Kuwait Energy looks at possible merger with UK firm as it eyes London listing

The Kuwait-based firm operates concessions in Iraq, Egypt, Yemen and Oman

Kuwait Energy is in talks to merge to with London-listed Soco International, as it looks to revive a bid to list on the London Stock Exchange. Essam Al-Sudani / Reuters

Kuwait Energy, which operates a clutch of concessions across conflict zones in the Middle East is in talks to merge to with London-listed Soco International, as it looks to revive a bid to list on the London Stock Exchange.

"Kuwait Energy confirms that it is in preliminary discussions with SOCO in this regard. At this stage, there can be no certainty that any agreement will be reached,” the company said in a statement late Monday.

It added that it would “only pursue a transaction that it considers optimal for the benefit of its shareholders” and that it would keep all stakeholders informed of any developments.

A merger with Soco International, which has a market capitalisation of $500 million will give the Kuwait-based firm leverage to list in London, after it failed an earlier bid last year to request for floatation on the exchange. Kuwait Energy had hoped to raise around $150m through its initial public offering last year.

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Soco International also said it is evaluating “a merger of equals with Kuwait Energy”in context of strategically reshaping its business and growing its portfolio.

The UK firm currently operates a minority stake (25 per cent) in Vietnam with Petrovietnam and also holds a 40.39 per cent interest in the North Congo basin offshore the African state. Average production from across its blocks stood around 29,600 barrels of oil equivalent per day (boepd) during the first half of 2017.

A merger with Kuwait Energy will give Soco access to a wider portfolio of reserves-rich concessions in the Middle East and North Africa. Kuwait Energy, operates 10 concessions across Iraq, Egypt, Yemen and Oman and registered an average daily production of 26,962 boepd for the year ending September 2017. Total production for the time period stood at seven million barrels of oil equivalent, the firm said in its last financial statement.

Kuwait Energy plans to commence production in the first quarter of this year from the Faihaa-4 well in Block 9 in Iraq, where it well spudded a well last year.

In Iraq, the region’s second largest oil producer, Kuwait Energy holds majority stakes of 60 per cent each in the Siba and Block 9 concessions, with a minority interest in the Mansuriya field.

In its note to the London Stock Exchange last May, Kuwait Energy had said it would begin production from the Siba gas field in the southern Basra province in January 2018. However, production from the concession from where it hopes to maintain an average output level of 100 million cubic feet a day has not yet started.