LONDON, UNITED KINGDOM--(Marketwire - May 18, 2012) -
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Heritage Oil Plc (TSX:HOC)(LSE:HOIL) ("Heritage" or the "Company"), an independent upstream exploration and production company, issues its Interim Management Statement for the period from 1 January 2012 to 18 May 2012, in accordance with reporting requirements of the EU Transparency Directive.
- The Miran West-3 well was drilled to a total depth of 3,528 metres and the primary target of the Jurassic gas reservoir was successfully tested. The well is being suspended pending completion as a production well
- Well testing of the main Jurassic reservoir resulted in a constrained flow of up to 22 MMscf/d of wet gas with a yield of 20 bbl/MMscf of 55˚ API condensate
- It is estimated that this well will be capable of delivering 50 MMscf/d of wet gas and 1,000 bbl/d condensate when put into production
- The Miran East-1 well is currently at a depth of 2,020 metres. Oil shows encountered whilst drilling in the Upper Cretaceous are consistent with wireline log interpretation indicating the presence of hydrocarbons and pressure data indicates that the East and West structures are in communication
- Operations on Miran East-1 well are on schedule and drilling is expected to take a further five months
- The full processed 3D seismic, across the Miran Block, is now available and initial interpretation of the data has been completed
- Tanzania work programme commenced in the recently awarded Kyela and Rukwa licences with the acquisition of a high resolution gravity survey, following which a seismic programme is planned
- Production for the first quarter 2012 averaged 605 bopd, an increase of 40% on the same period in the prior year
- Cash position of approximately US$154 million, excluding amounts related to the Ugandan tax dispute, as at 31 March 2012
Kurdistan Region of Iraq
The Miran West-3 well, which commenced drilling in August 2011, has reached a total depth of 3,528 metres after encountering the primary gas bearing reservoir interval in the Jurassic.
Subsequent well testing operations within the main Jurassic reservoir have been completed and resulted in a constrained flow of up to 22 MMscf/d of wet gas with a yield of 20 bbl/MMscf of 55˚ API condensate. This tested interval is shown to be in pressure communication with the main reservoir interval discovered and tested in the Miran West-2 well c.4.3 km to the North West. Examination of the wireline log data in conjunction with the well test data indicates that a pervasive and productive fracture network has been intercepted as planned. It is estimated that once the well is completed and placed on production that it will be capable of delivering 50 MMscf/d of wet gas and 1,000 bbl/d of condensate. The well is currently being suspended pending re-entry and completion as a production well. The success of the Miran West-3 well continues to de-risk the Miran Field, having confirmed the presence of gas-bearing fracture networks at this location, as predicted by geophysical and geological models. The rig will then move to the Miran West-4 appraisal location for the drilling of a high angle well targeting the Upper Cretaceous oil bearing intervals. This well should spud in early June 2012. Heritage plans to undertake an extended well test of these oil bearing reservoirs for a minimum period of six months which should commence at year end.
In March 2012 Heritage announced that drilling of the Miran East-1 exploration well had commenced, with an estimated target depth of c.4,000 metres. The well is targeting exploration potential within the Cretaceous and Jurassic reservoir intervals of the eastern structure. The well is currently at a depth of 2,020 metres in the regional seal above the Lower Cretaceous. Oil shows observed whilst drilling are consistent with wireline log interpretation indicating the presence of hydrocarbons at various levels within the Upper Cretaceous. Furthermore, pressure data obtained in the Upper Cretaceous indicates that the East and West structures are in pressure communication.
Acquisition of 3D seismic, covering 730 square kilometres, across the Miran Block was completed in 2011. Initial interpretation of the full processed 3D data has recently been completed which has enabled enhanced mapping of the structure, increased the Company's ability to identify fault systems and significantly increased our geological understanding of the field.
Monetisation and Development of the Miran Field
Heritage is considering a phased development of the Miran Field which involves early development by the end of 2013, targeting between 80 and 180 MMscfd of gas for local supplies and the production of between 10,000 and 15,000 bpd of oil and condensate. Full field development should comprise an integrated development of the oil, gas and condensate with export of the gas production to Turkey estimated to commence in 2015.
Work on conceptual development studies, gas marketing plans and strategies has continued and Heritage is in discussions with the Kurdistan Regional Government, gas buyers and contractors regarding both early and full field development, including the export of the gas to Turkey where gas demand is increasing significantly.
Heritage was appointed operator and awarded new Production Sharing Agreements ("PSAs") in Tanzania over the Rukwa Block in November 2011 and the Kyela Block in January 2012. In both of these areas the Company recognises certain geological similarities with the Albert Basin of Uganda, where Heritage has had previous experience and significant commercial success, thereby providing a material advantage in assessing this acreage. The work programme on Rukwa has commenced with the reprocessing of legacy 2D seismic data and the acquisition of further 2D seismic in the summer of 2012 is planned. On the unexplored Kyela Block the acquisition of a high resolution gravity survey has commenced following which a seismic programme will be acquired.
