Heritage Oil Plc
TSX : HOC
LSE : HOIL

Heritage Oil Plc

December 31, 2012 02:00 ET

Heritage Oil Announces Shoreline Power has Exercised Option on Shoreline Natural Resources and Provides Production Update

LONDON, UNITED KINGDOM--(Marketwire - Dec. 31, 2012) -

THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Heritage Oil Plc ("Heritage" or the "Company") (TSX:HOC)(LSE:HOIL), an independent upstream exploration and production company, today 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.

Highlights

  • Over US$100 million to be received by Heritage in January 2013 from Shoreline Power
  • The proceeds will be used in part as security against the existing facility to Shoreline and also for general corporate purposes by Heritage
  • Average field production for OML 30 in November 2012 was 35,704 bopd gross, 15,665 bopd net to Heritage
  • Revenues net to Heritage from OML 30 for November 2012 production are expected to total approximately US$52 million with final pricing to be determined following lifting
  • Shoreline received payment of US$38.3 million on 27 December 2012 towards proceeds from its first crude lifting in Q1 2013
  • Planning and further work has commenced on improvement of the gaslift system, an area of production optimisation

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.

Notes to Editors

  • Heritage is listed on the Main Market of the London Stock Exchange and is a constituent of the FTSE 250 Index. The trading symbol is HOIL. Heritage has a further listing on the Toronto Stock Exchange (TSX:HOC).

  • Heritage is an independent upstream exploration and production company engaged in the exploration for, and the development, production and acquisition of, oil and gas in its core areas of Africa, the Middle East and Russia.

  • Heritage has producing assets in Nigeria and Russia, exploration assets in Malta, Tanzania, Pakistan, Libya and the Democratic Republic of Congo and an exploration, appraisal and development asset in Kurdistan which is in the process of being divested.

  • OML 30, in Nigeria is located onshore in the delta region, covers 1,097 square kilometres and includes eight producing fields with oil and gas contained in numerous stacked reservoirs. The licence includes a 45% interest in the segment of the Trans Forcados pipeline between the Eriemu Manifold and the Forcados River Manifold.

  • For further information please refer to our website, www.heritageoilplc.com.

If you would prefer to receive press releases via email please contact Jeanny So (jeanny@chfir.com) and specify "Heritage press releases" in the subject line.

FORWARD-LOOKING INFORMATION:

Except for statements of historical fact, all statements in this news release - including, without limitation, statements regarding production estimates and future plans and objectives of Heritage - constitute forward-looking information that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from those anticipated in such statements. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as: risks relating to completion of the exercise of the option by Shoreline Power; estimates of reserves and recoveries; production and operating cost assumptions; development risks and costs; the risk of commodity price fluctuations; political and regulatory risks; and other risks and uncertainties as disclosed under the heading "Risk Factors" in its Prospectus dated 6 August 2012, as supplemented by a supplementary prospectus dated 23 August 2012, and elsewhere in Heritage documents filed from time-to-time with the London Stock Exchange and other regulatory authorities. Further, any forward-looking information is made only as of a certain date and the Company undertakes no obligation to update any forward-looking information or statements to reflect events or circumstances after the date on which such statement is made or reflect the occurrence of unanticipated events, except as may be required by applicable securities laws. New factors emerge from time to time, and it is not possible for management of the Company to predict all of these factors and to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking information.

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