Heritage Oil cancels $6bn Genel Energie merger
Recent cash windfall plus Kurdistan payment concerns behind decision
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Canadian exploration and production company Heritage Oil has announced that its proposed US$6 billion merger with the Turkish company Genel Energie has been cancelled.
In a statement the company said that the sale of two oil blocks it owns in Uganda to the Italian supermajor Eni for US$1.5 billion coupled with concerns over payment mechanisms in Iraqi Kurdistan is behind the decision.
“Following entry into the LOI with Eni, and in light of the continuing situation in Kurdistan where, in particular, the revenue payment mechanism for oil exports has not yet been established, discussions with Genel have been terminated,” the statement said.
“Heritage will continue to have operations in seven countries and will use some of the disposal proceeds in the exploration, appraisal and development of these areas, in particular in the Kurdistan Region of Iraq which remains a core area of focus,” it added.
Heritage decided to sell the two Ugandan blocks, located at Lake Albert, to Eni after deciding that they were too expensive to develop due to the remote location of both fields.