Hertiage Oil

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Our Operations

Heritage typically focuses on regions which may have been overlooked and where it can participate as an early entrant. 


 

  • Nigeria

  • Russia

  • Papua New Guinea

  • Tanzania

  • Malta

  • Libya

  • Pakistan

  • Nigeria

    OML 30 is a world class asset with gross 2P oil reserves of over 1.1 billion barrels.

    Nigeria Maplegends

    Nigeria

    Gross production from OML 30 has reached over 50,000 bopd, in part from the benefit of continued maintenance and rehabilitation programmes. As a result of successful community relations programmes, production from the Uzere West Field recommenced in December 2013 after having been shut-in for over two years. In 2013, average production net to Heritage was 8,919 bopd at an average realised price of $114.70/bbl for total net revenues of $423 million. These revenues include November and December 2012 production sold in 2013. Production in Q4 2013 averaged c.13,300 bopd net to Heritage, 63% higher than the average of c.8,150 bopd for the first nine months of the year.

    The development of OML 30 remains the priority for the Company. All existing facilities have been reviewed to identify opportunities for improvement and maintenance. A number of comprehensive operational, engineering and community projects that commenced in 2013 are generating and contributing to significant production increases.

    Gas lift is the method of artificial lift within OML 30 and six of the eight fields have gas lift installed, with the two remaining fields planned to have gas lift installed within the next two years. Work on the gas lift systems continues and the installation of new gas lift compressors procured in 2013 is nearing completion. A further five new gas compressors have been ordered to be installed later this year. In addition, replacement of gas lift engines for the existing compressors, installation of diesel generators and replacement of the instrument air compressors is in progress.

    Wellhead maintenance has been completed on wells throughout the licence in preparation of flow line and gas line repairs. An extensive list of well optimisation activities continues to be refined. Over the course of this year work will continue aimed at further optimisation of the existing wells and facilities.

    The drilling of new wells, planned to commence in the second half of 2014, should provide a significant increase to production with the longer term potential estimated at approximately 300,000 bopd gross.

    OML 30 lies onshore within the Niger Delta in one of the most prolific oil and gas provinces in the world. The licence covers 1,097 square kilometres and includes eight producing fields with oil and gas contained in numerous stacked reservoirs. The fields are deltaic shallow marine shelf sands at intermediate depth. The fields each contain up to 40 stacked reservoirs and the reservoirs are underlain by substantial aquifers that provide nearly infinite pressure support. The oil is good quality 30° API and typically sells at over a 2% premium to Brent.

    Since 1961 over 200 wells have been drilled on the licence and the strong aquifer support has enabled the majority of these to be producers. There is the potential to both stabilise and increase production in the near term through refurbishing infrastructure and restarting non-producing existing wells. Additionally, existing wells will be worked over to further increase production.

    The licence benefits from infrastructure being in place with nine flow stations that have the capacity to handle 395,000 bpd thereby allowing for the projected production growth. The facilities have been robustly designed and constructed, and benefit from a standard design so equipment can easily be replaced if required.

    The OML 30 acquisition included a 45% interest in the segment of the TFP that transports liquids from OML 30 to the Forcados Terminal. The 97 kilometre long pipeline is 26 inch in diameter and largely buried along most of its length. It has a capacity of 850,000 bpd. The TFP is used by several other operators and provides additional revenue for OML 30 through the tariffs charged. Maintenance and construction work was also undertaken on the Trans Forcados Pipeline (“TFP”) to complete work that was initiated by the previous operator but delayed due to the prolonged sales process.

    In Nigeria, engagement with local communities is fundamental to driving an improved performance from the licence and in generating shared wealth to all stakeholders. To this extent, a not for profit Non-Government Organisation (“NGO”), registered and working in Nigeria and West Africa for over 20 years, was engaged to work with the National Petroleum Development Company, the operator, and Shoreline to ensure a cohesive approach to community issues. Conclusions from extensive consultations with communities within the OML 30 licence area allowed Shoreline to gain an understanding of the fundamental issues of concern arising from activities in the area. This enabled Shoreline to engage accordingly in the interest of the impacted communities as well as helping to restore and build an environment such that all can benefit.

    In December 2012, Heritage announced that Shoreline Power had exercised its call option to acquire a 30% economic interest in Shoreline. Completion of the transaction is expected imminently, following which Heritage will have an effective working interest in OML 30 of 30.71%. On completion, Heritage will receive cash of $31.5 million and the balance will be provided by way of an interest bearing, secured loan from Heritage to Shoreline Power.

    In November 2013, Heritage announced that a wholly owned subsidiary has entered into a joint venture agreement with Bayelsa Oil Company, owned by the Bayelsa State government and another Nigerian company, to establish an indigenous Nigerian oil company called Petrobay. Heritage has a 45% equity interest in Petrobay which combines Bayelsa Oil Company’s indigenous support from state government and Heritage’s strong technical and financial capability.

    A number of upstream assets in the state of Bayelsa and the larger Niger Delta region have been identified and Petrobay will engage in both bilateral and competitive auction processes to acquire these assets. Petrobay will look to enable Heritage to build upon its current interests in Nigeria, which is Africa’s largest oil producer and contains the second largest oil reserves in the continent.

