Malta oil exploration programme 'progressing' - Heritage Oil

The Canadian company, says in an operational update published today, that exploration work programmes are progressing in Tanzania, Mali and Malta.

In March 2008, Libya issued a formal letter warning Heritage Oil Company Ltd – which had been contracted by Malta three months earlier  to undertake oil exploration in the region – to desist from any activity in an area that the Great Libyan Arab Socialist Jamahiriya considered part of its territory.

Malta also claims part of the same continental shelf as its own – in particular, an 8,000 square metre stretch designated as ‘Area 7’ – but the Foreign Ministry stopped short of formally protesting when the Libyan government issued a concession to Sirte Oil Company Ltd to carry out oil exploration in the area.

A concession map published by Libya’s National Oil Corporation in 2007 clearly indicates that the area ceded to Sirte Oil Co. under this agreement covers the same territory for which Malta had granted a concession to Heritage Oil.

But while Heritage Oil has yet to start its operations on account of threats of legal action by Libya, Sirte’s operations are already under way.

The company recently rejected a US$1.9 billion takeover approach from a Middle Eastern company. It said it has a strong balance sheet and will continue to consider value adding opportunities.

As at 31 March 2011, Heritage had a cash position of more than US$570 million, excluding amounts related to the tax dispute of approximately US$405 million Arbitration proceedings commenced in London against the Government of the Republic of Uganda in May 201.

In January 2011, Heritage announced the discovery of the largest gas field in Iraq for the last 30 years.

Appraisal drilling on the Miran structure continues at the beginning of August with the Miran West-3 well which will be an angled well targeting the flanks of the Jurassic structure. The well bore will be designed to optimally intercept the fracture networks with the benefit of the current 3D seismic survey. It is planned that two rigs will be drilling by the end of the year with exploration drilling on the Miran East structure.

The 3D seismic acquisition across the Miran structure is progressing well and is being analysed in separate tranches to expedite understanding of the structure. Interpretation of the first fast track data is anticipated to start shortly.

The seismic survey was extended by approximately 35% after the success of the Miran West-2 well and acquisition of the original survey is nearly complete. In addition, a 2D seismic survey over the southern parts of the Miran Block is planned to commence in the summer which will define other potential prospects on the Block.

The conceptual study for the Miran gas development and processing facilities has begun. The initial priority will be to satisfy local gas demand by supplying produced gas, on commercial terms, to local power stations and other end-users in the Sulymaniyah region in 2013. Discussions with the Kurdistan Regional Government continue.

Early production of the gas will also result in early associated condensate and oil production with full production of the Field expected to commence in 2015 with exports to Turkey/Europe.