Genel said it agreed to take an additional 26 percent interest in the Miran exploration block from Heritage Energy Middle East Ltd., a subsidiary of Heritage Oil, for $156 million. Genel Energy will provide another $294 million by way of a bilateral loan.
The acquisition gives Genel Energy a 51 percent working interest in the Miran block. The company said an independent analysis of the play developed for Heritage in March estimates the block contains 10.5 trillion cubic feet of gas in place.
Heritage Chief Executive Officer Tony Buckingham said the deal "crystallizes significant value for shareholders."
"This acquisition represents an excellent opportunity to extend our interest in, and assume joint operatorship of, a commercial gas discovery and high quality asset in the Kurdistan Region of Iraq," Genel Energy's Chief Executive Officer Tony Hayward said.
The central government in Baghdad says unilateral deals with the Kurdish government are illegal. Last week, Baghdad officials said the government would sever ties with companies dealing illegally with the Kurdistan Regional Government.
Heritage Energy Middle East Ltd. was set up and signed its contract with the KRG for a production sharing contract at the Miran play in 2007.