HERITAGE Oil is spending $850m (£541m) on assets in Nigeria, Africa’s biggest oil producer, the firm announced yesterday.
The firm will buy a 45 per cent in the OML 30 fields from Shell, Total and Eni in a bid to diversify.
The firm has endured frustratingly slow progress at its Kurdistan wells, which has weighed down its share price in the last 18 months.
Heritage shares will be suspended from today as the firm embarks on a reverse takeover through its Shoreline subsidiary.
The FTSE 250-listed group will fund the acquisition with a $370m underwritten rights issue and a $550m loan.
Chief executive Tony Buckingham said the deal would be “transformational for Heritage, providing a material change in production and reserves whilst pursuing our strategy of generating shareholder value”.
Buckingham has pledged to use his 33 per cent stake in Heritage to support the deal. Other investors will vote on the takeover at a meeting in August.
The deal, Heritage’s first in the oil-rich country, is set to boost the explorer’s output from 605 barrels of oil per day to around 11,350 once it has repaired pipelines that have been vandalised and improved production at other wells.
It will also boost the company’s provable oil reserves by 356 per cent, and the firm said in a statement it might also develop the 25 trillion cubic feet of natural gas in the fields if the price of gas rises enough to make it worthwhile.
The OML 30 assets, near Warri on Nigeria’s southern coast, have been subject to a bidding war lasting more than a year. London-listed rivals Afren and Essar expressed an interest in the region.
Shell and other oil majors have been divesting Nigerian assets in the wake of violent attacks on rigs and pipelines coupled with the government’s push to return oil assets to local companies.
The state-owned NNPC remains involved with a 55 per cent stake in the OML 30 site.
ADVISERS HERITAGE’S NIGERIAN OIL DEAL
JP MORGAN CAZENOVE
LONG-STANDING partner JP Morgan Cazenove is acting as financial adviser for Heritage during its purchase of oilfield assets in Nigeria.
JP Morgan, which is also helping underwrite a $370m (£235.5m) equity raising to pay for the deal, lists Barry Weir, James Taylor and Neil Haycock as the lead advisers on this deal.
But Ian Hannam, who resigned from JP Morgan in April in order to work on his appeal against a £450,000 FSA fine, is also on board to provide advice.
The watchdog censured Hannam, JP Morgan’s former global chairman of equity capital markets, for passing on information about Heritage’s oil finds to a potential takeover bidder in 2008.
Alongside his appeal, Hannam is also being kept busy with ongoing work on the troubled Glencore-Xstrata merger, after keeping on some of his JP Morgan clients for reasons of continuity.
Meanwhile, Canaccord is underwriting 27 per cent of Heritage’s equity raising and will act as lead manager, with head of capital markets Giles Fitzpatrick, chairman Tim Hoare, head of natural resources Rob Collins and Tarica Mpinga leading the team.
And Standard Bank will provide a $550m secured bridge finance facility, while acting as joint global coordinator and joint bookrunner on the rights issue. Leading the bank’s work on the Heritage mandate are oil and gas expert Roger Brown, head of capital markets Simon Matthews and Donald Hultman, who is head of mining, energy and infrastructure lending.