Genel Energy Plc (GEGYF) Tuesday said it has agreed with Heritage Energy Middle East Ltd., a unit of British oil firm Heritage Oil Plc (HOIL.L), to acquire an additional 26 percent interest in Miran exploration block in the Kurdistan Region of Iraq for $156 million cash.
Upon completion of the acquisition, Genel Energy will hold a 51 percent working interest in the Miran Block, and Heritage Energy Middle East will hold 49 percent. Through this acquisition, Genel Energy aims to build a material gas business alongside its existing oil business in the medium term. Heritage Oil shares rose about 14 percent in London.
Genel Energy will also provide a bilateral loan of $294 million to Heritage, secured on Heritage's shares in Heritage Energy Middle East or HEME as well as HEME's remaining working interest in the Miran Block.
As part of the deal, Genel Energy will become joint operator of the Miran Block. The acquisition will allow it to increase its interest in the Miran Block, a commercial gas discovery, from a 25 percent working interest to a 51 percent. As an Anglo-Turkish company, it will develop the Miran Field and export gas to Turkey.
Tony Hayward, chief executive officer of Genel Energy stated, "This acquisition represents an excellent opportunity to extend our interest in, and assume joint operatorship of, a commercial gas discovery and high quality asset in the Kurdistan Region of Iraq. Following our recent acquisition of a 44% interest in Bina Bawi, it will further enhance our position as the leading oil and gas company in Kurdistan."
Genel Energy noted that the acquisition and the loan will be funded and serviced from its existing cash resources.
Separately, Tony Buckingham, chief executive officer of Heritage Oil stated that the proceeds provide significant financial flexibility and will allow it to fund its proposed acquisition of OML 30 without any rights issue or other additional capital requirement.
HOIL.L is currently trading at 192.3 pence, up 24.2 pence or 14.4 percent, on a volume of 6.97 million shares.
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by RTT Staff Writer
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