Kurdish oil sector in midst of consolidation
Norway’s DNO International has completed its merger with the Middle East and North Africa assets of the UAE’s RAK Petroleum.
RAK Petroleum’s operating subsidiaries were valued at $250m, while DNO was valued at $1.64bn, according to an independent assessment of their oil and gas assets, RAK Petroleum said in a 10 January statement confirming the completion.
The merger was first agreed in July 2011 and approved by the companies’ boards in September. DNO’s shareholders approved the merger with a 76.5 per cent majority vote at an extraordinary general meeting on 1 November 2011.
However, it faced opposition from two shareholders who filed a court injunction in December, which was dismissed by an Oslo court as a “frivolous attack”.
DNO is developing the Tawke field in the semi-autonomous Kurdistan region of northern Iraq. It also has operator stakes in two producing blocks in Yemen – Blocks 32 and 43, as well as a stake in Block 53, which is operated by the Dubai-based Dove Energy.
The agreement is part of wider picture of mergers and acquisitions among Kurdish exploration and production firms.
“There is enormous potential, and this is the life cycle in the Kurdistan market. It started with small wild-cat companies five or six years ago. Some firms did well and have stayed, others failed. Now we are seeing more consolidation.”
The region was given a major boost in November, when the Kurdistan Regional Government (KRG) announced it had signed agreements for six exploration blocks with US oil major ExxonMobil.
“The merger will help manage risk in the Kurdish region, as well as providing investment,” says a source close to the firm in Irbil.
DNO currently only receives payments from the KRG covering its operational expenses. In 2011, it received $110m for its work on the Tawke production sharing contract. DNO exports about 50,000 barrels a day (b/d) of crude oil through the Kirkuk pipeline to the port of Ceyhan on the Turkish coast of the Mediterranean Sea (MEED 15:5:11).