Heritage Oil PLC HOIL Proposed Divestment

  Heritage Oil PLC (HOIL) - Proposed Divestment

RNS Number : 8354Q
Heritage Oil PLC
12 November 2012






NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES OR ANY JURISDICTION WHERE  TO 
DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.



THIS ANNOUNCEMENT  IS  AN ADVERTISEMENT  AND  NOT A  PROSPECTUS  OR  CIRCULAR. 
CERTAIN CORPORATE  DOCUMENTS  RELATING  TO CERTAIN  MATTERS  DISCUSSED  HEREIN 
ARE/WILL BE AVAILABLE FROM  THE COMPANY'S REGISTERED OFFICE  AND FROM 34  PARK 
STREET, LONDON, W1K 2JD AND ARE/WILL BE AVAILABLE FOR VIEWING ON THE COMPANY'S
WEBSITE.



THE SECURITIES REFERRED TO  HEREIN ARE HIGHLY SPECULATIVE  AND INVOLVE A  HIGH 
DEGREE OF RISK AND SHOULD  NOT BE PURCHASED BY  PERSONS WHO CANNOT AFFORD  THE 
LOSS OF THEIR ENTIRE INVESTMENT.







12 November 2012

                                      

                Heritage Oil Plc ("Heritage" or the "Company")

                                      

HERITAGE ANNOUNCES PROPOSED DIVESTMENT OF ITS 49% INTEREST IN THE MIRAN BLOCK,
   IN THE KURDISTAN REGION OF IRAQ, AS FULL REPAYMENT OF EXCHANGEABLE LOAN



Further to the  announcements made by  the Company  on 21 August  2012 and  23 
August 2012, Heritage Oil Plc (LSE: HOIL), an independent upstream exploration
and production  company,  and its  wholly  owned subsidiary,  Heritage  Energy 
Middle East  Limited  ("HEME"), announce  the  proposed divestment  of  HEME's 
remaining 49%  interest in  the production  sharing contract  relating to  the 
Miran Block (the "Miran  PSC") in the Kurdistan  Region of Iraq  ("Kurdistan") 
and corresponding  interest  in the  related  joint operating  agreement  (the 
"Miran JOA") to  Genel Energy (Miran)  Limited, a wholly  owned subsidiary  of 
Genel Energy plc ("Genel")  under the terms of  a US$294 million  exchangeable 
loan (the "Loan") provided to Heritage by Genel in August 2012, including  the 
sum of cash calls paid by Genel to  the operator of the Miran Block on  HEME's 
behalf in respect of its  49% interest (the "Cash  Calls"), since 1 July  2012 
(the "Divestment"). Completion of the Divestment is subject to approval of the
Company's shareholders.



Highlights

·Notice served by Heritage to Genel  on 9 November 2012, stating that  the 
Loan repayment is  to be satisfied  by the proposed  Divestment of HEME's  49% 
interest in  the  Miran PSC  and  the  Miran JOA  (the  "Divestment  Assets"), 
reducing Heritage's interest in the Miran Block to nil

·Board of  Directors believe  that  the proposed  Divestment is  the  most 
advantageous option to repay the Loan due to the attractive valuation  secured 
for a development  asset with  a very significant  future capital  expenditure 
requirement

·The proposed  Divestment  constitutes a  class  1 transaction  under  the 
Financial  Services  Authority's  ("FSA")  Listing  Rules,  thereby  requiring 
approval from  the  Company's shareholders  by  ordinary resolution  prior  to 
completion

·Combined proceeds  of US$450  million received  from Genel  on 22  August 
2012, further details of which are contained in the announcements made by  the 
Company on 21 August 2012 and 23  August 2012, were used to partially  finance 
the acquisition of  a 45%  participating interest  in a  producing oil  mining 
licence in Nigeria  ("OML 30") together  with a 45%  interest in other  assets 
under the joint operating  agreement for OML 30,  without need for  additional 
capital raising and without delay to the acquisition process

·Successful completion of the acquisition of  OML 30 was announced by  the 
Company on 9 November 2012

·A circular containing information on repayment of the Loan and details on
the proposed Divestment, together  with a notice  to convene an  extraordinary 
general meeting ("EGM"),  will be sent  to the Company's  shareholders in  due 
course



Background

On 22 August 2012, HEME completed the sale of a 26% interest in the Miran  PSC 
and Miran JOA to Genel for cash consideration of US$156 million (the  "Initial 
Sale"). Contemporaneously, the Company and Genel entered into a loan agreement
in respect  of the  Loan  (the "Loan  Agreement"), as  amended  by deed  on  9 
November 2012, whereby Genel agreed to (i) loan Heritage US$294 million at  an 
interest rate of  8% (subject to  adjustment) ending on  1 February 2014  (the 
"Repayment Date") and (ii) pay the Cash Calls. The Loan Agreement states  that 
the full amount of the Loan, plus any interest accrued thereon, must be repaid
by Heritage in full on the Repayment  Date unless, prior to such date,  either 
of the  parties  have elected,  and  Heritage shareholders  have  given  their 
approval by way of ordinary resolution,  to Heritage repaying the Loan by  way 
of a transfer of the Divestment Assets.