    OML 30 – SUMMARY Of RESERVES(1,2)

      Gross Remaining Reserves  Heritage Group Net
    Entitlement Reserves 
      Gross of Royalty (mmstb) Net of Royalty (mmstb) Gross of
    Royalty (mmstb)
    Net of
    Royalty (mmstb)
    Proved
    Reserves (1P)
    538 430 168 134

    Proved &

    Probable
    Reserves (2P)

    1,114 891 347 277
    Proved &
    Probable & Possible
    Reserves (3P)
    1,733 1,387  539 431

    1 Post exercise of Shoreline Power option.
    2 As per RPS, as at 31 March 2012.

  • Russia

    Since 2005, the Group has held a 95% equity interest in ChumpassNefteDobycha Limited, a Russian company whose sole asset is a 100% interest in the Zapadno Chumpasskoye licence.

    Russia Maplegends

    Russia

    The Zapadno Chumpasskoye licence is in the hydrocarbon-rich West Siberian province of Khanty-Mansiysk, approximately 100 kilometres from the city of Nizhnevartovsk and in the area of the region’s prolific Samotlor oilfield, which makes it accessible to existing infrastructure. The licence contains the Zapadno Chumpasskoye Field, discovered in 1997. A total of 13 wells have been drilled on the licence including four by the Group. The Chumpasskoye crude is light, sweet (42° API) oil, with moderate gas-to-oil ratios.

    Since 2006, the Group has acquired 2D seismic data covering an area of 200 kilometres, constructed pilot production facilities, commenced field production, drilled four wells and re-entered existing well 226. Production facilities were commissioned and production commenced in May 2007. A fracture stimulation was completed on well P3, well P2 was converted to an injector for water disposal and pressure maintenance, a water shut-off completed on well P4 and ESPs installed on all producers to arrest the natural production decline. Based on positive results from the horizontal well (well 363) drilled in August 2011, a revised field development plan was submitted for Zapadno Chumpasskoye replacing vertical producers with horizontal wells. The change in well type should result in a 50% reduction in the number of production wells required to develop the field and a corresponding reduction in drilling expenditure of approximately $200 million. The development proposal was approved by regulatory authorities at the end of December 2012. Preparations continue for further development drilling in 2014/2015.

    Production averaged 577 bopd for the year, a decrease of 5% year-on-year due to natural well decline and a temporary mechanical issue in 2013 that was resolved later that year.

    INDEPENDENTLY ESTIMATED RESERVES AT THE ZAPADNO CHUMPASSKOYE FIELD1

     

    Net working and
    entitlement
    reserves
    MMbbls

    Net present
    value
    ($ million
    in money
    of the day)

    Proved 23 152

    Probable
    Additional

    42 284
    Total Proved
    + Probable
    65 336

    Total Proved +
    Probable +
    Possible
    163 976

    1 A summary of RPS’s net working interest reserves and their Net Present Value, based on forecast prices and costs, discounted at 10%, as of 31 March 2012.

  • Papua New Guinea

    In 2013 Heritage expanded its portfolio into onshore Papua New Guinea ("PNG") through the farm-in to four licences. This acreage provides the opportunity to discover large gas reserves at a time when regional gas demand is growing rapidly.

    Png Maplegends

    PNG

     

    PPL 319/PRL 13

    In April 2013, Heritage announced the farm-in to Petroleum PPL 319 and PRL 13. The contiguous licences are located onshore and have respective gross areas of approximately 2,025 and 160 square kilometres. Heritage has been appointed operator, and in return for earning an 80% working interest in both licences Heritage will fund the costs of seismic acquisition and drilling an exploration well. In addition, Heritage made a $4 million contribution to Esrey Energy Limited’s (formerly LNG Energy Limited) back costs on the licences. The licences are located at the junction of the Papuan fold belt and the Miocene carbonate platform where there are producing fields and discoveries including the multi-TCF Triceratops and Elk/Antelope gas discoveries.

    The licences benefit from being close to current and underconstruction infrastructure with the Kutubu oil export pipeline and the PNG Liquefied Natural Gas pipeline crossing the acreage. The licences also benefit from the Kikori River which provides a link to the open sea, thereby providing additional transport options.

    The work programme in 2013 began with the acquisition of the first 62 kilometres of 2D seismic data over the Tuyuwopi structure in PPL 319. Processing of the new seismic data, combined with the reprocessing of c.300 kilometres of legacy seismic data over these licences was completed in late February 2014. Further seismic data acquisition over leads within the licences has commenced in first quarter 2014, in order to firm up these leads as additional drilling prospects. Well and logistical planning continues to enable drilling of the Tuyuwopi prospect in the short term.

    PPL 337

    In October 2013, Heritage announced the farm-in to PPL 337, which has a gross area of approximately 5,508 square kilometres. Heritage will earn a 70% working interest and operatorship, by funding the costs of drilling two shallow exploration wells. In addition, Heritage made a $500,000 contribution to Kina Petroleum’s back costs on the licence and in the event of a discovery, Heritage will carry Kina Petroleum’s costs of up to 100 kilometres of appraisal seismic data.

