Genel Enerji, a Turkish firm exporting crude from Iraqi Kurdistan, agrees to merge with Canada's Heritage Oil.
Heritage and Enerji in US$5.5bn deal
Genel Enerji, a Turkish firm exporting crude from Iraqi Kurdistan, has agreed to merge with Canada's Heritage Oil in a strategic deal aimed at accelerating the development of billions of barrels of oil from discoveries in northern Iraq and Uganda. If approved by a majority of Heritage's shareholders, the stock transaction would create a combined company, HeritaGE, worth about US$5.5billion, with substantial cash flow from which to fund development, according to Paul Atherton, the chief financial officer of Heritage.
"We see this as an opportunity whereby we can build a new regional giant," he said. The "reverse takeover" agreement calls for Heritage, whose stock trades on exchanges in London and Toronto, to double its number of shares outstanding in order to give Cukurova Group, the Turkish conglomerate that owns Genel, a 50 per cent stake in the merged company. Mehmet Sepil, the Genel chief executive, said the combination, which he would also head, would create "a significant main board listed company with a strong financial capability" and access to international capital markets and expertise.
On June 1, Genel started exporting about 30,000 barrels per day of crude from two northern Iraqi fields, after Baghdad and the Kurdistan regional government reached a deal to kick-start exports from the Kurdish region, breaking a long-standing impasse. Heritage, an oil exploration company with negligible production, last month announced a large oil discovery in Kurdistan that it estimated could contain up to three billion barrels of recoverable crude. The company also has substantial oil reserves in Uganda awaiting development.
Privately held Cukurova, controlled by the Turkish magnate, Mehmet Karamehmet, is one of Turkey's biggest conglomerates, with interests spanning the telecommunications, media, banking and industrial sectors. email@example.com