Heritage Oil announces interim results for the six months ended 30 June 2013

Thursday, August 29, 2013
  • Heritage's operations have been transformed by the acquisition of an interest in OML 30, Nigeria.
  • Very strong growth in revenues in the first half of the year with $238 million generated from operations in Nigeria and Russia.
  • Gross production from OML 30, Nigeria, for the second half of 2013 is expected to average 45,000 bopd, nearly triple that of the first half of the year.

Heritage Oil Plc (LSE: HOIL) announces the publication of its interim results for the six months ended 30 June 2013. All dollars are US dollars unless otherwise stated.

Operational Highlights

  • Heritage's operations have been transformed by the acquisition of an interest in OML 30, Nigeria
  • OML 30 achieved record gross production, since acquisition, of c.44,000 bopd in August 2013, with a first half average gross production for the licence of 15,327 bopd
  • Net average daily production of 7,197 bopd in the first half 2013. Production, net to Heritage, for the month of July 2013 averaged c.11,000 bopd, over 50% higher than the first half of the year
  • Continued the work programmes in Tanzania through the processing of 2D seismic on Rukwa and the processing and interpretation of seismic across the Kyela licence
  • Expanded the exploration portfolio with the farm-in to two licences in Papua New Guinea ("PNG"); Petroleum Prospecting Licence No:319 ("PPL 319") and Petroleum Retention Licence No:13 ("PRL 13"), which are in a proven hydrocarbon bearing region
  • Acquired first 62 kilometres of seismic across the Tuyuwopi structure in PPL 319, PNG, confirming a drilling location

Corporate Highlights

  • Very strong growth in revenues in the first half of the year with $238 million generated from operations in Nigeria and Russia
  • Cash generated from operations of $135 million in the six months ended 30 June 2013
  • Cash position as at 30 June 2013 of approximately $113 million, excluding $51 million used as part security in respect of OML 30 which was released back to the Company on 22 August 2013 and replaced with alternative security granted by Heritage
  • Successfully completed the refinancing of the bridge loan facility with a five year $500 million Senior Secured Revolving Reserves Based Lending Facility
  • Heritage has sought leave to appeal to the High Court the judgment in the English Commercial Court case brought against the Company and Heritage Oil & Gas Limited, received in June 2013

Outlook

  • Gross production from OML 30, Nigeria, for the second half of 2013 is expected to average 45,000 bopd, nearly triple that of the first half of the year. This results in a full year expected average for 2013 of c.30,000 bopd
  • Average gross production for 2014 is estimated in the range of 60,000 to 65,000 bopd
  • The increase in production from OML 30 for the remainder of this year will be achieved by the installation of new equipment, working over existing wells and commencing production from the Uzere West field which has been shut-in for nearly two years
  • First exploration drilling in Tanzania and PNG slated for 2014
  • Development drilling of OML 30, Nigeria, scheduled to commence in the summer of 2014

Tony Buckingham, Chief Executive Officer, commented:

"We have started the second half of the year remaining resolutely focused on our existing operations in Nigeria to ensure we extract maximum value from our asset. Our ongoing operations have been transformed with record revenues, profits and cash flows achieved. We expect to see further significant production gains during the remainder of the year from the operational, engineering and comprehensive community programmes undertaken so far. Considerable cash flow can be generated from our OML 30 interests to fund our exploration portfolio in the short term and longer term provide surplus funds for a sustainable dividend stream to our investors. Activity will be focused on delivering production growth over the next twelve months whilst also providing a step up in exploration drilling. The Company is positioned to offer a balanced portfolio with upside from both production and exploration."

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More

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