Heritage Oil announced that a wholly owned subsidiary has acquired a controlling 51% interest in Sahara Oil Services Holdings Limited (SOSH) which holds the necessary long term permits and licenses to provide oil field services in Libya, for cash consideration of US $19.5 million. Through this acquisition Heritage is looking to play a significant role in the future development of the oil and gas industry in Libya.
Heritage Energy International Limited, a wholly owned subsidiary of Heritage, has, following consultation with local parties, acquired a 51% equity interest and control of SOSH which owns the entire share capital of SOS, a Libyan registered company providing services to the oil industry, for cash consideration of US $19.5 million.
SOS was established in April 2009 and has been granted long-term licenses to provide full oil field services in Libya, including the ability to drill onshore and offshore and hold both oil and gas licenses. SOS is based in Benghazi with a large operational yard and equipment.
During the last five months, Heritage established a base in Benghazi and has been in discussions with senior members of the National Transitional Council (NTC), the legitimate and recognized government of Libya, the Executive Committee which is the executive arm of the NTC and the National Oil Company and certain subsidiaries. The dialogue with these parties continues through SOS with Heritage exploring ways to assist the NTC and the state oil companies rehabilitate certain of their existing fields and recommence production.
Heritage has a strong cash position and a portfolio with an exploration bias. The acquisition of SOSH will help diversify the current portfolio by gaining access to some large producing fields in Libya. In addition, Heritage plans to use SOS to assist with the drilling of its targets offshore Malta and is actively looking to contract a rig to bring forward the drilling of Area 7. Heritage has an extensive data set of approximately 5,000 kilometres of 2D seismic, including data acquired in July 2011, which indicates the presence of multiple prospects and leads across Areas 2 and 7. The initial well planned to be drilled will be targeting c.500 mmboe.
Tony Buckingham, CEO, commented, "We are delighted to have acquired a controlling interest in an established oil field services company in Libya. We consider that Heritage, through SOS, is uniquely positioned to pursue field rehabilitation activities and be awarded exploration and production licenses as we have operator status. This means Heritage is well placed to play a significant role in the future oil and gas industry in Libya. This acquisition is consistent with Heritage's first mover strategy of entering regions with vast hydrocarbon wealth where we have a strategic advantage. Ongoing discussions with the NTC and other stakeholders continue to highlight opportunities with the potential to transform Heritage."
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