Gulf Keystone Petroleum, listed on the London Stock Exchange, and Shamaran Petroleum, active on the Oslo Stock Exchange, have recently made an agreement worth approximately $601 million to merge their shares in the oil fields of the Kurdistan Region of Iraq. This agreement aims to create one of the largest oil production entities in the region and increase daily production to around 53,000 barrels.
Details of the Merger Agreement
The agreement between Gulf Keystone and Shamaran is based on the combination of the two companies' oil assets, and it is expected that the market value of this new entity will exceed one billion dollars. The estimated daily production of 53,000 barrels of oil is based on proven and probable reserves of 323 million barrels.
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This merger includes the Sheikhhan oil field owned by Gulf Keystone and Shamaran Petroleum's share of the Atrush and Sarqala oil fields. Additionally, both companies have plans to invest in the Hamrin field, located in the area controlled by the federal government of Iraq.
Market Impacts and Future
Gulf Keystone Petroleum intends to move its primary stock listing to the main Euronext Oslo market as part of this agreement and ultimately exit the London Stock Exchange. However, the finalization of this agreement depends on shareholder approval and the fulfillment of other transaction conditions, and it is expected to be completed by the first half of 2027.
The Sheikhhan oil field in Duhok province, as one of the largest oil-producing fields in the Kurdistan Region, holds significant importance with proven and probable gross reserves of about 416 million barrels. Since the start of commercial production in 2013, this field has produced over 155 million barrels of oil and has recently returned to a daily production of around 40,000 barrels.
Movements in the oil market of the Kurdistan Region are not limited to Gulf Keystone and Shamaran, as Genel Energy and DNO have also made competing offers to acquire Capricorn Energy. The board of Capricorn has supported Genel Energy's increased offer. If finalized, the Gulf Keystone and Shamaran agreement could help increase the concentration of oil assets of these two companies in the Kurdistan Region and provide a basis for more integrated management of oil fields and the development of production activities.
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