Heritage Oil Buys Nigerian Assets For $850 Million

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Heritage Oil Heritage Oil Plc (LSE: HOIL) plans to buy a 45% interest in an oil mining lease and other assets for $850 million from Royal Dutch Shell Plc (LSE: RDSA), Total SA (Paris: FP) and Nigerian National Petroleum Corp. (NNPC).

Prior to the deal, Shell owned 30% of the joint venture, Total owned 10% and Nigerian National Petroleum Corp. owns the remaining 60%. After the deal, the assets will be held by a joint venture, 45% of which will be controled by a subsidiary of Heritage Oil Plc and the remaining 55% by the Nigerian National Petroleum Corp.

The lease, known as OML 30 is onshore in the Nigeria delta, includes eight producing fields and associated infrastructure, including 45% of the 850,000 barrels (bbl) of oil per day capacity Trans Forcados pipeline. The lease covers 1,097 square kilometers and includes eight main producing fields with oil and gas contained in numerous stacked reservoirs.

The lease's current average gross production is about 35,000 bbbl. per day, which owuld increase Heritage's net production from 605 bbl per day to about 11,350 bbl per day.

Heritage Oil estimates that the lease has gross proved and probable reserves of 707 million bbl of oil and and 2.5 trillion cubic feet of gross reserves of natural gas. The company's net proved and probable reserves increase 356% from 61 million bbls to a management estimated 278 million bbls.