(RTTNews) - British oil explorer Heritage Oil plc (HOIL.L: News ,HOC.TO: News ) said Monday that its wholly owned subsidiary entered into a binding letter of intent, or LOI, with Italy's Eni S.p.A (E: News ) to sell its entire interests in Blocks 1 and 3A in Uganda to Eni. The consideration comprises cash of US$1.35 billion and a further contingent, deferred consideration of US$150 million in cash or an interest in a producing field independently valued at a similar amount.
Eni proposes to acquire Heritage's 50% working interest in Blocks 1 and 3A in Uganda and be appointed its operator. This is expected to complete in the first quarter of 2010. Heritage holds 50% working interest in Blocks 1 and 3A, which it shares with Tullow Oil plc (TLW.L: News ).
Heritage noted that six wells have been drilled in Blocks 1 and 3A in the past two years, with a discovery of about 300 million barrels net to the company.
If certain conditions are met, Eni will pay Heritage a consideration of US$150 million in cash or an interest in a producing field independently valued at a similar amount within two years. Negotiations regarding the further consideration could be completed during the first half of 2010, Heritage said.
The proposed transaction has been approved in principle by the Board of Heritage. Heritage said it would retain an interest in the Albert Basin through its interests in Blocks 1 and 2 in the Democratic Republic of Congo, which are currently awaiting presidential decree.
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