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Heritage Energy Middle East Ltd. (HEME) has agreed to sell a 26% interest in the Miran PSC and Miran JOA in Kurdistan region of Iraq to Genel for US $156 million, HEME announced.
Following completion of the sale, Heritage, through its interest in HEME, will hold a 49% interest in the Miran PSC and Genel will hold the remaining 51%. Pursuant to the terms of the sale agreement, Genel and HEME will act as joint operators for the Miran block, operating according to an amended Miran JOA to reflect the new joint operatorship structure.
As was the case previously, a 75% majority approval of the operating committee will be required with respect to any material decisions affecting the Miran joint operations. Therefore, each of HEME and Genel will retain control over such decisions with both parties having an effective veto right. Genel will have the right to appoint the general manager of the Miran joint operations.
Most recently, the Miran West-3 well reached the primary target of the Jurassic gas reservoir and was successfully tested. The well is suspended pending completion as a production well. The Miran West-4 well commenced drilling in June 2012 to further appraise the Upper Cretaceous oil reservoir and reached a target depth of 1,905 m (6,250 ft). A maximum flow rate of oil of 1,350 b/d of oil was achieved in the one test undertaken, with oil quality similar to that found at Miran West-1 and Miran West-3. The Miran East-1 exploration well commenced drilling in March 2012 and is currently at a depth of 3,700 m (12,139 ft) and drilling through the main Jurassic reservoir targets. Drilling is expected to complete in November 2012.
Also, fully processed 3D seismic across the Miran Block is available and initial interpretation of the data has been completed. Planning and development studies on the Miran Field and conceptual design studies on a gas export pipeline are ongoing.
Between October 2007 and July 1, the deemed effective date of the sale, HEME has spent approximately $211 million in respect of the Miran PSC operations and, as the Miran block operations are still in the exploration phase. No profits have been generated to date. The unaudited gross assets subject to the sale are estimated at $74 million.