Lombard
HBJ gives Heritage a get-outBy Jonathan Guthrie
Ex-mercenary Anthony Buckingham appears to have snatched a measure of victory from the jaws of defeat by selling his business Heritage Oil to a prominent Qatari for £924m. The failure of explorers, notably Cairn and Tullow, to make big new oil finds has left shares trading at steep discounts to assets.
Heritage, which has £180m in net cash, is no exception. Production from a stake in the OML oilfield in Nigeria, acquired for $850m in 2012 from a consortium led by Shell has been disappointing too. Gross output has stuck at around 35,000 barrels per day and has been disrupted by a quaint local tendency to tap pipelines as if they were rubber trees.
Shares have risen around 50 per cent since the start of the year as a knock-on from tax breaks for indigenous Nigerian producers. Sheikh Hamad Bin Jassim, a former boss of Qatar’s wealth fund, plans to buy Heritage at 320p per share. That is a 25 per cent premium to the undisturbed price, but still a 14 per cent discount to net assets, according to one estimate.
Shareholders may feel queasy at the news Mr Buckingham would stay with the business. He would reduce his holding from 34 to 20 per cent and appoint one director.
He is therefore excluded from voting on the takeover, which independent directors have approved. There is a trade-off for leaving Mr Buckingham and “HBJ”, as the sheikh is known, to benefit from any ramp-up in Nigerian production. It saves other investors from advancing more cash to another explorer predisposed to shove it into a dry hole in the ground. |
