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New Kurdistan oil producer plans LSE listing

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A new and acquisitive middle-east focused oil and gas firm is planning to list on the London Stock Exchange, following a merger between Norway’s DNO and certain subsidiaries of UAE-based Rak Petroleum.

Many UK investors are likely to have heard of DNO as they’ve followed, fellow Kurdistan oil firm, Gulf Keystone Petroleum (LON:GKP).

Yesterday DNO and RAK announced that they have signed a ‘heads of agreement’ for the proposed merger and now they will negotiate the definitive details of the deal. The agreement follows the appointment of RAK boss Bijan Mossavar-Rahmani as DNO’s new chairman in June.

As part of the deal RAK, who already has a 30 percent stake in DNO, will be issued new shares worth between US$250 and US$300 million. Subsequently RAK will own about 40 percent of the merged company.

In a Reuters report Mossavar-Rahmani stressed that the enlarged firm would be able to take the lead in the consolidation of other assets and companies in the MENA region. 

He reckons that depressed share prices, caused by perceptions of increased risks in the area, will present opportunities for the new company.

DNO managing director Helge Eide told investors: “I am excited about the opportunities for further expansion and value creation built through this merger.” He added: “The enlarged DNO will be a more robust company with higher production and stable cash flow from a more diversified portfolio.”

The Norwegian firm currently produces around 15,000 barrels a day, from the Tawke oilfield in the Kurdish region of northern Iraq as well as three oilfields in Yemen. 

Notably DNO received a major boost recently with the resumption of oil exports out of Kurdistan, a result of the recent thawing of relationships between Erbil – the administrative centre of Iraqi Kurdistan – and Bagdad. 

Kurdistan oil exports resumed earlier this year and in May DNO received its first payments from Bagdad.

Meanwhile RAK has a number of assets in the Middle-East and Northern Africa (MENA) region with seven operated licences, four in Oman and three concessions in Ras Al Khaimah which is the northernmost state of the United Arab Emirates.

The Emirati oil firm currently produces oil and gas from two fields in Oman – both of which are in Block 8.

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