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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Repeatseat Ltd. (Tier2) | TSXV:RPS | TSX Venture | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0 | - |
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NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO
THE UNITED STATES, AUSTRALIA, SOUTH AFRICA AND JAPAN
Heritage Oil Plc (TSX:HOC)(LSE:HOIL) ("Heritage" or the "Company"), an
independent upstream exploration and production company, is pleased to announce
the publication of an independent Competent Person's Report ("CPR") compiled by
industry specialists RPS Energy Consultants Limited ("RPS"). On 29 June 2012,
Heritage announced the proposed acquisition of a major interest in Oil Mining
Lease 30 in Nigeria ("OML 30") and this CPR has been commissioned to provide
independent reserve and resource information and a valuation of OML 30, together
with an update on certain existing assets in Heritage's portfolio.
The range of reserves and resources is as at 31 March 2012 and is based on the
data and information available up until that date. The CPR assumes that the
acquisition of OML 30 completes on 1 September 2012. All volumes are stated net
of royalties unless otherwise stated.
Highlights:
-- OML 30, Nigeria;
-- Gross Proved plus Probable reserves(1): 1,114 million barrels, 58%
higher than management estimates as set out in the announcement
issued by the Company on 29 June 2012
-- Proved plus Probable net entitlement reserves to Heritage: 396
million barrels of oil
-- Economic valuation of Proved plus Probable reserves estimated at
between US$3,089 million and US$3,789 million, depending on the
income tax scenario (post-tax, net Heritage share, assuming a 10%
discount rate)
-- Zapadno Chumpasskoye Field, Russia;
-- Proved plus Probable net entitlement reserves to Heritage: 65
million barrels of oil
-- Economic valuation of Proved plus Probable reserves estimated at
$336 million (post-tax, net Heritage share, assuming a 10% discount
rate)
-- Miran Field, Kurdistan Region of Iraq ("Kurdistan");
-- Contingent Resources - mean estimate of Heritage working interest of
56.25%, gross of royalty: 366 million barrels of oil equivalent,
comprising 53 million barrels of oil and condensate and 1,815
billion cubic feet of gas, resulting in a mean net entitlement
volume to Heritage of 136 million barrels of oil equivalent
-- 2C estimate of net entitlement to Heritage of Contingent Resources:
130 million barrels of oil equivalent, comprising 15 million barrels
of oil and condensate and 669 billion cubic feet of gas based on
Heritage interest of 56.25%
-- Prospective Resources - mean(2) un-risked estimate of working
interest of 56.25% to Heritage, gross of royalty: 142 million
barrels of oil equivalent, comprising 96 million barrels of oil, 256
billion cubic feet of gas and condensate of 3.1 million barrels
Tony Buckingham, Chief Executive Officer, commented:
"This independent report, assessing OML 30 and certain existing assets,
highlights the strength of our current portfolio and the transformational nature
of the proposed acquisition of OML 30 which creates shareholder value and is
cash generative upon completion. The economic valuation of between US$3.4
billion and US$4.1 billion given for the current 2P reserves at OML 30 and our
assets in Russia underlines the significant opportunity we have to create
substantial value for shareholders. There is considerable upside in OML 30 which
has not been assessed in the CPR, notably gas in the licence, estimated by
management at 2.5 TCF, as well as undeveloped reservoirs and behind pipe
reserves in some of the developed reservoirs that have not currently been
targeted with new wells. These additional resources could provide further
significant upside which has not been quantified in the CPR. Also, significant
value exists for the Contingent and Prospective resources within the Miran Field
that has not been estimated in this report due to the classification as
resources."
The gross reserves and the net reserves attributable to Heritage are given in
Table 1 and Table 2.
-----
(1) Full field (100% basis) gross of royalty.
(2) The mean is a statistical aggregate which assumes that each of the
three prospects is successful. The probability of this occurring is 3%
for the oil and 12% for the non-associated gas and condensate.
