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JERSEY, CHANNEL ISLANDS--(Marketwire - Aug. 4, 2009) -
THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE
SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.
Heritage Oil Plc (TSX:HOC)(LSE:HOIL), an
independent upstream exploration and production company, announces an
update on the status of negotiations of the proposed acquisition of Genel Energy International Limited ("Genel") (the "Proposed
Acquisition").
On 9 June 2009, Heritage announced that it had entered into a
non-binding Memorandum of Understanding ("MoU")
with Genel Enerji
A.S. The Proposed Acquisition would be paid for wholly in new shares of
Heritage and would result in Genel
shareholders (the "Vendors") owning
approximately 50% of the enlarged ordinary share capital of Heritage.
Further to this, it has been agreed in principle, subject to completion
of a definitive binding implementation agreement, that Heritage will
issue 286.3 million ordinary shares (representing approximately 50% of
the voting rights of Heritage as enlarged by the Proposed Acquisition
(the "Enlarged Group")) in consideration for acquiring the
entire share capital of Genel. Additionally, it has been agreed that
Genel's previously announced US$1.1 billion capacity building liability
for infrastructure support to the Kurdistan Region of Iraq
("Kurdistan") will be extinguished in its entirety at, or
before, completion. Out of the 286.3 million ordinary shares to be
issued as consideration, the Kurdistan Regional Government
("KRG") will receive a total of 96.0 million ordinary shares
in consideration for extinguishing the infrastructure projects
liability. The KRG has confirmed that it intends to be a long-term
shareholder and is therefore willing to enter into a lock-up agreement
in respect of Heritage shares it will receive but with the ability to
sell shares periodically to fund new infrastructure and local community
support projects, indicating its support of the post merger entity and
the growth prospects it believes exist for the Enlarged Group. The
Vendors will receive the remaining 190.3 million ordinary shares and
any loans outstanding from them (or their related parties) will be
fully extinguished at, or before, completion of the Proposed
Acquisition.
Completion of the Proposed Acquisition remains subject to various
conditions. These include: (i) agreeing definitive legally binding
documentation, including an implementation agreement; (ii) formal
ratification of the Proposed Acquisition by the Ministry of Natural
Resources of the Kurdistan Region of Iraq and the Kurdistan Region Oil
and Gas Council; (iii) the approval of Heritage's shareholders voting
at an Extraordinary General Meeting of the Company; and (iv)
confirmation as to the eligibility of the Enlarged Group to be admitted
to the Official List by the UK Listing Authority ("UKLA") and
the admission of the ordinary shares of Heritage, as enlarged, to the
Official List of the UKLA and to trading on the London Stock Exchange. Assuming
the parties execute an implementation agreement shortly, Heritage
currently intends to make available to shareholders later this month a
Prospectus and Circular describing the Proposed Acquisition, which will
include the relevant Mineral Experts' Reports for the key assets of
both the Company and Genel, with a view to holding an Extraordinary
General Meeting in September, at which time Heritage shareholders will
be asked to approve the transaction.
Tony Buckingham, Chief Executive Officer of Heritage, commented:
"We look forward to adding to Heritage Oil's world-class discoveries
in Uganda by creating the leading Anglo-Turkish company with oil
production and refining capacity in the Kurdistan Region. We recognise
the important role Turkey is playing in the region and are delighted
that the KRG will be a significant long-term shareholder, thereby
providing their endorsement and support to the Enlarged Group. Our due
diligence has highlighted that, in addition to the known export
opportunities from the region, there is considerable and growing
domestic demand for petroleum products which the Taq Taq refinery
should help us capture, bringing strong potential cash flow and
earnings to shareholders."
Mehmet Sepil, Chief Executive Officer of Genel, commented:
"We are delighted at this opportunity to create the leading
integrated oil and gas company in the Kurdistan Region. Cash flow from
the sale of production from our Taq Taq and Tawke fields which is
exported and sold in the domestic market is expected to generate
significant cash flow for the benefit of all shareholders and deliver
excellent value to all stakeholders, including the people of
Iraq."
If you would prefer to receive press releases via email please contact
Lindsay Carpenter (lindsay@chfir.com) and specify "Heritage press releases" in the subject
line.