On 9 November 2012, Heritage gave notice to Genel of its election to repay the
Loan and the Cash  Calls, excluding accrued interest,  by way of the  proposed 
Divestment, subject  to  shareholder  approval. Following  completion  of  the 
proposed Divestment, HEME will not hold an interest in the Miran PSC or  Miran 
JOA.



Divestment and rationale

By executing the Loan Agreement  contemporaneously with the Initial Sale,  the 
Company received aggregate proceeds of US$450 million and was able to proceed,
without delay and without  the need for any  equity capital raising, with  the 
acquisition of OML  30, which successfully  completed and was  announced on  9 
November 2012.



The proposed  Divestment constitutes  a class  1 transaction  under the  FSA's 
Listing Rules and therefore requires approval by ordinary resolution from  the 
Company's shareholders. A circular including  information on the repayment  of 
the Loan and  details on  the proposed Divestment  together with  a notice  to 
convene the EGM will be sent to shareholders in due course.



The Board  of Directors  believe  that the  proposed  Divestment is  the  most 
advantageous Loan  repayment  option and  is  in  the best  interests  of  the 
Company's shareholders as a  whole. The valuation achieved  for the Miran  PSC 
and Miran JOA is considered by the Board to be attractive taking into  account 
the stage of development and  the very significant future capital  expenditure 
requirements associated with developing the Miran  gas field, as described  in 
the independent technical  report prepared by  RPS Energy Consultants  Limited 
and included in the Company's prospectus published on 6 August 2012.



The Board  therefore unanimously  recommends that  the Company's  shareholders 
vote in favour of the proposed Divestment in order to effect full repayment of
the Loan,  as each  of the  Directors intend  to do  in respect  of their  own 
beneficial shareholdings, representing approximately 34.2% of the voting share
capital.



Key Conditions of the proposed Divestment

In addition  to requiring  shareholder approval  by ordinary  resolution,  the 
proposed Divestment is conditional  on: (i) relevant  approvals in respect  of 
the proposed Divestment being granted by the Minister of Natural Resources for
the Kurdistan Regional Government and the Regional Council for the Oil and Gas
Affairs of  Kurdistan;  (ii)  the  execution  of  an  amendment  and  novation 
agreement between HEME  and Genel  Energy (Miran)  Limited in  respect of  the 
Divestment Assets; and (iii) other customary closing conditions.



Tony Buckingham, Chief Executive Officer, commented:

"The divestment of our remaining 49% interest in Miran will allow Heritage  to 
monetise the asset at an attractive valuation and the total proceeds will have
funded a significant part of the  completed acquisition of OML 30 in  Nigeria. 
Completion of  these  transactions  will  provide  Heritage  with  a  balanced 
portfolio of assets  generating cash  flow from production  which will  assist 
with work programmes on high impact exploration whilst allowing the Company to
continue considering further opportunities."



                                   - Ends -



For further information please contact:



Heritage Oil Plc

Tony Buckingham, CEO / Paul Atherton, CFO

+44 (0) 1534 835 400

info@heritageoilplc.com



Heritage Oil Plc - Investor Relations

Tanya Clarke / Claire Harrison

+44 (0) 20 7518 0838 / +44 (0) 20 7518 0827

ir@heritageoilplc.com



Sole Sponsor

J.P. Morgan Cazenove

Barry Weir / James Taylor / Neil Haycock

+44 (0) 20 7742 4000



Sole Financial Adviser in connection with the proposed Divestment

Standard Bank Group

Roger Brown / Simon Matthews / Donald Hultman

+44 (0) 203 145 5000



Media Enquiries

John Waples / Ben Brewerton

+44 (0) 20 7831 3113

heritageoil.sc@fticonsulting.com



Canada

Cathy Hume / Jeanny So

+1 416 868 1079 x231 / x225

cathy@chfir.com / jeanny@chfir.com



Notes to Editors



· Heritage is listed on the Main Market of the London Stock Exchange and is
a constituent of the FTSE 250 Index. The trading symbol is HOIL. Heritage  has 
a further listing on the Toronto Stock Exchange (TSX: HOC).