Table 1: OML 30 summary of reserves as of 31 March 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Heritage Group net
Heritage Group net entitlement reserves
Gross remaining working interest(2) at base case price
reserves reserves forecast
---------------------------------------------------------------
Gross of Net of Gross of Net of Gross of Net of
Royalty Royalty(1) Royalty Royalty(1) Royalty Royalty(1)
(MMstb) (MMstb) (MMstb) (MMstb) (MMstb) (MMstb)
----------------------------------------------------------------------------
Proved
Reserves
(1P) 538 430 225 180 240 192
Proved plus
Probable
Reserves
(2P) 1,114 891 456 365 495 396
Proved plus
Probable
plus
Possible
Reserves
(3P) 1,733 1,387 709 567 770 616
----------------------------------------------------------------------------
Notes:
(1) Values net of royalty are the most economically meaningful, as they
reflect the deduction of royalty volumes to which the government is
entitled. Values gross of royalty are shown at Heritage's request
(2) Net Working Interest volumes are notional values resulting from the
dynamics of changing Net Profit Interests, as detailed in the CPR. Net
Entitlement volumes are more economically meaningful as they represent
the actual volumes to which Heritage is entitled
Table 2: Zapadno Chumpasskoye Field summary of reserves as of 31 March 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Heritage Group net
Heritage Group net entitlement reserves
Gross remaining working interest(2) at base case price
reserves reserves forecast
---------------------------------------------------------------
Gross of Net of Gross of Net of Gross of Net of
Royalty Royalty(1) Royalty Royalty(1) Royalty Royalty(1)
(MMstb) (MMstb) (MMstb) (MMstb) (MMstb) (MMstb)
----------------------------------------------------------------------------
Proved
Reserves
(1P) 24 24 23 23 23 23
Proved plus
Probable
Reserves
(2P) 69 69 65 65 65 65
Proved plus
Probable
plus
Possible
Reserves
(3P) 172 172 163 163 163 163
----------------------------------------------------------------------------
Notes:
(1) The Chumpasskoye fiscal regime does not include a royalty
(2) Under the terms of the Chumpasskoye licence the Net Working Interest
volumes and Net Entitlement volumes are the same
The post-tax Net Present Values of Heritage's reserves in OML 30 and Zapadno
Chumpasskoye at a 10% discount rate are tabulated in Table 3, including an
alternative valuation for OML 30 with a different Income Tax scenario based on
Heritage's view of pending legislation (the "Alternative Income Tax Scenario").
The Alternative Income Tax Scenario uses tax rates based on a proposed Petroleum
Industry Bill that differ from the current Nigerian income tax rates for
petroleum production, where, following the five-year period beginning in the
2012 tax year, a variable tax rate of between 70 and 80% (based on Shoreline's
interest in production) is assumed instead of a flat rate of 85%.
Table 3: Post-tax valuation (net Heritage share) of Heritage's reserves for OML
30 and Zapadno Chumpasskoye Field as of 31 March 2012 (US$ million)
----------------------------------------------------------------------------
Zapadno
OML 30 Chumpasskoye
------------------------------
Alternative
Base Income Tax Income Tax
Scenario(1) Scenario(2)
Post-tax NPV Post-tax NPV Post-tax NPV
(10%) (10%) (10%)
----------------------------------------------------------------------------
Proved Reserves (1P) 1,699 2,014 52
Proved plus Probable Reserves
(2P) 3,089 3,789 336
Proved plus Probable plus
Possible Reserves (3P) 4,470 5,457 976
----------------------------------------------------------------------------
Notes
(1) Assumes the income tax applicable under current Nigeria law
(2) Assumes the income tax under changes to Nigerian Law which Heritage
thinks might occur
With regards to OML 30, under the terms of the shareholders' agreement and
option agreement in respect of Shoreline Natural Resources Limited
("Shoreline"), the private limited Nigerian company established by Heritage
(through a wholly-owned subsidiary) and Shoreline Power Company Limited
("Shoreline Power"), Shoreline Power has an option to acquire a 30%
participating interest in Shoreline for a term of six months from the date of
the OML 30 acquisition agreement, for a consideration of 30% of the OML 30 net
acquisition cost and expenses (the "Option"). If the Option is exercised, the
Heritage Group's Net Entitlement Reserves and Net Present Value with respect to
OML 30 will be reduced by 30% from those shown in Tables 1 and 3.
