UK Oil Explorer Company Heritage Oil Looking for Acquisitions After the Sale of Its Assets in East A

From: Investinuk
Published: Mon Aug 30 2010

Heritage Oil sold its assets in Uganda, East Africa, exiting the market even as controversy rages on over its tax dispute with the Ugandan government. From the sale of its assets, Heritage reported that it had paid its shareholders a special dividend of £1 pound for every share held. At the announcement of its interim results Friday, Heritage reported that minus amounts related to the tax dispute it has with the Ugandan government, it had accrued cash of about $700 million and is actively seeking acquisitions.

However, the firm said that its Pakistan exploration well, the ZamZam North licence, will be delayed to the first quarter of 2011 from the second half of this year as a result of the recent floods that have pummeled the country. Heritage further reported that with the completion of the East African asset sale, its focus will now shift to the Kurdistan region of Iraq. Heritage said it expects full results from its core Miran West-2 well in late September or early October. The Ugandan asset sale was not without its challenges, reiterated Heritage. Even though it was approved by the Ugandan government, it was under the condition that Heritage pay 30% of a $405 million capital gains tax on the transaction and remit to arbitration for the balance.

The East African asset sale was pegged at about $1.45 billion. Heritage sold the assets to Tullow, which bought the interests from Heritage while selling its own interest. In the deal, Tullow will pay CGT on the profit it gets from the sale. However, Tullow said it may be bringing in oil majors such as China National Offshore Oil Corp and Total as part of a $10 billion project to develop Uganda’s oil reserves. Heritage shares have declined by 26% over the last one month and closed trading at 304.6 pence Thursday. That subsequently valued the firm at about £878 million, about US$1.37 billion.

Heritage Oil is a leading Jersey-based oil and gas exploration and production business. Its activities are focused on Africa, the Middle East and Russia. It is a constituent of the FTSE 250 Index. It has a secondary listing on the Toronto Stock Exchange.

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