    PPL 337 is located within the south-eastern part of the North New Guinea Basin, in the underexplored Ramu Sub Basin. To date, three prospects and one advanced lead have been identified on the licence. A local depocentre has been identified in proximity to mapped prospects and the presence of gas seeps within the licence indicates an active petroleum system. These mapped prospects are in clastic
    and carbonate reef geological settings, with principal exploration targets at the large Banam anticline with an area of over 200 square kilometres and potential reef structures in the north of the licence respectively.

    Legacy datasets, which include regional gravity and magnetic data, surface geological mapping, c.140 kilometres of 2D seismic acquired in 1997 and offset well data have been evaluated. Reprocessing of seismic data over the Banam anticline is ongoing.

    Two wells are proposed to be drilled this year; one located at the Raintree prospect where a Pliocene/Miocene age reef target is identified, and the second located on or adjacent to the Banam anticline where several Neogene age clastic targets have been identified. The shallow nature of the targets identified makes the early drilling of wells the most cost effective method of assessing the potential within the licence. Detailed well planning to enable drilling of the two wells in 2014 is ongoing.

    PPL 337 has good road access and is close to potential local gas markets and the deep water port of Madang, which may be suitable for LNG export.

    PPL 437

    In October 2013, Heritage announced the farm-in to PPL 437 that has a gross area of approximately 1,530 square kilometres. Heritage will earn an initial 30% working interest, by carrying Kina Petroleum’s seismic acquisition costs for a minimum of 100 kilometres of data and make a $300,000 contribution towards Kina Petroleum’s back costs on the licence. During this phase Heritage will be the operator of the seismic work programme. Additionally, Heritage has an option to acquire a further 20% working interest from Kina Petroleum and operatorship of the licence by carrying Kina Petroleum through the drilling of an exploration well.

    PPL 437 lies within a proven hydrocarbon system less than 20 kilometres north of the Elevala and Ketu c.1.0 TCF gas condensate fields and the recent Tingu-1 discovery well. Legacy datasets, which include regional gravity and magnetic data and surface geological mapping, in addition to c.250 kilometres of 2D seismic, have been evaluated. The identified prospectivity in the licence is within several structural leads imaged on this legacy seismic data which will be incorporated into this process with the aim of maturing these leads to drillable prospects within the next two years.

    The licence is located close to an existing gas pipeline from PNG LNG’s gas fields to the LNG plant in Port Moresby and gas commercialisation options for the Elevala and Ketu fields include a mid-scale LNG project with a LNG plant to be located at Daru.

     Blocks

    Area 
    (sq km)

    Date 
    Farm-in

    Heritage
    Equity1

    Partners

    Operator

    PPL 319 2,025 April 2013 80% Esrey Energy Heritage

    PRL 13

    160 April 2013 80% Esrey Energy Heritage

    PPL 337

    5,508 October 2013 70% Kina Petroleum Heritage

    PPL 437

    1,530 October 2013 30%

    Kina Petroleum

    Cott Oil & Gas

    Kina Petroleum

    1 Heritage will earn its equity by funding minimum work programmes.

  • Tanzania

    Heritage has two licences in Tanzania that are considered to be geologically analogous to the Lake Albert Basin in Uganda.

    Tanzania Maplegends

    Tanzania Map 02

    RUKWA

    In November 2011, Heritage announced the award of a PSA that covers virtually the entire Rukwa Rift Basin, split into two separate areas, Rukwa North and Rukwa South. Heritage is the operator with a 100% interest. A limited amount of exploration activity was undertaken in the region in the mid-1980s which resulted in the acquisition of c.2,300 kilometres of 2D seismic data and the drilling of two wells. Reprocessing of the legacy seismic data in Rukwa was completed in 2012 and the acquisition of c.600 kilometres of 2D seismic data completed in March 2013. This data was processed and initial interpretation indicated that the principal prospectivity lies in the Rukwa South licence area resulting in the Rukwa North licence being relinquished. Focused interpretation over the Rukwa South licence area has resulted in the identification of several prospects, which are believed to be geologically analogous to the Kingfisher oil discovery in Uganda. Detailed prospect mapping and evaluation is ongoing.

    KYELA

    In January 2012, Heritage was awarded the Kyela PSA covering the entire northern onshore area of the Lake Nyasa (Livingstone) Basin in Tanzania. The licence has never previously been targeted for hydrocarbon exploration. Gravity data over the area suggested the presence of a sedimentary section of sufficient thickness to allow for the generation of oil. The work programme commenced with the acquisition of a c.1,500 square kilometre very high resolution gravity survey. This indicated the presence of probable structural highs adjacent to a main depocentre corresponding to that observed on regional gravity data that is a potential hydrocarbon kitchen. A 100 kilometre reconnaissance seismic survey completed in January 2013 confirmed the presence of structures as indicated by the gravity data. A geochemical survey of the Kyela licence has been completed and interpretation of the data is continuing. Infill seismic acquisition, designed and positioned using all available data will increase the density of the seismic grid and enhance the mapping of potential prospects. The survey is planned for the second half of 2014.

