May 6 (Bloomberg) -- Heritage Oil Ltd., a U.K.-based explorer, made a “major” oil discovery in the Miran West structure of the Kurdistan region of Iraq. The stock rose to a record in London trading.

Oil-in-place at Miran West is estimated at 2.3 billion to 4.2 billion barrels, St. Helier, Jersey-based Heritage said in a statement. The recovery factor may be between 50 percent to 70 percent because of the fractured nature of the reservoirs, Heritage said.

The discovery paves the way for “transformational production rates,” Paul Atherton, the company’s chief financial officer, said by telephone from Jersey. “The potential could be double” because the company also controls the similar-sized Maran East structure, he said.

Heritage rose 99 pence, or 25 percent, to 500 pence, the highest close since it started trading in March 2008, valuing the company at 1.3 billion pounds ($2 billion).

Heritage, which had a $41.3 million-loss last year, sold its assets in Oman to RAK Petroleum in April for $28 million to help fund operations in Kurdistan and Uganda. Brian Smith, the company’s vice president for exploration and production, said March 13 the two blocks it controls around Lake Albert in Uganda contain at least 2 billion barrels of oil.

The company estimates production from Miran West may be 10,000 barrels to 15,000 barrels of oil a day per well. Development will be “low cost and straightforward to fast- track,” with the potential to start crude production by the end of the year, the company said.

Fully Funded

Output will initially be transported by truck and the company plans to get an export license so it can ship the oil by pipeline to Turkey, Atherton said. That depends on negotiations between the Kurdistan and Iraq governments, he said.

Additional equipment for longer-term tests is scheduled to arrive at the site in about eight weeks and further drilling on the license is scheduled for later this year.

Heritage is fully funded until the middle of next year, according to Atherton. The company won’t make “significant profits” this year, he said, because production in Kurdistan isn’t likely until toward the end of 2009.

Heritage holds a 75 percent interest in the Miran license and Genel Energy International Ltd. holds the remainder.

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

Last Updated: May 6, 2009 12:12 EDT