Kuwait Energy and London-headquartered SOCO International have both confirmed being in negotiations for a potential merger, but have also maintained that there is no guarantee that the two companies will merge.

In statements posted on their respective websites to respond to “press speculation”, both companies have stated that discussions for a “potential merger of equals” are at a preliminary stage, and that “no transaction terms have been agreed”. The companies have insisted that negotiations will be pursued to serve the best interests of their stakeholders, who will be kept informed of key developments.

Kuwait Energy has oil assets in Iraq, Oman, Egypt and Yemen, while exploration and production firm SOCO has interests in Vietnam, Congo and Angola but has no major assets in the Middle East. A combination of the upstream assets will give both companies greater geographic exposure and balance risks.

SOCO, which has a market capitalisation of about $500m, is listed on the London Stock Exchange (LSE). Should the merger be completed, Kuwait Energy will go public. The energy firm failed last year to complete an initial public offer (IPO) of its shares on the LSE, through which it had hoped to have a valuation of £1bn ($1.35bn) to raise about $150m.

The Arab firm announced last June that it had not been able to complete the IPO, just two months after reviving an earlier shot at share flotation. It did not cite a reason, but said that considering positive feedback from potential investors, it remained committed to obtaining a London stock listing and continued to explore its options.

Kuwait Energy had appointed Numis and BofA Merrill Lynch as global coordinators and joint bookrunners for last year’s attempted IPO, with EFG Hermes as co-bookrunner.

In December, a board shake-up included the resignation of the company’s long-standing chief executive and co-founder Sara Akbar and the appointment of six new board directors.

Kuwait Energy announced last month that it had agreed to extend the maturity of the principal repayment of a $155m convertible loan due in November, partially held by Dubai-based private equity group Abraaj.