Other Exploration Assets
In Malta, the Company's extensive data set of approximately 5,000 kilometres of 2D seismic indicates the presence of multiple prospects and leads. This includes the acquisition over Area 7, in July 2011, of 1,400 kilometres of infill and exploration 2D seismic. Preparations are now underway to drill a high-impact well in Area 7.
Production for the first quarter of 2012 averaged 605 bopd, an increase of 40% on the same period in the prior year. However, this was 38% lower than the fourth quarter of 2011 due to a temporary mechanical issue on well 363, which is in the process of being resolved. Well 363 was the first horizontal well to be drilled in the field and further horizontal wells are planned to be drilled commencing in the second half of this year.
As at 31 March 2012, Heritage had a cash position of approximately US$154 million, excluding amounts related to the Uganda tax dispute of approximately US$405 million, which is more than sufficient to cover existing work programmes into 2013.
Heritage started a share buy back programme in April 2011. To date, 34,602,442 Ordinary Shares have been bought back and are held in treasury. Consequently, Heritage has 255,145,588 Ordinary Shares in issue (excluding treasury shares) as well as 2,811,408 exchangeable shares of no par value of Heritage Oil Corporation, each carrying one voting right in Heritage.
The total number of voting rights in Heritage, excluding treasury shares as at 17 May 2012, is 257,956,996.
Heritage currently holds 15.25% of the outstanding Shares of PetroFrontier Corp. for investment purposes. PetroFrontier is listed on the TSX Venture Exchange and has a high-impact drilling programme in Australia targeting billions of barrels of resources.
Heritage has appointed two new independent Non-Executive Directors during the period. Carmen Rodriguez joined on 23 March 2012, replacing Salim Macki who retired, and Colonel Mark Erwin was appointed with effect from 1 May 2012.
As previously announced on 18 April 2012 (within the results for the year ended 31 December 2011), multiple proceedings are ongoing all of which arise from the sale of the Group's interests in Blocks 1 and 3A in Uganda to Tullow Uganda Limited:
|(a)||Heritage Oil & Gas Limited ("HOGL"), the Company's wholly owned subsidiary, is engaged in appeals to the Ugandan High Court;|
|(b)||HOGL is also engaged in international arbitration proceedings in London against the Ugandan Government which commenced last year; and|
|(c)||Heritage and HOGL are together engaged in defending Commercial Court proceedings in the High Court of Justice in London against Tullow Uganda Limited.|
Heritage's position, based on comprehensive advice from leading counsel, legal and tax experts is that no tax is payable.
Tony Buckingham, Chief Executive Officer, commented:
"We are delighted with the Miran West 3 test results which give us great comfort on the extent of the primary gas reservoir and demonstrates its producibility. We are focused on the monetisation of the world class Miran Field, targeting the phased development of the field with export of the gas to the booming Turkish market. The active work programme in Kurdistan continues with the drilling of the Miran East 1 well and the Miran West-4 oil appraisal well expected to spud later this quarter. We continue to pursue these programmes whilst also considering further value generating opportunities."
Notes to Editors
- Heritage is listed on the Main Market of the London Stock Exchange and is a constituent of the FTSE 250 Index. The trading symbol is HOIL. Heritage has a further listing on the Toronto Stock Exchange (TSX:HOC).
- Heritage is an independent upstream exploration and production company engaged in the exploration for, and the development, production and acquisition of, oil and gas in its core areas of Africa, the Middle East and Russia.
- Heritage has an exploration, appraisal and development asset in the Kurdistan Region of Iraq, exploration assets in Malta, Tanzania, Mali, Pakistan, Libya and the Democratic Republic of Congo and a producing property in Russia.
- All dollars are US$ unless otherwise stated.
- For further information please refer to our website, www.heritageoilplc.com.
If you would prefer to receive press releases via email please contact Jeanny So (email@example.com) and specify "Heritage press releases" in the subject line.
Except for statements of historical fact, all statements in this news release - including, without limitation, statements regarding production estimates and future plans and objectives of Heritage - constitute forward-looking information that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from those anticipated in such statements. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as: risks relating to estimates of reserves and recoveries; production and operating cost assumptions; development risks and costs; the risk of commodity price fluctuations; political and regulatory risks; and other risks and uncertainties as disclosed under the heading "Risk Factors" in its Prospectus and elsewhere in Heritage documents filed from time-to-time with the London Stock Exchange and other regulatory authorities. Further, any forward-looking information is made only as of a certain date and the Company undertakes no obligation to update any forward-looking information or statements to reflect events or circumstances after the date on which such statement is made or reflect the occurrence of unanticipated events, except as may be required by applicable securities laws. New factors emerge from time to time, and it is not possible for management of the Company to predict all of these factors and to assess in advance the impact of each such factor on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking information.
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