UK OIL explorer Heritage Oil is planning a share buyback worth $100m (£60m), following a difficult few months for the company, which has seen its share price plummet and rival Tullow Oil launch a £313m lawsuit.
Explorers rarely engage in buybacks because their business model usually involves spending their cash on finding new fields.
“The recent share price performance following the discovery of the Miran gas field in Kurdistan neither reflects the underlying value of the assets nor our belief in the longer term prospects of the company,” said Heritage.
Investors were disappointed earlier in the year when it transpired a big discovery Heritage made in Iraq contained a lot of gas.
Though the Miran site is one of the largest gas fields to be discovered in Iraq, it is much harder to drill than oil, and the news saw Heritage’s share price fall 29 per cent to 310p.
The shares recovered slightly earlier this month on reports that Heritage could be the target of a takeover bid from an unnamed buyer in Abu Dhabi.
The FTSE 250-listed firm is believed to have turned down an offer that valued the company at £1.2bn, or 425p per share.
Tullow Oil is suing its former partner in Uganda to recover $313m that Tullow paid to cover tax on fields it bought from Heritage.
Uganda said Heritage was liable for capital gains taxes on the sale, which Heritage denies.
Tullow paid the Ugandan government the $313m to secure approval of the change in field ownership, and is now seeking to get the money back from Heritage through the High Court in London.
City A.M. Reporter