Kurdistan takes 17% stake in Heritage/Genel merger
Kurdistan Regional Government waives $1.1bn fee in return for shares
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Heritage Oil has announced that Kurdistan Regional Government (KRG) is to become a major shareholder in the enlarged company that will be created when the London-listed exploration and production (E&P) company completes its proposed merger with Genel Energi of Turkey.
The KRG will receive 17% of the new company’s shares in return for waiving a US$1.1 billion payment Genel Energy were due to make as a “capacity building liability” – basically a payment for drilling and oil production rights in the region.
“We recognise the important role Turkey is playing in the region and are delighted that the KRG will be a significant long-term shareholder, thereby providing their endorsement and support to the enlarged group,” Tony Buckingham, CEO of Heritage said.
Heritage Oil agreed the merger deal with Genel back in June. The deal values the new company at US$5 billion.
Both companies believe that the move will result in the new company having the financial capacity to bring into production its enlarged development and exploration portfolio, create the infrastructure for the development of the Taq Taq and Miran assets in Kurdistan, while also generating significant cash flow following the commencement of oil exports on 1 June 2009.