Heritage Oil drilling ‘could slip further’ after Libyan farm-out

Heritage Oil's high-impact Malta exploration well has been put back to the end of 2012 and possibly to 2013, having previously been pencilled in for summer 2012 the advisory firm Macquarie said after Heritage issued their interim directors statement.

"While the value proposition of this 500mmbl prospect is large (we carry a risked value of 27p and an unrisked value of 373p), we believe that drilling could slip further. "Farming out this prospect would help alleviate concerns on timing and have obvious benefits for the balance sheet with well costs estimated at $60m gross."

Oil industry experts who spoke to MaltaToday said the company's farm-out to the Libyan SOS may yet confirm its interest lie in Libyan oilfields rather than drilling Maltese prospects.

Heritage Oil Plc recently announced that a wholly owned subsidiary had acquired a controlling 51% interest in Sahara Oil Services Holdings Limited (SOSH) which holds the necessary long term permits and licences to provide oil field services in Libya, for a 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.

SOSH 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 licences to provide full oil field services in Libya, including the ability to drill onshore and offshore and hold both oil and gas licences. 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) to explore ways to assist the NTC and the state oil companies rehabilitate certain of their existing fields and recommence production.

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.