A summary of the Miran Field's contingent and prospective resources are given in
Table 4 and Table 5 below.
Table 4: Miran Field summary of oil, gas and condensate contingent resources as
of 31 March 2012
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Heritage net
Heritage net Working entitlement
Gross field Interest volumes
-------------------------------------------------------------
Net of
Gross of Royalty
Gross of Net of Royalty (1), (2), Net of
royalty Royalty(1) (2), (3) (3) Royalty(1)
(MMboe) (MMboe) (MMboe) (MMboe) (MMboe)
----------------------------------------------------------------------------
1C Resources 340 306 191 172 93
2C Resources 588 529 331 298 130
3C Resources 1,044 939 587 528 187
Mean
Resources(4) 650 585 366 329 136
----------------------------------------------------------------------------
Notes:
(1) Values net of royalty are the most economically meaningful, as they
reflect the deduction of royalty volumes to which the government is
entitled. Values gross of royalty are shown at Heritage's request
(2) Net Working Interest volumes are notional values obtained by
multiplying the corresponding Gross Field values by Heritage's working
interest. They are not economically meaningful, however, as they do not
reflect Heritage's actual entitlement under the terms of the Miran PSC.
Net Entitlement volumes are economically meaningful as they do
represent the actual volumes to which Heritage is entitled. They are by
definition net of royalty
(3) Calculated assuming state back-in upon commerciality which reduces
Heritage net working interest from 75% to 56.25%
(4) Mean values are estimated using a probability-weighted average
calculation, in which the probabilities are 30%, 40% and 30% for the
1C, 2C and 3C resources, respectively
(5) A conversion of 6MMscf (gas): 1MMstb (oil) has been used to convert gas
to oil equivalent volumes
Table 5: Miran Field summary of oil, gas and condensate prospective resources as
of 31 March 2012
---------------------------------------------------------
Heritage Working
Gross Estimate Interest Share(1)
------------------------------------------------
Low Best High Low Best High GPoS(2)
(P90) (P50) (P10) Mean (P90) (P50) (P10) Mean (%)
----------------------------------------------------------------------------
Resources (MMstb)
----------------------------------------------------------------------------
Miran East Oil
(MMstb) 11 44 169 74 6 25 95 42 58%
----------------------------------------------------------------------------
Miran West Oil
(MMstb) 17 56 131 67 10 32 74 38 38%
----------------------------------------------------------------------------
Miran South Oil
(MMstb) 4 17 64 28 2 10 36 16 14%
----------------------------------------------------------------------------
Total Oil
(MMstb)(3) 96
----------------------------------------------------------------------------
Non-Associated Gas (Bscf)
----------------------------------------------------------------------------
Miran East Gas
(Bscf) 78 212 499 256 44 119 281 144 71%
----------------------------------------------------------------------------
Miran West Gas
(Bscf) 21 94 268 124 12 53 151 70 58%
----------------------------------------------------------------------------
Miran South Gas
(Bscf) 15 61 155 75 8 34 87 42 28%
----------------------------------------------------------------------------
Total Gas (Bscf)(3) 256
----------------------------------------------------------------------------
Condensate (MMstb)
