Calgary, Alberta, July 19 - Heritage Oil Corporation (TSX: HOC) announced today that Maurel et Prom exercised its option to acquire Heritage's overriding royalty in the Republic of Congo on June 30, 2004 and the Company has received net cash of US$9.4 million. The total cash consideration on exercise was US$16.4 million, US$7 million has been used to acquire a further 7% interest in the Noumbi Licence, in the Republic of Congo, in accordance with the previously announced agreement.
In summary, Heritage has received net cash and loan notes of US$24.6 million, acquired an additional 7% of the Noumbi Exploration Permit for US$7 million and could receive an additional US$10.75 million if Maurel et Prom sells its interest in the M'Boundi Field and Kouilou Exploration Permit in the Republic of Congo within 18 months (for a certain minimum consideration).
It is Heritage's intention to sell the US$14 million loan note and it is in discussion with a number of interested parties. Following this anticipated sale, Heritage will have cash and cash equivalents of approximately US$42.3 million (Cdn$57.9 million), equating to Cdn$2.70 per issued share and an estimated net asset value of US$110 million (Cdn$151 million), equating to Cdn$7.13 per share. This value does not include any benefit from the contingent consideration of up to US$10.75 million.
"This transaction further strengthens an already solid balance sheet, providing cash to fund the accelerated work program in Uganda and new development projects which the Company is considering," said Chairman and CEO Micael Gulbenkian. "In addition, the increased interest in the Noumbi Licence gives us an opportunity for significant future growth in our Congo reserve base."
The additional 7% Noumbi interest increases the Company's holding in this licence to 14%. The Noumbi Licence, north of the Kouilou Permit's large M'Boundi oil field, holds considerable exploration potential in the Vandji sandstone, in particular the Doungou prospect on the same geological trend as the Kouakouala and M'Boundi fields.
