Another newcomer to the main market...anybody any idea what the production figures are ?

Heritage Oil reduces H1 losses28-08-2009 07:33

Oil explorer Heritage Oil reduced half year losses and said growth prospects never looked better.

The group, which is buying Turkey's Genel Energy International, said for the six months ended 30 June its net loss narrowed to $12.8m from $16.5m a year earlier. Revenue for the period fell to $0.8m compared with $2m the year before.

"With production expected to increase, potential resource growth from our active drilling campaigns and completion of the Genel acquisition, the growth prospects for Heritage have never looked better," the group said in a company statement.

Production during the period fell to 231 bopd from 372 in 2008.

Heritage warns FSA investigation could delay Genel merger
Heritage Oil said an investigation by the Financial Services Authority, Britain's financial regulator, could hinder the oil and gas explorer's plans for a $5.5bn (3.4bn) merger with Genel Energy International, a unit of Turkey's Cukurova Group

Reuters
Published: 9:05AM BST 28 Aug 2009

Heritage Oil
The company said in its first half results statement on Friday that an investigation by the Financial Services Authority (FSA) could affect the ability of certain members of Genel's operational management team to assume their proposed roles in the combined entity.

"Heritage understands that relevant members of the Genel team are assisting the FSA with a view to bringing this matter to a swift conclusion," the company said.

Heritage said it remained in merger talks with Genel and that, "as soon as practicable", would send shareholders the prospectus on the deal, for their approval.

The company had hoped to send the prospectus out in August and a source close to the matter said the probe would likely delay the merger by "a couple of months".

Unlisted Genel was not immediately available for comment.

Heritage declined to name the Genel managers involved or to confirm whether the probe was into the individuals or the company, or whether the Genel team members were simply providing information.

FSA spokeswoman Abi Jones declined to say what the nature of the investigation was or to give any reasons why the FSA would limit an individual's ability to take up a position with a UK-listed company.

Heritage and Genel announced plans in June to combine their large oil finds in Iraq's semi-autonomous Kurdish region.

Under the terms of the proposed merger Cukurova, one of Turkey's largest conglomerates, would end up with around 50pc of the enlarged company.

Cukurova is controlled by Mehmet Emin Karamehmet, one of Turkey's richest men.

Heritage reported a $12.1m loss from continuing operations in the six months to the end of June. This compares with a 17m loss in the same period last year. Net production fell 38pc to an average of 231 barrels of oil per day.

In June the company raised $216.8m via a placing of 25.4m new shares to strengthen its balance sheet.

Lots of things going on over there, but latest comment from FT:
"[DNO announced yesterday that its operations have been suspended by the Kurdish Regional Government (KRG) and all operations will be managed by the PSC partners.
The dispute stems from the purchase of a 4.8% interest in DNO by Ashti Hawarmi on behalf of the KRG, which the Oslo Stock Exchange (OSE) has deemed to be an insider transaction. As a result of the OSE's notices and the press comments the KRG sent a letter to DNO highlighting "that unjustifiable and incalculable harm has been caused to the reputation of the KRG".
The suspension is for a maximum of six weeks during which DNO needs to remedy the damage done to the KRG's reputation. If DNO satisfies the KRG's requirements all the PSC rights will be re-instated. However if DNO fails to remedy the damages caused, the KRG may terminate DNO's involvement in the Kurdistan Region with or without compensation.]
Whilst this issue obviously highlights some of the risks of operating in Kurdistan, it shouldn't have any direct impact on Genel/Heritage Oil as Genel will take over the operations of Tawke during the six week suspension period and we see this as an opportunity to BUY the shares ahead of the prospectus which is due late Sept/early Oct.
NHOur valuation currently stands at 637p/sh (which includes NAV of 486p/sh and EMV of 151p/sh)"

Exploration and consolidation are the major value short-term drivers in the African oil exploration and production sector, says Arbuthnot.
The broker starts with recommendations on four stocks: Tullow Oil (buy), Heritage Oil (strong buy), SOCO International (strong buy) and Afren (strong buy).
Preferred picks are Afren and SOCO as they offer investors the greatest upside potential.

"Heritage Oil Plc (LSE: HOIL) provides the market with information in relation to the Taq Taq oil field in the Kurdistan Region of Iraq ("Kurdistan") and an update on the proposed acquisition of Genel Energy International Ltd ("Genel").

