ELNI FINALLY BUYS UGANDA OIL FIELDS AT A PRICE OF USD 1.5 BILLION, ENDING SPECULATIONS ABOUT THE DEAL.

Business Report By Leo OderaOmolo In Kisumu City’

HERITAGE Oil, the multinational oil firm exploring oil and gas in Uganda has finally entered into a sale-purchase agreement with Eni Spa, an Italian energy giant, for the sale of its 50 per cent interest in Block 1 and 3A oil fields in Albertine region.

The consideration comprises USD 1.35 billion in cash, and a further contingent, deferred cash  consideration of either USDS 150 million, or an interest in a mutually agreed producing field, independently valued at a similar amount, Heritage announced yesterday.

In an article sourced in London and published in its to-day edition, the government owned NEWVISION quoted at length Mr. Tony Buckingham, the firm’s CEO, as saying that the transaction would create  a significant shareholder value at a critical juncture in Ugandan asset’s life circle.

“We are delighted to enter into this binding agreement with Eni, whom we believe is well positioned to further our work in Uganda, and realize production at the earliest possible time frame”.

In the context of the proposed transaction, the Heritage board believes that there is a provision in the joint operating agreement with Tullow that could give rise  to a right of pre-emption in favor of Tullow.

Heritage, according to the report, will notify Tullow of the proposed transaction, which has the right to acquire the disposed assets on the same terms and condition as agreed with Eni without reservation.

It says, Tullow secured additional financing, bringing its total debt totality to USD 2 billion, although analysts point out that it would need more funds to exercise the option and maintain spending on other key projects.

In 1997, the Heritage group become the first licensed oil and gas company in almost 60 years, for actively prospering in Uganda, after they were awarded a license covering the original Block-3 in the Lake Albert Basin in Western Uganda.

In 2001, the firm sold 50 per cent of their license to Energy Africa, which were subsequently acquired by Tullow.

Thirty seven holes will have been drilled in the Albert Basin since the beginning of the 2006, 26 of which were with oil deposits, three of them testing over 1200 barrels of oil per day.

The Ugandan government has repeatedly stated in the recent past that it wanted to achieve early production as a stepping stone to growth and important national economic output.

This now brings to an end the weeks of speculations and rumors, including the alleged Libya’s interference in the oil drilling in Uganda.

Ends