----------------------------------------------------------------------------
Miran East (MMstb) 0.6 2.0 5.3 2.6 0.3 1.1 3.0 1.5 71%
----------------------------------------------------------------------------
Miran West (MMstb) 0.2 1.3 4.4 1.9 0.1 0.7 2.5 1.1 58%
----------------------------------------------------------------------------
Miran South (MMstb) 0.1 0.6 1.7 0.8 0.1 0.3 1.0 0.5 28%
----------------------------------------------------------------------------
Total Condensate
(MMstb)(3) 3.1
----------------------------------------------------------------------------
Notes 1. Calculated assuming state back-in upon commerciality which reduces
Heritage net working interest from 75% to 56.25%
2. The chance or probability of discovering hydrocarbon volumes
within the range defined. This is not an estimation of commercial
chance of success
3. The sum of the Mean Prospective Resources is the statistical
aggregation assuming that each of the three prospects is
successful and that the probability of this occurring is 3% for
the oil and 12% for the non-associated gas and condensate
4. All volumetric data is shown on a gross of royalty basis
----------------------------------------------------------------------------
Notes to Editors
-- In estimating resources RPS has used standard petroleum engineering
techniques, which combine geological and production data with
information concerning fluid characteristics and reservoir pressure,
where available. RPS has estimated the degree of uncertainty inherent in
the measurements and interpretation of the data and has calculated a
range of reserves and resources and risk factors in accordance with the
2007 SPE/WPC/AAPG/SPEE Petroleum Resource Management System.
-- Consistent with UKLA guidelines the value of contingent and prospective
resources has not been included in the CPR.
Heritage
-- 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.
These materials are not for distribution, directly or indirectly, in or into the
United States (including its territories and dependencies, any State of the
United States and the District of Columbia), Australia, South Africa or Japan.
These materials do not constitute or form a part of any offer or solicitation to
purchase or subscribe for securities in the United States.
If you would prefer to receive press releases via email please contact Jeanny So
(jeanny@chfir.com) and specify "Heritage press releases" in the subject line.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This news release contains forward-looking information that is subject to
various risks, uncertainties and other factors. Such statements include, but are
not limited to, statements with regard to intentions, beliefs or current
expectations concerning, amongst other things, the outcome of the proposed
acquisition of OML 30, future production and grades, the economic limit or
viability of assets, estimated revenues, reserves and resources, the timing and
outcome of exploration projects and drilling programmes, projected capital
expenditures, transportation costs, the timing of new projects, future cash flow
and debt levels, fiscal regimes, the outcome of legislative changes, the outlook
for the prices of hydrocarbons, the outlook for trends in the trading
environment, statements about strategies, cost synergies, revenue benefits,
integration and future production levels and timing of the Company, including
OML 30, and the industry and countries in which it operates. All statements
other than statements and information of historical fact are forward-looking
statements. The use of any words "estimate", "forecast", "expect", "project",
"plan", "target", "vision", "goal", "outlook", "may", "will", "should",
"believe", "intend", "anticipate", "potential", and similar expressions are
intended to identify forward-looking statements. Forward-looking statements are
based on the Company's experience, current beliefs, assumptions, information and
perception of historical trends available to the Company, and are subject to a
variety of risks and uncertainties including, but not limited to those
associated with resource definition and expected reserves and contingent and
prospective resources estimates, unanticipated costs and expenses, the
consummation of the proposed acquisition of OML 30, regulatory approval,
fluctuating oil and gas prices, expected future production levels and timing,
the ability to access sufficient capital to finance future development and
credit risks, changes in regulatory framework in applicable jurisdictions where
the Company has oil and gas assets, including changes to regulatory approval
process and land-use designations, royalty, tax, environmental, greenhouse gas,
carbon and other laws or regulations and the impact thereof and the costs
associated with compliance. Although the Company believes that the expectations
represented by such forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct.
