Nov. 23 (Bloomberg) -- Eni SpA, Italy’s biggest energy company, agreed to buy Ugandan oil assets from Heritage Oil Plc, the U.K. explorer that said this month it was in talks with potential investors in the region, for as much as $1.5 billion.

The price of the deal, which is likely to be completed in the first quarter of 2010, will comprise as much as $1.35 billion in cash and a further payment of $150 million or an interest in a field independently valued at the same amount within two years.

Eni is seeking to expand reserves with fields in Africa, central Asia and the Gulf of Mexico after output cuts from disruptions in Nigeria. In August, its Chief Executive Officer Paolo Scaroni held talks with officials in Uganda and Ghana and the company signed a strategic agreement with the Democratic Republic of Congo.

“Eni’s extensive experience in West Africa should help de- risk” the Ugandan development, Sanjeev Bahl, a London-based analyst at Numis Securities Ltd., wrote today in an e-mailed report. Its “extensive reservoir management and water injection expertise potentially increase recovery factors at existing discoveries.”

Heritage, which has a 50 percent working interest in Blocks 1 and 3A, had been seeking investors to help build a pipeline from Uganda to the coast of Kenya to export crude from projects with its partner Tullow Oil Plc. The latter is also marketing its assets in Uganda’s Lake Albert and plans to announce a partner early next year.

Lake Albert

Eni has no plans to bid for a stake in Tullow’s assets in the country, after reaching the accord with Heritage, Scaroni said on a conference call today.

“For the time being we are not going ahead with the data room Tullow has opened,” Scaroni said. “We are not interested because we cannot do everything.” He said Eni had been attracted to the Heritage deal because it wanted operatorship of blocks.

“I think Tullow will find a buyer in the next few months, but we won’t participate,” Scaroni said. He declined to comment on whether Chinese companies may bid for Tullow’s assets.

Tullow said last month that Uganda had approved an initial list of companies interested in bidding for a stake in its projects in the Lake Albert Rift Basin. The Sunday Times has reported that Eni was among 10 companies that prequalified.

Ugandan Investment

“The development of these resources will require great synergy with Uganda’s infrastructure programs, in respect of which Eni intends to play a leading role in partnership with the authorities,” Eni said in a statement.

Heritage fell 23.8 pence, or 4.7 percent, to 483.7 pence in London, after initially rising following the announcement. Tullow fell 0.3 percent to 1,256 pence, also in London, while Eni climbed 2.4 percent to 17.25 euros in Milan.

Since the discovery of the Kingfisher Field in 2007, six wells have been drilled in both blocks, discovering about 300 million barrels net to Heritage. The company has invested about $150 million in its Ugandan project, Heritage said today.

“The development of the Albert Basin in Uganda will be very large” and will “cost multi-billions of dollars,” Heritage Chief Financial Officer Paul Atherton said today by phone. The talks with “Far East investors” on building the export pipeline are halted now after the agreement with Eni.

Export Pipeline

Heritage said Nov. 17 it was in talks with companies who were offering help on “large-scale infrastructure programs” related to Uganda that may include a pipeline. The company will keep an interest in the Albert Basin, through interests in Blocks 1 and 2 in the Democratic Republic of Congo, which are awaiting presidential decree.

Scaroni said a pipeline could be built either through Kenya or Tanzania, and that the route was under study.

Some of the proceeds of the asset sale will be used by Heritage for projects in the Iraqi region of Kurdistan. Heritage said it was pulling out of the planned purchase of Genel partly because a revenue payment mechanism for oil exports has not yet been established.

“It became appropriate to terminate the discussions,” Atherton said. “The payment mechanism will be discussed next year following the Iraqi national elections in Baghdad in January.”

Heritage will consider a special dividend to shareholders of 75 pence to 100 pence a share as a result of the sale, the St. Helier, Jersey-based company said in a statement. Heritage ended talks to buy Genel Energy International Ltd., a producer in Iraq’s Kurdish region.

Heritage was advised by JPMorgan Cazenove Ltd.

To contact the reporter on this story: Stephen Cunningham at scunningha10@bloomberg.netEduard Gismatullin in London at egismatullin@bloomberg.net

Last Updated: November 23, 2009 11:45 EST