· Heritage is  an independent upstream  exploration and production  company 
engaged  in  the  exploration  for,   and  the  development,  production   and 
acquisition of, oil and gas in its  core areas of Africa, the Middle East  and 
Russia.

· Heritage has producing assets  in Nigeria and Russia, exploration  assets 
in Malta, Tanzania, Pakistan, Libya and  the Democratic Republic of Congo  and 
an exploration,  appraisal  and  development asset  in  Kurdistan  (being  the 
Divestment Assets).

· Following completion of  the proposed Divestment, HEME  will not hold  an 
interest in the Miran Block.

·   For    further   information    please    refer   to    our    website, 
www.heritageoilplc.com



This press release is not for distribution to United States Newswire  Services 
or for dissemination in the United States.



Standard Bank is authorised and regulated in the United Kingdom by the FSA, is
acting as sole Financial Adviser to Heritage and for no one else in connection
with the proposed Divestment and will not be responsible to anyone other  than 
Heritage for  providing  the  protections  afforded to  its  clients  nor  for 
providing advice in relation to the matters set out in this announcement.



J.P. Morgan Limited, which conducts its UK investment banking business as J.P.
Morgan Cazenove and is authorised and  regulated in the United Kingdom by  the 
FSA, is acting  as sole Sponsor  to Heritage in  connection with the  proposed 
Divestment and  will not  be responsible  to anyone  other than  Heritage  for 
providing the protections afforded to its clients nor for providing advice  in 
relation to such matters  or any other matters  set out in this  announcement. 
For the purposes of  this announcement, references  to "J.P. Morgan  Cazenove" 
are to J.P. Morgan Limited.



If you would prefer to receive press releases via email please contact  Jeanny 
So (jeanny@chfir.com) and  specify "Heritage  press releases"  in the  subject 
line.



Certain information in  this announcement  is based  on management  estimates. 
Such estimates have been made in  good faith and represent the genuine  belief 
of applicable members  of management.  Those management  members believe  that 
such estimates are founded  on reasonable grounds.  However, by their  nature, 
estimates may not be  correct or complete.  Accordingly, no representation  or 
warranty (express or  implied) is  given that  such estimates  are correct  or 
complete. No representation  or warranty  (express or implied)  is given  that 
such estimates are so founded. Neither the Company nor J.P. Morgan Cazenove or
Standard Bank undertake  any obligation  to correct or  complete any  estimate 
whether as a result of being  aware of information (new or otherwise),  future 
events or otherwise.





Overseas shareholders



This announcement has been prepared for the purposes of complying with English
law and the Listing Rules of the FSA and information disclosed may not be  the 
same as that which  would have been  prepared in accordance  with the laws  of 
jurisdictions outside England.



Persons who are not resident in the United Kingdom may be affected by the laws
of jurisdictions other  than the  United Kingdom. Such  persons should  inform 
themselves  about   and   observe   any  applicable   requirements   of   such 
jurisdictions. Any  failure by  such  persons to  comply with  any  applicable 
restrictions may constitute  a violation of  the securities laws  of any  such 
jurisdiction. To the fullest extent permitted by applicable law, the companies
involved in the proposed  Divestment, J.P. Morgan  Cazenove and Standard  Bank 
disclaim  any  responsibility   or  liability  for   the  violation  of   such 
restrictions by any person.



Copies of  this  announcement  are not  being,  and  must not  be,  mailed  or 
otherwise forwarded, distributed  or sent  in, into or  from any  jurisdiction 
where to  do  so  would  constitute  a  breach  of  securities  laws  in  that 
jurisdiction.  Persons  receiving  this  announcement  (including  custodians, 
nominees and trustees) should observe  these restrictions and should not  send 
or distribute this announcement in, into or from any such jurisdictions.



CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION:



This announcement  includes statements  that  are, or  may  be deemed  to  be, 
"forward-looking statements".  These forward-looking  statements include,  but 
are not limited  to, statements  with regard to  the outcome  of the  proposed 
Divestment, Loan, future production and grades, projections for sales  growth, 
estimated revenues,  reserves and  resources, targets  for cost  savings,  the 
construction cost  of new  projects,  the timing  and outcome  of  exploration 
projects and drilling programmes,  projected capital expenditures, the  timing 
of new projects, future cash flow and debt levels, the outlook for the  prices 
of hydrocarbons, the  integration of  acquisitions, the  outlook for  economic 
recovery and trends in the  trading environment, statements about  strategies, 
cost synergies, revenue benefits or integration costs and production  capacity 
and future production levels and timing, and may be (but are not  necessarily) 
identified by  the use  of  words such  as "believes",  "estimates",  "plans", 
"projects",  "anticipates",  "expects",  "intends",  "may",  "aims",  "plans", 
"predicts", "continues",  "assumes",  "positioned", "will",  or  "should"  and 
other similar expressions that  are predictions of  or indicate future  events 
and future trends  or, in  each case, their  negative or  other variations  or 
comparable terminology. These forward-looking statements include matters  that 
are not  historical  facts  and include  statements  regarding  the  Company's 
intentions, beliefs  or current  expectations. An  investor should  not  place 
undue reliance on  forward-looking statements because,  by their nature,  they 
involve known and unknown risks, uncertainties and other factors and relate to
events and depend on  circumstances that may  or may not  occur in the  future 
that are in many cases beyond the control of the Company. A number of  factors 
could cause actual results  and developments to  differ materially from  those 
expressed or implied by the  forward-looking statements. In particular,  there 
is no assurance that  the conditions precedent to  completion of the  proposed 
Divestment will be  satisfied or waived  and the Company  may not realise  the 
anticipated benefits, operational and other synergies and/or cost savings from
the proposed Divestment or the Loan repayment.



Any forward-looking statements in this announcement reflect the Company's view
with respect to  future events as  at the  date of this  announcement and  are 
subject to risks relating to future events and other risks, uncertainties  and 
assumptions relating  to  the  Company's operations,  results  of  operations, 
growth strategy and liquidity.  None of the Company,  J.P. Morgan Cazenove  or 
Standard Bank Group undertake any  obligation publicly to release the  results 
of any  revisions  or  up-dates  to any  forward-looking  statements  in  this 
announcement that  may occur  due to  any  change in  its expectations  or  to 
reflect events or circumstances after the date of this announcement.



Subject to certain exceptions,  neither this announcement nor  any copy of  it 
may be taken or transmitted into the United States of America, its territories
or possessions or distributed, directly or  indirectly, in or into the  United 
States of America, its territories  or possessions. Neither this  announcement 
nor any copy of  it may be  taken or transmitted  into any other  jurisdiction 
where to do  so would  constitute a  violation of  the relevant  laws of  such 
jurisdiction or to  any securities  analyst or other  person in  any of  those 
jurisdictions. Any failure to  comply with this  restriction may constitute  a 
violation  of  United   States  or  other   applicable  securities  law.   The 
distribution of this announcement in other jurisdictions may be restricted  by 
law and  persons  into whose  possession  this document  comes  should  inform 
themselves about, and observe, any  such restrictions. This announcement  does 
not constitute or  form a part  of any  offer or solicitation  to purchase  or 
subscribe for  securities in  the United  States. The  securities referred  to 
herein have not been and will not be registered under the US Securities Act of
1933 (the "Securities  Act"), and may  not be  offered or sold  in the  United 
States absent  an exemption  from, or  in  a transaction  not subject  to  the 
registration requirements of  the Securities  Act and in  compliance with  any 
applicable securities laws of  any state or other  jurisdiction of the  United 
States. There will be  no public offer  of any securities  of Heritage in  the 
United States. The securities referred to herein have not been and will not be
registered under  the  applicable  securities laws  of  any  other  restricted 
jurisdiction and, subject to  certain exceptions, may not  be offered or  sold 
within any jurisdiction  where to do  so would constitute  a violation of  the 
relevant laws or to any national, resident or citizen of such jurisdiction.



This announcement  constitutes  an advertisement  within  the meaning  of  the 
Prospectus Rules of  the FSA and  is not  a prospectus and  has been  prepared 
solely in connection with the proposed Divestment. Copies of certain corporate
documents relating to certain matters  discussed herein are/will be  available 
from the Company's registered office and from 34 Park Street, London, W1K  2JD 
and  are/will  be  available   for  viewing  on   the  Company's  website   at 
www.heritageoilplc.com.



Important Information

This announcement does not constitute an offer to sell, or the solicitation of
an offer to buy, exchange, or  transfer any securities of Heritage. The  value 
of ordinary  shares  of  Heritage  and exchangeable  shares  of  Heritage  Oil 
Corporation exchangeable into ordinary shares of Heritage can go down as  well 
as up  and  past  performance  cannot  be relied  on  as  a  guide  to  future 
performance.















                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


DISLFLLFLFFEFBQ -0- Nov/12/2012 07:01 GMT
 
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