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 conditions precedent to completion of
the proposed acquisition of OML 30 will be satisfied or waived. Readers are
cautioned that the assumptions and factors discussed in this information release
are not exhaustive and readers are not to place undue reliance on
forward-looking statements as our actual results may differ materially from
those expressed or implied. The Company disclaims any intention or obligation to
update or revise any forward-looking statements as a result of new information,
future events or otherwise, subsequent to the date of this news release, except
as required under applicable legislation. The forward-looking statements speak
only as of the date of this news release and are expressly qualified by these
cautionary statements. Readers are cautioned that the foregoing lists are not
exhaustive and are made as at the date hereof. For a full discussion of material
risk factors, see the section entitled "Risks" in the Annual Review included in
our most recently filed Annual Report for the year ending 31 December 2011,
which is available on the SEDAR website at www.sedar.com or the Company's
website under the tab "Reports" at
http://www.heritageoilplc.com/annualReports.cfm. Statements in this news release
relating to reserves and resources are deemed to be forward-looking information,
as they involve the implied assessment, based on certain estimates and
assumptions, that the described reserves and resources, as the case may be,
exist in the quantities predicted or estimated, and can be profitably produced
in the future. This news release contains estimates of the Company's contingent
resources. There is no certainty that it will be commercially viable to produce
any portion of the Company's contingent resources. The assumptions relating to
the Company's reserves and resources are contained in the CPR.
Forward-looking statements appear in a number of places in the CPR. The CPR
reproduces data derived from studies conducted on behalf of the Company relating
to its interest in reserves and resources of crude oil and gas in certain of the
Company's properties and the reserves and resources of crude oil and gas of OML
30, and contains projections and estimates relating to the Company's current
plans regarding volume of crude oil and gas, well development, amount and type
of equipment and transportation infrastructure necessary to implement the
Company's exploration and production plans and associated timeline and capital
and operating expenditures required to purchase or build such equipment and
infrastructure. In estimating facilities and costs estimates for OML 30,
including capital expenditure, drilling costs, operating costs and abandonment
costs, RPS relied on recent Company studies together with in-house RPS data. The
estimates and projections contained in the CPR are based certain assumptions,
such as geological and engineering estimates (which have inherent
uncertainties), the assumed effects of regulation by governmental agencies, the
assumed fiscal regime and tax on the extraction of commercial minerals and
estimates of future commodity prices, operating costs and development costs,
which may prove to be incorrect.
The projections and estimates contained in the CPR may differ materially from
actual results. The Company may not pursue its exploration and development plans
in their current form or on the timelines proposed in the CPR, or development or
operating costs may differ materially from those assumed by RPS in the
preparation of the CPR. There can be no assurances that the results and events
contemplated by the forward-looking statements contained in the CPR will, in
fact, occur.
CAUTIONARY NOTE REGARDING REPORTING STANDARDS
Unless otherwise indicated, RPS has, in compiling the CPR, used the definitions
and guidelines set out by the 2007 SPE/WPC/AAPG/SPEE Petroleum Resource
Management System ("PRMS") and has not used the standards of reserves
measurement applied by the US Securities and Exchange Commission ("SEC"). The
SEC standards differ from PRMS. The SEC permits oil and gas companies, in their
filings with the SEC, to disclose only proved reserves, probable reserves and
possible reserves, each term as defined by the SEC. This announcement contains
data, such as prospective and contingent resources, presented in accordance with
PRMS standards, which the SEC's guidelines would prohibit the Company from
including in filings with the SEC. Accordingly, information concerning
descriptions of oil and gas reserves and resources contained in this document
may not be comparable to information required or permitted to be made public by
US or other international companies engaged in oil and gas producing activities
and subject to the reporting and disclosure requirements of the SEC.
National Instrument 51-101 ("NI 51-101") of the Canadian Securities
Administrators imposes oil and gas disclosure standards for public companies in
Canada engaged in oil and gas activities. The Company and Heritage Oil
Corporation have obtained an exemption from Canadian securities regulatory
authorities to permit them to provide disclosure in accordance with the relevant
legal requirements for public companies in the United Kingdom. This facilitates
comparability of oil and gas disclosure with that provided by the United Kingdom
and other international issuers, given that the Company is listed on the United
Kingdom capital markets.
Accordingly, the reserves and resources data and other oil and gas information
included in this press release is disclosed in accordance with United Kingdom
disclosure requirements and practices. Such information, as well as the
information that the Company and Heritage Oil Corporation disclose in the future
in reliance on the exemption, may differ from the corresponding information
prepared in accordance with NI 51-101 standards.
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