Labour Wants Oil Block Sale to Heritage Oil Cancelled

The Federal Government has been called upon to cancel the sale of one of Nigeria’s most prolific onshore oil blocks, Oil Mining Lease (OML) 30, sold by Shell and its multinational partners to Heritage Oil, a British oil and gas company. This was sequel to the revelation that a key player in the deal, Tony Buckingham, the founder, chief executive and leading shareholder of Heritage, boasts a less than salubrious past.

There are also mounting concerns that a man with Buckingham’s reputation could pose a security risk in the already unstable Niger Delta. Prior to his entry into the Nigerian oil and gas sector, Buckingham, a British national, had supplied mercenaries to fight insurgents in Angola and Sierra Leone and had ties to the masterminds behind the coup plot to overthrow the government of oil-rich Equatorial Guinea in 2004.

Reacting to the sale of OML 30 to Buckingham’s Heritage Oil, the President of the Trade Union Congress, Peter Esele, called on President Goodluck Jonathan and the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, to do everything in their power to rescind the transaction, pointing out that by the sale, Nigeria had become the “laughing stock in Europe over the deal.”

Heritage Oil to sell part of Gas Block to fund its entry into Nigeria

Heritage Oil Plc said it will sell a part of its holding in a gas block in Iraq's autonomous Kurdistan region to Genel Energy Plc and take a loan from Genel, for a total of $450 million in proceeds. Heritage Oil said it would use the proceeds from the transactions with Genel, to partly fund its acquisition of a stake in a string of Nigerian oilfield assets, known as OML 30, which it announced last month.

Heritage Oil will sell a 26 percent interest in the Miran Block and an interest in a related joint operating agreement to Genel for $156 million, which would increase Genel's holding in the Miran Block to 51 percent. The $294 million loan provided by Genel to Heritage Oil can be repaid by transferring ownership of its unit Heritage Energy Middle East Ltd, which currently operates the Miran Block, to Genel.

Quest for Nigerian Oil assets: Heritage Oil launches $370m rights issue

Heritage Oil has launched a $370m (£237m) rights issue to raise finance for its entry into the Nigerian oil industry. The fully underwritten rights issue will provide the backing for Heritage and its Nigerian partner, Shoreline Power, to buy a 45pc share of an onshore oil producing block called OML 30 from oil majors Shell, Total and ENI for $850m. The remaining stake is owned by the Nigerian National Petroleum Corporation. The rest of the deal will be funded by $550m in bridge finance loans from Standard Bank of South Africa and JP Morgan. The FTSE 250 group also said it could raise additional capital via a bond or placing of ordinary shares.

The acquisition will see Heritage, which is led by chief executive Tony Buckingham radically increase its net production from 567 barrels of oil per day (bpd) to 11,320 bpd. It will also provide a more than five-fold increase in its "proven and probable" reserves to 408m barrels. OML 30 has proved and probable reserves of 1.1bn barrels of oil, worth up to $3.8bn. It is producing 35,000 bpd, but there is the potential to increase production in the short term by improving the existing infrastructure.

News of the rights issue came as Heritage unveiled a net loss of $52.2m in the six months to June 30, compared with a loss of $11.4m in the same period last year, as costs jumped. Heritage - which has interests in Russia, Kurdistan and Tanzania - said operating costs rose 21pc to $1.6m and production tax climbed from $1.5m to $2.2m, while acquisition costs of $18.1m and an $18.4m write-down of assets in Mali all hurt the bottom line. This offset a 35pc rise in oil production to 567 bpd at a 4pc higher average price of $39.9 per barrel. Petroleum revenues rose to $2.85m in the first half from $2.85m.

 Heritage ended the half with a cash balance of $34.6m, down from $310.9m at the start of the year. This excludes costs of $407m related to a tax dispute in Uganda. The company remains in dispute over tax claims for $435m by Uganda’s government following the sale of oil blocks in the African country in 2010.