Heritage Oil to sell its Ugandan oil blocks to Eni for $1.5 billion
24 November 2009
Heritage Oil, an independent oil and gas exploration company with a focus on Africa, the Middle East and Russia, has agreed yesterday to sell its interests in Uganda to Italy's largest oil and gas company Eni S.p.A for $1.5 billion.
Heritage Oil proposes to sell its 50-per cent working interest in Blocks 1 and 3A of the oil-rich Lake Albert Basin in Uganda to Eni as well as appoint it as the operator for $1.35 billion in cash and will receive an additional $150 million in cash for the interest in a producing field independently valued at a similar amount.
The proposed transaction has been approved in principle by the board of Heritage, subject to various conditions, the execution of a binding sale and purchase agreement and approval from the Ugandan authorities, said the Jersey-based Heritage Oil in a statement.
Last week, Heritage had been in a $6 billion merger talks with private Turkish group Genel, which has assets in the Kurdish region of Iraq, but Heritage ended the talks by saying, "In light of the continuing situation in Kurdistan where, in particular, the revenue payment mechanism for oil exports has not yet been established, discussions with Genel have been terminated."
Since the discovery of field in 2007, six wells have been drilled in Blocks 1 and 3A, which have discovered approximately 300 million barrels net to the company. Heritage has spent about $150 million on its oil and gas interests in Uganda, since being awarded its first licence in 1997.
The London-listed Heritage has a 50-per cent working interest in Blocks 1 and 3A in the Albert Basin project in Uganda with Tullow Oil being its partner. But due to high cost involved in developing the fields and the related infrastructure, both companies had put the blocks for sale this summer.