London-listed Heritage Oil has invested £541 million in a number of assets in Nigeria, it has been announced.
The company is buying a 45 per cent stake in OML 30, a producing oil mining lease in Nigeria, from Shell, Total and ENI, as well as a 45 per cent interest in other assets under the OML 30 joint operating agreement.
OML 30, located onshore in the Nigerian delta, includes eight producing fields and associated infrastructure, including a segment of the 850,000 bopd-capacity Trans Forcados pipeline.
Shell, Total and ENI each hold interests of 30 per cent, 10 per cent and five per cent in the acquisition assets respectively. The remaining 55 per cent participating interest is held by the Nigerian National Petroleum Corporation.
Heritage said that the proposed acquisition represents a significant opportunity for the company to achieve a material change in production and reserves. OML 30 is currently averaging gross production of around 35,000 bopd, increasing Heritage’s net production from 605 bopd to approximately 11,350 bopd. Heritage estimates that OML 30 has gross proved and probable reserves of 707 mmbbls of oil, and 2.5 tcf gross reserves of gas.
Heritage will make the acquisition through Shoreline Natural Resources, a special purpose private Nigerian company formed between a subsidiary of Heritage and a local Nigerian partner, Shoreline Power Company.
Nigeria has proved reserves of 37.2 bnbbls, the largest in Sub-Saharan Africa, the second largest in Africa and the tenth largest in the world. It is the largest African producer with 2.5 mmbbls per day, and has well-established infrastructure from over 50 years of oil production.
Tony Buckingham, chief executive officer of Heritage, commented: “The acquisition of OML 30 is transformational for Heritage, providing a material change in production and reserves whilst pursuing our strategy of generating shareholder value. As part of Heritage’s diversified portfolio of exploration, appraisal and development assets, OML 30 is expected to provide significant production and cash flow, thereby de-risking Heritage’s financial profile, and our technical expertise will provide a comparative advantage in creating additional value.
“Heritage is very excited to be participating in the development of OML 30 and entering at an attractive valuation. We look forward to continuing to build local relationships and partnerships with the communities in the delta region and creating a platform to build a substantial presence in Nigeria.”
Heritage is an independent upstream exploration and production company. It has an exploration, appraisal and development asset in the Kurdistan Region of Iraq, exploration assets in Malta, Tanzania, Mali, Pakistan, Libya and the Democratic Republic of Congo, and a producing property in Russia.
