British exploration and production (E&P) company Heritage Oil has announced that it is to acquire Turkish E&P company Genel Enerji in a deal that values the new company at US$5 billion.
AÂ non-binding Memorandum of Understanding (MoU) has been signed between the companies that would result in Genel shareholders owning approximately 50% of the enlarged ordinary share capital of Heritage. It is anticipated that following the acquisition, the company will be re-named HeritaGE Oil plc.
Both companies believe that the move will result in the new company having the financial capacity to bring into production its enlarged development and exploration portfolio, create the infrastructure for the development of the Taq Taq and Miran assets in Kurdistan, while also generating significant cash flow following the commencement of oil exports on 1 June 2009.
Paul Atherton, the chief financial officer of Heritage Oil, believes that the acquisition will result in the new company becoming a major force in the Iraqi oil industry.
“The enlarged group [HeritaGE Oil] will clearly be the largest oil and gas player in Iraqi Kurdistan,” Atherton said. “It owns key licences, most notably Taq Taq and Tawke [oilfields in Iraqi Kurdistan], both of which have commenced production and started exporting oil on June 1.”
“Production from Taq Taq and Tawke is approximately 30,000 barrels per day (bpd) and that is expected to increase to 43,000 bpd (net) to the enlarged group by the end of 2009. This will generate significant cash flow.”
“This will provide the financial flexibility to fast track the develop of the other assets and further development of the Taq Taq licence,” Atherton added.Â
The main asset that the company will be fast tracking is the enormous Miran oilfield in Iraqi Kurdistan. It is believed that the field holds up to 4.2 billion barrels of oil. Atherton believes that Genel Enerji will bring added expertise to the field’s development.
“Genel is the joint operator of the Taq Taq field. That field has been developed, that field is in production,” Atherton said.
“They have considerable local knowledge which could result in cost savings, benefits and other synergies to the development of the Miran field.”
Tony Buckingham, CEO of Heritage Oil will become executive chairman of HeritaGE Oil while Mehmet Sepil, CEO of Genel Enerji, becomes CEO of the new company. Paul Atherton remains in place as CFO while Mehmet Emin Karamehmet, chairman of the Cukurova Group (Genel Enerji’s parent company), will become executive director of HeritaGE Oil.
Heritage Oil is listed on the London Stock Exchange (LSE), but is headquartered in Canada. Genel Eenrji is a private company that is 56% owned by Cukorva, the large industrial conglomerate from Turkey.
