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Shoreline Power Acquires 30% Interest in Shoreline Natural

Source: 12/31/2012, Location: Africa

Heritage Oil Plc, an independent upstream exploration and production company, announces that, in line with expectations, Shoreline Power Company Limited (“Shoreline Power”) has exercised its option to acquire a 30% economic interest in Shoreline Natural Resources Limited (“Shoreline”) and Heritage will receive over US$100 million in January 2013. Shoreline owns a 45% interest in OML 30, Nigeria.

Tony Buckingham, Chief Executive Officer, commented:
“The acquisition of an interest in OML 30 is proving to be a transformational deal for Heritage, providing 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.”

Option Exercise
Heritage, together with its Nigerian partner, Shoreline Power, established Shoreline, a special purpose private Nigerian company, to acquire a 45% participating interest in OML 30 together with a 45% interest in other assets under the joint operating agreement for OML 30, which includes a 95 kilometre segment of the Trans Forcados pipeline. On 9 November 2012, Heritage announced the successful completion of the acquisition of the 45% interest in OML 30, Nigeria, effective 1 November 2012.

Shoreline was structured with 55% of its equity interest held by Shoreline Power and the remaining 45% held by Heritage, through a wholly owned subsidiary. Shoreline Power had, as previously stated, an option to acquire 30% of Heritage’s interest in Shoreline. This option has now been exercised, in line with expectations, and Heritage is due to receive the exercise price from Shoreline Power of over US$100 million in January 2013 which, in accordance with the bridge facility from Standard Bank, will be used in part as security against the existing facility to Shoreline and also for general corporate purposes. Following completion of the option exercise and continuation of the existing profit share agreement, Heritage’s equity and economic interests in Shoreline will be 31.5% and 68.25%, respectively.

Production Update
Average field production for OML 30 in November 2012 was 35,704 bopd gross. The net entitlement to Heritage of 15,665 bopd is based on the economic interest which prevailed at that time, before the option exercise. Shoreline is scheduled to lift November and December OML 30 crude production in the first quarter of 2013. Accordingly, revenues net to Heritage for November 2012 and payable on this first crude lifting are expected to total approximately US$52 million. Shoreline received payment of US$38.3 million on 27 December 2012 towards the first lifting in Q1 2013 at which time the final pricing will be determined.

Planning and further work has commenced on improvement of the gaslift system, which is viewed as an important aspect of production optimisation.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 

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