    A multi-well drilling programme across the two licences is planned for 2014/2015.

    Satellite radar surveys indicate areas of wave-calming in Lake Rukwa and in Lake Nyasa that may be associated with oil seeps. In the event of a commercial oil discovery, at either Rukwa or Kyela, economic scoping shows the commercial viability of either rail export to Dar es Salaam or export by pipeline depending on exploration success.

    Heritage recognises that the Rukwa and Kyela licences share certain geological similarities with the hydrocarbon prolific Albert Basin of Uganda where Heritage has previous experience and had significant success.

    Blocks Area (sq km) Date awarded Heritage equity Partners Operator
    Rukwa South 8,745 November 2011 100% - Heritage
    Kyela 1,934 January 2012 100% - Heritage
  • Malta

    The Group holds a PSC with the Maltese government for a 100% interest in Areas 2 and 7 in the south-eastern offshore region of Malta.

    Malta Maplegends

    Malta

    The Maltese licences cover almost 18,000 square kilometres and are situated approximately 80 kilometres (Area 2) and 140 kilometres (Area 7) offshore, in water depths of up to approximately 300 metres. The two Areas are close to, and geologically similar to, a number of producing fields offshore Libya, such as the Bouri field, and Tunisia.

    With only one well previously drilled in Area 2, the Medina Bank-1 well in 1980 which did not reach its target, both licences are considered to be underexplored. Although drilled to a depth of 1,225 metres, the well failed to reach the deeper objective horizons, estimated to be between 1,500 and 4,500 metres.

    The interpretation of seismic data in Heritage’s extensive dataset of approximately 5,000 kilometres of 2D seismic, has confirmed a highly attractive Lower Eocene carbonate reef play. Detailed prospect level mapping within Area 7 has identified a prospect with both Eocene and Cretaceous reef targets. These primary targets are recognised as major hydrocarbon producing zones in the central part of the Mediterranean.

    In addition, the Company has recognised the presence of a south-tonorth trending shelf margin on the eastern part of the blocks where a number of attractive reef prospects have been mapped.

    Preparations are underway to enable the drilling of the prospect identified in Area 7 subject to relevant government approvals and the international boundary agreed.

    Area 2

    Area 
    (sq km)

    Date 
    Awarded

    Heritage
    Equity

    9,190 December 2007 100%

    Area 7

    Area 
    (sq km)

    Date 
    Awarded

    Heritage
    Equity

    8,778 December 2007 100%
  • Libya

    In August 2011, Heritage acquired a controlling 51% interest in Sahara Oil which holds the necessary long-term permits and licences to provide oil field services in Libya.

    Libya Maplegends

    Libya

    Heritage has pursued its strategy of “first mover advantage” through pursuing participation in the restoration of the Libyan oil production sector which presents a dynamic and evolving environment.

    Libya, which has the largest proven hydrocarbon reserves in Africa, is considered to be a highly attractive oil province due to the low cost of oil recovery, high quality oil which is generally sweet with API gravity ranging between 32–44º, proximity to European markets and well developed infrastructure.

    A wholly owned subsidiary of Heritage acquired a 51% equity interest and control of Sahara Oil which owns the entire share capital of Sahara, a Libyan registered company providing services to the oil industry.

    Sahara Oil 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. Our efforts have the aim of playing a key role in the substantial rehabilitation work needed to resume, maintain and increase Libya’s hydrocarbon production in line with National Oil Company (“NOC”) and Oil Ministry targets.

    Heritage established a base in Benghazi in the first half of 2011, having been in discussions with senior members of the National Transitional Council, the legitimate and recognised government of Libya at the time, as well as with its Executive Committee, the NOC and certain subsidiaries. The dialogue with parties in country that would enable Heritage to participate in the rehabilitation of Libya’s hydrocarbons sector is ongoing.

  • Pakistan

    Heritage is operator of two Blocks in Pakistan.

    Pakistan Maplegends

    Pakistan

    SANJAWI

    Heritage has a 54% interest and is operator of the Sanjawi licence (number 3068-2) in Zone II (Baluchistan), which was awarded in November 2007, and which covers a gross area of 2,258 square kilometres. The Block is considered prospective due to an oil discovery to the west, a number of gas fields to the south-east and the presence of oil seeps in the licence. The licence area is dominated by a series of broad east-west trending surface features including the large Dabbar and Warkan Shah anticlines, the former being some 300 square kilometres in area.

    ZAMZAMA NORTH

    In December 2008, Heritage obtained a 48% interest in the Zamzama North licence (number 2667-8) and was appointed operator. The Zamzama North licence covers an area of 1,229 square kilometres and is located in the south of Pakistan, in the western part of the Sindh Province, approximately 200 kilometres north-west of Hyderabad.

    There is considerable infrastructure in the area as one of the main pipelines runs through the licence and any discovered hydrocarbons could be readily connected. The Zamzama Gas Field, a major gas field in production, lies immediately to the south of, and adjacent to, Zamzama North.

    Using the current seismic database Heritage has mapped a number of structural prospects and leads and a drilling programme is under consideration. The database comprises some 1,000 kilometres of good quality 2D seismic data.

