Heritage Oil Ltd., an energy company with operations in Russia and the Middle East, said Tuesday it will buy the privately held oil producer Genel Enerji AS of Turkey for stock worth more than 3 billion Canadian dollars ($2.7 billion), AP reported.
Heritage, which is based in the United Kingdom with offices in Calgary, said the deal will create an Anglo-Turkish company operating under the Heritage name and with significant oil and gas interests in northern Iraq's oil-rich Kurdistan region.
Heritage said the combined company would have two core areas: Kurdistan and Uganda.
Genel is an independent oil explorer and producer with interests in oilfields in Iraq and other properties.
Under the agreement, Heritage will double its current share capital by issuing 260 million new shares, receiving all of Genel's shares in return.
Last week, Heritage requested a suspension of its shares on the London Stock Exchange after confirming it was in talks with an unnamed third party.
Based on Monday's closing price of Heritage shares on the Toronto Stock Exchange, the deal is valued at about 3.02 billion Canadian dollars ($2.74 billion)
In morning trading Tuesday in Toronto, Heritage shares rose 42 Canadian cents (38 U.S. cents), or 3.6 percent, to 12.04 Canadian dollars ($10.92).
Heritage said the expanded company will have proved and probable reserves of about 300 million barrels and potential for millions more.
The deal, which is subject to shareholder and regulatory approval, is slated to close during the third quarter of 2009.
"The potential combination of our two companies brings together a long held ambition to develop the assets in our core areas," Heritage CEO Tony Buckingham said in a statement.
Genel CEO Mehmet Sepil said in a statement that the deal will create a strong company with access to international capital markets, international expertise and with the aim of expanding the activities of the enlarged group in other countries in the Middle East.
Heritage has a producing property in Russia and other exploration projects in the Kurdistan region of Iraq, the Democratic Republic of Congo, Malta, Pakistan, Tanzania and Mali.