim report today, Heritage Oil said that the Miran West-2 well in the Kurdistan region of northern Iraq is drilling ahead close to the base of the Jurassic section where initial results from wireline logging, shows and sampling indicate the presence of hydrocarbon-bearing fractured reservoir intervals. Back in April, Heritage reported that the well intersected significant hydrocarbon-bearing intervals over 1,800 metres in the Cretaceous section.
Further intervals in the Jurassic section in addition to those secured in the Cretaceous section have been identified for testing upon the completion of the well.
Heritage’s net average daily production in H1 2010 amounted to 583 bopd (barrels of oil per day), all of it coming from Russia, marking a year on year increase of 152%. Petroleum and natural gas revenue soared 213% to $2.5 million in H1 due to both higher volumes of crude oil sales from the Zapadno Chumpasskoye Field in Russia and higher average realised prices.
Net losses for H1 were at US$14.2 million compared to US$12.8 million in H1 2009.
The US$1.45 billion sale to Tullow Oil’s (LON:TLW) subsidiary Tullow Uganda Ltd was completed in July with Heritage receiving and retaining US$1.045 billion. Following the sale, Uganda billed Heritage for US$405 million in taxes. This assessment has been disputed by the company, which has deposited US$121.5 million with the tax authorities with the remaining US$283.5 million remaining in an escrow account.
Heritage is expecting the results from its Miran West-2 well in September to early October, while the acquisition of 3D data across the Miran block is planned to start in Q4 this year. Additionally, the company has begun well planning for an exploration well on the Zamzana North license in Pakistan. The well has been delayed until Q1 2011 due to floods in the license area.
Further development drilling in Russia is expected to lead to an increase in production.
The company said that progress at the Miran West-2 well was encouraging and said it intended to use the funds realised from the Ugandan sale to accelerate the work programme and look for more acquisitions.
“We have a very attractive prospective portfolio that has the potential to create significant shareholder value in the next year through several high impact exploration wells. In addition, the proceeds received from the disposal of the Ugandan assets leave the company with a strong balance sheet capable of executing the current strategy and we are actively looking for new acquisitions and opportunities,” said Chief Executive of Heritage Oil Tony Buckingham.