    Blocks

    Area (sqKm)

    Date awarded

    Heritage equity

    Partners

    Operator

    Sanjawi 2,258 November 2007

    54%

    Hycarbex

    America Energy

    Sprint Energy

    Trakker Energy

    Heritage
    Zamzama North 1,229 December 2008

    48%

    Hycarbex

    American Energy

    Sprint Energy

    Trakker Energy

    Heritage

Nigeria

OML 30 is a world class asset with gross 2P oil reserves of over 1.1 billion barrels.

Nigeria Maplegends

Nigeria

Gross production from OML 30 has reached over 50,000 bopd, in part from the benefit of continued maintenance and rehabilitation programmes. As a result of successful community relations programmes, production from the Uzere West Field recommenced in December 2013 after having been shut-in for over two years. In 2013, average production net to Heritage was 8,919 bopd at an average realised price of $114.70/bbl for total net revenues of $423 million. These revenues include November and December 2012 production sold in 2013. Production in Q4 2013 averaged c.13,300 bopd net to Heritage, 63% higher than the average of c.8,150 bopd for the first nine months of the year.

The development of OML 30 remains the priority for the Company. All existing facilities have been reviewed to identify opportunities for improvement and maintenance. A number of comprehensive operational, engineering and community projects that commenced in 2013 are generating and contributing to significant production increases.

Gas lift is the method of artificial lift within OML 30 and six of the eight fields have gas lift installed, with the two remaining fields planned to have gas lift installed within the next two years. Work on the gas lift systems continues and the installation of new gas lift compressors procured in 2013 is nearing completion. A further five new gas compressors have been ordered to be installed later this year. In addition, replacement of gas lift engines for the existing compressors, installation of diesel generators and replacement of the instrument air compressors is in progress.

Wellhead maintenance has been completed on wells throughout the licence in preparation of flow line and gas line repairs. An extensive list of well optimisation activities continues to be refined. Over the course of this year work will continue aimed at further optimisation of the existing wells and facilities.

The drilling of new wells, planned to commence in the second half of 2014, should provide a significant increase to production with the longer term potential estimated at approximately 300,000 bopd gross.

OML 30 lies onshore within the Niger Delta in one of the most prolific oil and gas provinces in the world. The licence covers 1,097 square kilometres and includes eight producing fields with oil and gas contained in numerous stacked reservoirs. The fields are deltaic shallow marine shelf sands at intermediate depth. The fields each contain up to 40 stacked reservoirs and the reservoirs are underlain by substantial aquifers that provide nearly infinite pressure support. The oil is good quality 30° API and typically sells at over a 2% premium to Brent.

Since 1961 over 200 wells have been drilled on the licence and the strong aquifer support has enabled the majority of these to be producers. There is the potential to both stabilise and increase production in the near term through refurbishing infrastructure and restarting non-producing existing wells. Additionally, existing wells will be worked over to further increase production.

The licence benefits from infrastructure being in place with nine flow stations that have the capacity to handle 395,000 bpd thereby allowing for the projected production growth. The facilities have been robustly designed and constructed, and benefit from a standard design so equipment can easily be replaced if required.

The OML 30 acquisition included a 45% interest in the segment of the TFP that transports liquids from OML 30 to the Forcados Terminal. The 97 kilometre long pipeline is 26 inch in diameter and largely buried along most of its length. It has a capacity of 850,000 bpd. The TFP is used by several other operators and provides additional revenue for OML 30 through the tariffs charged. Maintenance and construction work was also undertaken on the Trans Forcados Pipeline (“TFP”) to complete work that was initiated by the previous operator but delayed due to the prolonged sales process.

In Nigeria, engagement with local communities is fundamental to driving an improved performance from the licence and in generating shared wealth to all stakeholders. To this extent, a not for profit Non-Government Organisation (“NGO”), registered and working in Nigeria and West Africa for over 20 years, was engaged to work with the National Petroleum Development Company, the operator, and Shoreline to ensure a cohesive approach to community issues. Conclusions from extensive consultations with communities within the OML 30 licence area allowed Shoreline to gain an understanding of the fundamental issues of concern arising from activities in the area. This enabled Shoreline to engage accordingly in the interest of the impacted communities as well as helping to restore and build an environment such that all can benefit.

In December 2012, Heritage announced that Shoreline Power had exercised its call option to acquire a 30% economic interest in Shoreline. Completion of the transaction is expected imminently, following which Heritage will have an effective working interest in OML 30 of 30.71%. On completion, Heritage will receive cash of $31.5 million and the balance will be provided by way of an interest bearing, secured loan from Heritage to Shoreline Power.

In November 2013, Heritage announced that a wholly owned subsidiary has entered into a joint venture agreement with Bayelsa Oil Company, owned by the Bayelsa State government and another Nigerian company, to establish an indigenous Nigerian oil company called Petrobay. Heritage has a 45% equity interest in Petrobay which combines Bayelsa Oil Company’s indigenous support from state government and Heritage’s strong technical and financial capability.

A number of upstream assets in the state of Bayelsa and the larger Niger Delta region have been identified and Petrobay will engage in both bilateral and competitive auction processes to acquire these assets. Petrobay will look to enable Heritage to build upon its current interests in Nigeria, which is Africa’s largest oil producer and contains the second largest oil reserves in the continent.

