Date Closed

November 9, 2012

Lead Office

London, UK

Value

850.00 Million USD

On November 9, 2012, Heritage Oil announced that Shoreline Natural Resources Limited, a special purpose private Nigerian company formed between a subsidiary of Heritage and a local Nigerian partner, Shoreline Power Company Limited, had successfully completed the acquisition of a 45% participating interest in a producing oil mining licence in Nigeria, together with a 45% interest in other assets under the joint operating agreement for OML 30, for a total cash consideration of US$850 million, net of costs.  In addition, Shoreline has paid a transfer tax of US$10.625 million, being 1.25% of the value of the consideration payable for the Acquisition, to the Federal Government of Nigeria, pursuant to the provisions of Paragraph 15 of the First Schedule to the Petroleum Act of Nigeria. The tax was paid by Shoreline on behalf of the assignors, in accordance with the Sale and Purchase Agreement. The remaining 55% participating interest is held by the Nigerian Petroleum Development Company, a subsidiary of the Nigerian National Petroleum Corporation.

The Acquisition was partially financed by a US$550 million secured bridge finance facility provided by The Standard Bank of South Africa. Following satisfaction of certain release conditions post completion of the Acquisition, Shoreline intends to refinance the Standard Bank Plc bridge facility by implementing a long-term lending facility in respect of, and secured by, its interest in OML 30, arranged by Standard Bank Plc, following which there would be no recourse to the Heritage Group.

Standard Bank Plc has also provided a US$50 million letter of credit to NPDC, to cover Shoreline's working capital requirements under the joint operating agreement for OML 30. Heritage has agreed to provide cash collateral of US$51 million to Standard Bank Plc to guarantee this Letter of Credit which also covers any interest which may be due under the Letter of Credit.

OML 30 is one of the largest onshore licences in Nigeria, with eight producing fields and associated infrastructure, including an interest in a segment of the Trans Forcados pipeline; gross proved and probable reserves of 1,114 mmbbls of oil, estimated by independent technical consultants RPS Energy Consultants Limited; current production of c.35,000 bopd; and economic valuation of proved plus probable reserves estimated by RPS Energy at between US$3,089 million and US$3,789 million.

Heritage, headquartered in Jersey, is an independent oil and gas exploration and production company.

McCarthy Tétrault LLP acted as English and Canadian counsel to Heritage Oil, as acquiror.