Negotiations between exploration and production (E&P) firms Kuwait Energy and SOCO International for a potential merger are continuing, although no major developments have been made.
The two companies put out press statements last month when it was widely reported that they were discussing a “potential merger of equals”, adding that “no transaction terms had been agreed.”
MEED has now learnt that talks have not derailed and the two parties are indeed progressing with negotiations. A source has said London-based Soco International is having conversations with Kuwait Energy on the possibility of a collaboration. Had talks ended, the source said, there would have been formal notifications from both the firms, including press releases, but since there has been none, it can be taken that the talks are ongoing.
When asked if a timeline had been set by the two companies for finalising a deal, the source did not mention when discussions would conclude, however adding “obviously talks can’t go on forever.”
MEED understands that a couple of new business achievements of Kuwait Energy, ever since the merger talks were reported on January 8, has made the company’s case for a merger stronger.
Kuwait Energy earlier this week announced the signing of the Block 9, Iraq Farm-out Agreement with Dragon Oil, a subsidiary of the Dubai Government-owned Emirates National Oil Company (Enoc).
As per the deal, Kuwait Energy will assign a 15 per cent participating interest in Iraqi Block 9 to Dragon Oil, a service contract comprising 8.57 per cent participating interest in Block 9, in consideration for $100m in cash; and a 6.43 per cent participating interest in the block to Dragon Oil in settlement of a dispute with it in relation to a non-controlling interest in the block.
Also this week, Kuwait Energy announced an oil discovery in the Area A concession Egypt’s Eastern Desert. The South Kheir-1X (SK-1X) well spud on 11 December 2017 and tested successfully on 28 January 2018 at an initial oil flow rate of 2,452 barrels a day (b/d). On 6 February the well stabilised at an oil rate of 1,900 b/d.
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