OML 30 – SUMMARY Of RESERVES(1,2)

  Gross Remaining Reserves  Heritage Group Net
Entitlement Reserves 
  Gross of Royalty (mmstb) Net of Royalty (mmstb) Gross of
Royalty (mmstb)
Net of
Royalty (mmstb)
Proved
Reserves (1P)
538 430 168 134

Proved &

Probable
Reserves (2P)

1,114 891 347 277
Proved &
Probable & Possible
Reserves (3P)
1,733 1,387  539 431

1 Post exercise of Shoreline Power option.
2 As per RPS, as at 31 March 2012.

Russia

Since 2005, the Group has held a 95% equity interest in ChumpassNefteDobycha Limited, a Russian company whose sole asset is a 100% interest in the Zapadno Chumpasskoye licence.

Russia Maplegends

Russia

The Zapadno Chumpasskoye licence is in the hydrocarbon-rich West Siberian province of Khanty-Mansiysk, approximately 100 kilometres from the city of Nizhnevartovsk and in the area of the region’s prolific Samotlor oilfield, which makes it accessible to existing infrastructure. The licence contains the Zapadno Chumpasskoye Field, discovered in 1997. A total of 13 wells have been drilled on the licence including four by the Group. The Chumpasskoye crude is light, sweet (42° API) oil, with moderate gas-to-oil ratios.

Since 2006, the Group has acquired 2D seismic data covering an area of 200 kilometres, constructed pilot production facilities, commenced field production, drilled four wells and re-entered existing well 226. Production facilities were commissioned and production commenced in May 2007. A fracture stimulation was completed on well P3, well P2 was converted to an injector for water disposal and pressure maintenance, a water shut-off completed on well P4 and ESPs installed on all producers to arrest the natural production decline. Based on positive results from the horizontal well (well 363) drilled in August 2011, a revised field development plan was submitted for Zapadno Chumpasskoye replacing vertical producers with horizontal wells. The change in well type should result in a 50% reduction in the number of production wells required to develop the field and a corresponding reduction in drilling expenditure of approximately $200 million. The development proposal was approved by regulatory authorities at the end of December 2012. Preparations continue for further development drilling in 2014/2015.

Production averaged 577 bopd for the year, a decrease of 5% year-on-year due to natural well decline and a temporary mechanical issue in 2013 that was resolved later that year.

INDEPENDENTLY ESTIMATED RESERVES AT THE ZAPADNO CHUMPASSKOYE FIELD1

 

Net working and
entitlement
reserves
MMbbls

Net present
value
($ million
in money
of the day)

Proved 23 152

Probable
Additional

42 284
Total Proved
+ Probable
65 336

Total Proved +
Probable +
Possible
163 976

1 A summary of RPS’s net working interest reserves and their Net Present Value, based on forecast prices and costs, discounted at 10%, as of 31 March 2012.

Papua New Guinea

In 2013 Heritage expanded its portfolio into onshore Papua New Guinea ("PNG") through the farm-in to four licences. This acreage provides the opportunity to discover large gas reserves at a time when regional gas demand is growing rapidly.

Png Maplegends

PNG

 

PPL 319/PRL 13

In April 2013, Heritage announced the farm-in to Petroleum PPL 319 and PRL 13. The contiguous licences are located onshore and have respective gross areas of approximately 2,025 and 160 square kilometres. Heritage has been appointed operator, and in return for earning an 80% working interest in both licences Heritage will fund the costs of seismic acquisition and drilling an exploration well. In addition, Heritage made a $4 million contribution to Esrey Energy Limited’s (formerly LNG Energy Limited) back costs on the licences. The licences are located at the junction of the Papuan fold belt and the Miocene carbonate platform where there are producing fields and discoveries including the multi-TCF Triceratops and Elk/Antelope gas discoveries.

The licences benefit from being close to current and underconstruction infrastructure with the Kutubu oil export pipeline and the PNG Liquefied Natural Gas pipeline crossing the acreage. The licences also benefit from the Kikori River which provides a link to the open sea, thereby providing additional transport options.

The work programme in 2013 began with the acquisition of the first 62 kilometres of 2D seismic data over the Tuyuwopi structure in PPL 319. Processing of the new seismic data, combined with the reprocessing of c.300 kilometres of legacy seismic data over these licences was completed in late February 2014. Further seismic data acquisition over leads within the licences has commenced in first quarter 2014, in order to firm up these leads as additional drilling prospects. Well and logistical planning continues to enable drilling of the Tuyuwopi prospect in the short term.

PPL 337

In October 2013, Heritage announced the farm-in to PPL 337, which has a gross area of approximately 5,508 square kilometres. Heritage will earn a 70% working interest and operatorship, by funding the costs of drilling two shallow exploration wells. In addition, Heritage made a $500,000 contribution to Kina Petroleum’s back costs on the licence and in the event of a discovery, Heritage will carry Kina Petroleum’s costs of up to 100 kilometres of appraisal seismic data.

