Heritage Oil Corporation has entered into an agreement with Afren PLC to sell the entire share capital of Heritage Congo Limited, which holds the Company's interests in the Republic of Congo (Brazzaville), for the following consideration:
• Cash of US$28 million, with $26 million paid on closing and $2 million placed in a security account;
• 1,500,000 Afren warrants, with a term of five years and an exercise price of (pnds stlg)0.60 GBP Sterling per share. Afren is quoted on the AIM market of the London Stock Exchange in the UK (symbol AFR);
• An overriding royalty of 15% over a 30% working interest in the Kouakouala B license in relation to the Mengo Field; and
• An additional 500,000 warrants in Afren, with a term of five years, and an exercise price of (pnds stlg)0.80 GBP Sterling per share, issued upon the satisfaction of certain conditions.
The sale of the Congolese assets is expected to close later this year, subject to certain conditions precedent, including the waiver of pre-emption rights by the existing partners, which the Company expects will be met.
Afren is an independent UK public limited company with an exclusive focus on oil and gas exploration and production activities in Africa with a current market capitalization of approximately (pnds stlg) 98 million GBP Sterling, US$185 million.
The Congolese assets include a 25% working interest in the Kouakouala A license containing the Kouakouala field, which had an average gross production of 1,093 barrels per day in the first quarter of 2006, and a 14% working interest in the Noumbi exploration permit.
Micael Gulbenkian, Chairman & CEO said: "The disposal of our interests in Congo is in line with our stated strategy of refocusing the Company into our core areas. We believe the cash generated from this sale can be better deployed to generate enhanced shareholder values."
Nanes Delorme Capital LLC acted as sole financial adviser to Heritage in the transaction. Nanes Delorme Capital LLC is a U.S. boutique financial advisory services firm involved in a wide range of investment banking and other broker/dealer related activities and is a member of the National Association of Securities Dealers (NASD), the Securities Investor Protection Corporation (SIPC) and the Municipal Securities Rulemaking Board (MSRB). Its services include debt and equity private placements, institutional equities and fixed income trading, asset allocation models, portfolio strategy and concentrated stock diversification risk management and hedging strategy. The firm specializes in merger and acquisition advisory services to the oil and gas industry.