Heritage understands that since 14 October 2009, all production from the Taq Taq oil field has been diverted into the local market. Production for export has ceased, in coordination with the other operators in the region, and export production is not expected to recommence until a payment mechanism is in place. Exports commenced on 1 June 2009, so far no revenue has been received for any exported production and none is expected until there is an agreement on the payment mechanism between the Federal Government of Iraq and the Kurdistan Regional Government.

According to Genel, the current gross production capacity of the Taq Taq oil field is approximately 35,000 bopd which is expected to increase to approximately 60,000 bopd by the end of December 2009 as new production facilities are completed. Average gross production for the Taq Taq oil field in September 2009, according to Genel, was 29,580 bopd, of which approximately 52% was sold into the domestic market, in part driven by the opening of the Erbil refinery in July.

Elections took place in Kurdistan at the end of July and a new government is in the process of being formed. A caretaker government is currently in place whilst the new Prime Minister forms his government, which is expected to be completed by early November.

In addition, Heritage understands the FSA investigation previously disclosed continues and that the parties concerned are assisting with the FSA's enquiries. Heritage confirms that discussions with Genel are continuing with the terms of the merger nearing formal agreement. Both sides remain committed to successfully completing the proposed transaction, however the transaction is taking longer to conclude than had originally been estimated. We hope the implementation agreement can be signed and the prospectus published before the end of the year."

i sold out of these on thursday/friday, more as a precaution against the markets turning sour in general ..... am sure i shall buy back in in due course

EVOLUTION COMMENTS: "The risk for E&P investors is that a company decides to take on complicated and expensive development projects and destroys value in the process. Heritages exit from Uganda prior to this stage then is strategically sound and has been achieved at a fair price. In addition, the deal demonstrates the undervaluation the market has been applying to Heritages Kurdistan interests. At 580p/share we believe their value is worth over 3x the implied deal value of just 186p/share
DETAILS Heritage has agreed to sell its 50% interests in Block 1 & 3A in the Lake Albert Basin to Eni for $1.35bn in cash and a deferred consideration of $150m subject to certain criteria. The deal has been backed by the Ugandan government and is expected to complete in 1H 2010. The funds will be used to progress development and exploration of the remaining assets, make selective acquisitions with a special dividend of between 75p-100p also under consideration. Talks with Genel have been terminated.

VALUATION AND RECOMMENDATION We retain our target price of 900p."

Article in this morning's Daily Mail....rumour that ENI the Italian Oil giant to buy all of Heritage's Ugandan oil assets.....with completion as soon as today !.

market says hahaha!

To get that out to print they must have known about it a lot earlier than anybody else,......lot of changes in the Kurdistan oil world at the moment.

GKP, HOIL, ans SEY should all be valued at least 50% - 75% more, if they did not have to tolerate the idiots in Bagdad. Maybe the Bagdad Ministers etc are waiting for and expecting some " baksheesh ", which as we all know is the usual thing for sweetening deals in the middle east ?
I know I have worked there and paid it out on behalf of the company I worked for.

see GKP post

If they are going to return cash to shareholders : it will be one hell of a dividend....with tax to pay on it....better of with a share buyback or a takeover bid for Gulfkeystone.

I'm always happy to pay tax - the more I can pay the better.

Yes....but the sp will drop when it goes exdividend.....and many a time the sp takes ages to come back......if I was HOIL : I would retain some serious working capital, it will be needed.

long article intoday's FT that is well worth reading .... i assume it's in london FT as have only seen the international edition here

Heritage Oil & Gas is selling its 50% interest in Blocks 1 and 3A in Uganda to Eni International.
Heritage will receive $1.35bn in cash and a further contingent, deferred consideration of $150m in cash or an interest in a mutually agreed producing oil field independently valued at a similar amount.

=======

TLW have pre-emption rights on these blocks and it will be interesting to see if they exercise same .... they merely(!) have to match ENI's price

The Iranians have taken a well from Iraq, down in the south.....perhaps they could pretend to be at war and get the price of oil rocketing once again.

the story seems to be true, but it does rather feel like "Small earthquake in Chile; few injured" ..... though oil price is up a bit, it's hardly dramatic .... ditto the rise in gold, considering its recent retrenchment ..... and Dow has shrugged its shoulders

the "kids" in Iran are obviously trying to provoke a reaction to divert attention away from their internal problems, you really can't take this bunch of "gangsters" seriously.