PPL 337 is located within the south-eastern part of the North New Guinea Basin, in the underexplored Ramu Sub Basin. To date, three prospects and one advanced lead have been identified on the licence. A local depocentre has been identified in proximity to mapped prospects and the presence of gas seeps within the licence indicates an active petroleum system. These mapped prospects are in clastic
and carbonate reef geological settings, with principal exploration targets at the large Banam anticline with an area of over 200 square kilometres and potential reef structures in the north of the licence respectively.

Legacy datasets, which include regional gravity and magnetic data, surface geological mapping, c.140 kilometres of 2D seismic acquired in 1997 and offset well data have been evaluated. Reprocessing of seismic data over the Banam anticline is ongoing.

Two wells are proposed to be drilled this year; one located at the Raintree prospect where a Pliocene/Miocene age reef target is identified, and the second located on or adjacent to the Banam anticline where several Neogene age clastic targets have been identified. The shallow nature of the targets identified makes the early drilling of wells the most cost effective method of assessing the potential within the licence. Detailed well planning to enable drilling of the two wells in 2014 is ongoing.

PPL 337 has good road access and is close to potential local gas markets and the deep water port of Madang, which may be suitable for LNG export.

PPL 437

In October 2013, Heritage announced the farm-in to PPL 437 that has a gross area of approximately 1,530 square kilometres. Heritage will earn an initial 30% working interest, by carrying Kina Petroleum’s seismic acquisition costs for a minimum of 100 kilometres of data and make a $300,000 contribution towards Kina Petroleum’s back costs on the licence. During this phase Heritage will be the operator of the seismic work programme. Additionally, Heritage has an option to acquire a further 20% working interest from Kina Petroleum and operatorship of the licence by carrying Kina Petroleum through the drilling of an exploration well.

PPL 437 lies within a proven hydrocarbon system less than 20 kilometres north of the Elevala and Ketu c.1.0 TCF gas condensate fields and the recent Tingu-1 discovery well. Legacy datasets, which include regional gravity and magnetic data and surface geological mapping, in addition to c.250 kilometres of 2D seismic, have been evaluated. The identified prospectivity in the licence is within several structural leads imaged on this legacy seismic data which will be incorporated into this process with the aim of maturing these leads to drillable prospects within the next two years.

The licence is located close to an existing gas pipeline from PNG LNG’s gas fields to the LNG plant in Port Moresby and gas commercialisation options for the Elevala and Ketu fields include a mid-scale LNG project with a LNG plant to be located at Daru.

 Blocks

Area 
(sq km)

Date 
Farm-in

Heritage
Equity1

Partners

Operator

PPL 319 2,025 April 2013 80% Esrey Energy Heritage

PRL 13

160 April 2013 80% Esrey Energy Heritage

PPL 337

5,508 October 2013 70% Kina Petroleum Heritage

PPL 437

1,530 October 2013 30%

Kina Petroleum

Cott Oil & Gas

Kina Petroleum

1 Heritage will earn its equity by funding minimum work programmes.

Tanzania

Heritage has two licences in Tanzania that are considered to be geologically analogous to the Lake Albert Basin in Uganda.

Tanzania Maplegends

Tanzania Map 02

RUKWA

In November 2011, Heritage announced the award of a PSA that covers virtually the entire Rukwa Rift Basin, split into two separate areas, Rukwa North and Rukwa South. Heritage is the operator with a 100% interest. A limited amount of exploration activity was undertaken in the region in the mid-1980s which resulted in the acquisition of c.2,300 kilometres of 2D seismic data and the drilling of two wells. Reprocessing of the legacy seismic data in Rukwa was completed in 2012 and the acquisition of c.600 kilometres of 2D seismic data completed in March 2013. This data was processed and initial interpretation indicated that the principal prospectivity lies in the Rukwa South licence area resulting in the Rukwa North licence being relinquished. Focused interpretation over the Rukwa South licence area has resulted in the identification of several prospects, which are believed to be geologically analogous to the Kingfisher oil discovery in Uganda. Detailed prospect mapping and evaluation is ongoing.

KYELA

In January 2012, Heritage was awarded the Kyela PSA covering the entire northern onshore area of the Lake Nyasa (Livingstone) Basin in Tanzania. The licence has never previously been targeted for hydrocarbon exploration. Gravity data over the area suggested the presence of a sedimentary section of sufficient thickness to allow for the generation of oil. The work programme commenced with the acquisition of a c.1,500 square kilometre very high resolution gravity survey. This indicated the presence of probable structural highs adjacent to a main depocentre corresponding to that observed on regional gravity data that is a potential hydrocarbon kitchen. A 100 kilometre reconnaissance seismic survey completed in January 2013 confirmed the presence of structures as indicated by the gravity data. A geochemical survey of the Kyela licence has been completed and interpretation of the data is continuing. Infill seismic acquisition, designed and positioned using all available data will increase the density of the seismic grid and enhance the mapping of potential prospects. The survey is planned for the second half of 2014.

A multi-well drilling programme across the two licences is planned for 2014/2015.

