Heritage Oil Limited, an independent upstream exploration and production company, announces that it has entered into a non-binding Memorandum of Understanding ('MoU') with Genel Enerji A.S. The MoU is subject to various conditions and execution of binding documentation to acquire Genel Energy International Limited ('Genel'), a private independent oil and gas exploration and production ('E&P') company, which holds licences in the Kurdistan Region of Iraq ('Kurdistan'). The proposed acquisition (the 'Proposed Acquisition') would be paid for wholly in new shares of Heritage and would result in Genel shareholders owning approximately 50% of the enlarged ordinary share capital of Heritage. It is anticipated that following the Proposed Acquisition, the Company, as enlarged by the acquisition of Genel ('the Enlarged Group') will be re-named Heritage Oil plc.
Heritage’s management believe that the Proposed Acquisition will offer considerable shareholder value as it will create a prominent Main Market London listed production company which should have the financial capacity to bring into production its enlarged development and exploration portfolio, create the infrastructure for the development of the Taq Taq and Miran assets in Kurdistan, while also generating significant cash flow following the commencement of oil exports on 1 June 2009.
Genel currently holds exploration assets including the Miran license, of which Heritage holds the balance, a 40% share in the Duhok license, 40% of the Barbahar license, and a 20% interest in the Chia Surkh license. Genel also owns stakes in two producing oil fields, being the joint operator of the Taq Taq field with a 55% working interest (44% participating interest) and a 25% working interest in the Tawke field. The company has also been given the right to develop the Taq Taq Petroleum Refinery.
Under the transaction Heritage will issue 260 million ordinary shares, constituting up to 100% of the current issued share capital of Heritage, in exchange for acquiring the entire share capital of Genel. The new Heritage shares issued as consideration will rank pari passu with Heritage’s existing ordinary shares. The proposed executive board of the Enlarged Group following completion will include: Tony Buckingham, the current CEO of Heritage, who will be appointed as Executive Chairman of the Enlarged Group; Mehmet Sepil, the current CEO of Genel, who will be appointed as CEO; Mehmet Emin Karamehmet, currently Chairman of the Cukurova Group, who will be appointed as Executive Director and Paul Atherton who will remain as CFO.