Certain information in this announcement is based on management
estimates. Such estimates have been made in good faith and represent
the genuine belief of applicable members of management. Those
management members believe that such estimates are founded on
reasonable grounds. However, by their nature, estimates may not be
correct or complete. Accordingly, no representation or warranty
(express or implied) is given that such estimates are correct or
complete. No representation or warranty (express or implied) is given
that such estimates are so founded. The Company and J.P. Morgan
Cazenove Limited do not undertake any obligation to correct or complete
any estimate whether as a result of being aware of information (new or
otherwise), future events or otherwise.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION:
This announcement includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking
statements include, but are not limited to, statements with regard to
the outcome of the Proposed Acquisition, future production and grades,
projections for sales growth, estimated revenues, reserves and
resources, targets for cost savings, the construction cost of new
projects, projected capital expenditures, the timing of new projects,
future cash flow and debt levels, the outlook for the prices of
hydrocarbons, the outlook for economic recovery and trends in the
trading environment, statements about cost synergies, revenue benefits
or integration costs and capacity and may be (but are not necessarily)
identified by the use of words such as "believes",
"estimates", "plans", "projects",
"anticipates", "expects", "intends", "may",
"aims", "plans", "predicts",
"continues", "assumes", "positioned",
"will", or "should" and other similar expressions
that are predictions of or indicate future events and future trends or,
in each case, their negative or other variations or comparable
terminology. These forward-looking statements include matters that are
not historical facts and include statements regarding the Company's
intentions, beliefs or current expectations. An investor should not
place undue reliance on forward-looking statements because, by their
nature, they involve known and unknown risks, uncertainties and other
factors and relate to events and depend on circumstances that may or
may not occur in the future that are in many cases beyond the control
of the Company. A number of factors could cause actual results and
developments to differ materially from those expressed or implied by
the forward-looking statements. In particular, there is no assurance
that the Company will enter into a binding implementation agreement in
respect of the Proposed Acquisition or that such an agreement will be
entered into on the terms described in this announcement. There is also
no assurance that even if a binding implementation agreement is entered
into that any such transaction will be completed.
Any forward-looking statements in this announcement reflect the Company's
view with respect to future events as at the date of this announcement
and are subject to risks relating to future events and other risks,
uncertainties and assumptions relating to the Company's operations,
results of operations, growth strategy and liquidity. The Company (and
J.P. Morgan Cazenove Limited) undertake no obligation publicly to
release the results of any revisions or up-dates to any forward-looking
statements in this announcement that may occur due to any change in its
expectations or to reflect events or circumstances after the date of
this announcement.
Neither this announcement nor any copy of it may be taken or
transmitted into the United States of America, its territories or
possessions or distributed, directly or indirectly, in or into the
United States of America, its territories or possessions. Neither this
announcement nor any copy of it may be taken or transmitted into
Australia, Canada, Japan or South Africa or to Canadian persons or to
any securities analyst or other person in any of those jurisdictions. Any
failure to comply with this restriction may constitute a violation of
United States, Australian, Canadian, South African or Japanese
securities law. The distribution of this announcement in other
jurisdictions may be restricted by law and persons into whose
possession this document comes should inform themselves about, and
observe, any such restrictions. This announcement does not constitute
or form a part of any offer or solicitation to purchase or subscribe
for securities in the United States. The securities referred to herein
have not been and will not be registered under the US Securities Act of
1933 (the "Securities Act"), and may not be offered or sold
in the United States. The securities referred to herein have not been and
will not be registered under the applicable securities laws of Canada,
Australia, South Africa or Japan and, subject to certain exceptions,
may not be offered or sold within Canada, Australia, South Africa or
Japan or to any national, resident or citizen of Canada, Australia,
South Africa or Japan.
This announcement constitutes an advertisement within the meaning of
the Prospectus Rules of the United Kingdom Financial Services Authority
and is not a prospectus and has been prepared solely in connection with
the Proposed Acquisition. A prospectus and circular (the
"Prospectus") will be published by Heritage in due course in
connection with the Proposed Acquisition. Copies of the Prospectus will
be available, following publication, from the Company's registered
office and from 34 Park Street, London, W1K 2JD, being the Company's
principal place of business in the UK.
Important Information
This announcement does not constitute an offer to sell, or the
solicitation of an offer to buy, exchange, or transfer any securities
of Heritage. The value of Heritage's ordinary shares can go down as
well as up and past performance cannot be relied on as a guide to
future performance.
J.P. Morgan Cazenove Limited, which is authorised and regulated in the
United Kingdom by the Financial Services Authority, is acting for
Heritage and no-one else in connection with this announcement and will
not be responsible to anyone other than Heritage for providing the
protections afforded to its clients or for providing advice in relation
to the contents of this announcement, or for any other transaction,
arrangement or matters referred to in this announcement.
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