Satellite radar surveys indicate areas of wave-calming in Lake Rukwa and in Lake Nyasa that may be associated with oil seeps. In the event of a commercial oil discovery, at either Rukwa or Kyela, economic scoping shows the commercial viability of either rail export to Dar es Salaam or export by pipeline depending on exploration success.

Heritage recognises that the Rukwa and Kyela licences share certain geological similarities with the hydrocarbon prolific Albert Basin of Uganda where Heritage has previous experience and had significant success.

Blocks Area (sq km) Date awarded Heritage equity Partners Operator
Rukwa South 8,745 November 2011 100% - Heritage
Kyela 1,934 January 2012 100% - Heritage

Malta

The Group holds a PSC with the Maltese government for a 100% interest in Areas 2 and 7 in the south-eastern offshore region of Malta.

Malta Maplegends

Malta

The Maltese licences cover almost 18,000 square kilometres and are situated approximately 80 kilometres (Area 2) and 140 kilometres (Area 7) offshore, in water depths of up to approximately 300 metres. The two Areas are close to, and geologically similar to, a number of producing fields offshore Libya, such as the Bouri field, and Tunisia.

With only one well previously drilled in Area 2, the Medina Bank-1 well in 1980 which did not reach its target, both licences are considered to be underexplored. Although drilled to a depth of 1,225 metres, the well failed to reach the deeper objective horizons, estimated to be between 1,500 and 4,500 metres.

The interpretation of seismic data in Heritage’s extensive dataset of approximately 5,000 kilometres of 2D seismic, has confirmed a highly attractive Lower Eocene carbonate reef play. Detailed prospect level mapping within Area 7 has identified a prospect with both Eocene and Cretaceous reef targets. These primary targets are recognised as major hydrocarbon producing zones in the central part of the Mediterranean.

In addition, the Company has recognised the presence of a south-tonorth trending shelf margin on the eastern part of the blocks where a number of attractive reef prospects have been mapped.

Preparations are underway to enable the drilling of the prospect identified in Area 7 subject to relevant government approvals and the international boundary agreed.

Area 2

Area 
(sq km)

Date 
Awarded

Heritage
Equity

9,190 December 2007 100%

Area 7

Area 
(sq km)

Date 
Awarded

Heritage
Equity

8,778 December 2007 100%

Libya

In August 2011, Heritage acquired a controlling 51% interest in Sahara Oil which holds the necessary long-term permits and licences to provide oil field services in Libya.

Libya Maplegends

Libya

Heritage has pursued its strategy of “first mover advantage” through pursuing participation in the restoration of the Libyan oil production sector which presents a dynamic and evolving environment.

Libya, which has the largest proven hydrocarbon reserves in Africa, is considered to be a highly attractive oil province due to the low cost of oil recovery, high quality oil which is generally sweet with API gravity ranging between 32–44º, proximity to European markets and well developed infrastructure.

A wholly owned subsidiary of Heritage acquired a 51% equity interest and control of Sahara Oil which owns the entire share capital of Sahara, a Libyan registered company providing services to the oil industry.

Sahara Oil 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. Our efforts have the aim of playing a key role in the substantial rehabilitation work needed to resume, maintain and increase Libya’s hydrocarbon production in line with National Oil Company (“NOC”) and Oil Ministry targets.

Heritage established a base in Benghazi in the first half of 2011, having been in discussions with senior members of the National Transitional Council, the legitimate and recognised government of Libya at the time, as well as with its Executive Committee, the NOC and certain subsidiaries. The dialogue with parties in country that would enable Heritage to participate in the rehabilitation of Libya’s hydrocarbons sector is ongoing.

Pakistan

Heritage is operator of two Blocks in Pakistan.

Pakistan Maplegends

Pakistan

SANJAWI

Heritage has a 54% interest and is operator of the Sanjawi licence (number 3068-2) in Zone II (Baluchistan), which was awarded in November 2007, and which covers a gross area of 2,258 square kilometres. The Block is considered prospective due to an oil discovery to the west, a number of gas fields to the south-east and the presence of oil seeps in the licence. The licence area is dominated by a series of broad east-west trending surface features including the large Dabbar and Warkan Shah anticlines, the former being some 300 square kilometres in area.

ZAMZAMA NORTH

In December 2008, Heritage obtained a 48% interest in the Zamzama North licence (number 2667-8) and was appointed operator. The Zamzama North licence covers an area of 1,229 square kilometres and is located in the south of Pakistan, in the western part of the Sindh Province, approximately 200 kilometres north-west of Hyderabad.

There is considerable infrastructure in the area as one of the main pipelines runs through the licence and any discovered hydrocarbons could be readily connected. The Zamzama Gas Field, a major gas field in production, lies immediately to the south of, and adjacent to, Zamzama North.

Using the current seismic database Heritage has mapped a number of structural prospects and leads and a drilling programme is under consideration. The database comprises some 1,000 kilometres of good quality 2D seismic data.

Blocks

Area (sqKm)

Date awarded

Heritage equity

Partners

Operator

Sanjawi 2,258 November 2007

54%

Hycarbex

America Energy

Sprint Energy

Trakker Energy

Heritage
Zamzama North 1,229 December 2008

48%

Hycarbex

American Energy

Sprint Energy

Trakker Energy

Heritage