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Kuwait Energy in merger talks with London-listed SOCO International

January 10/2018

MOSCOW (MRC) - SOCO International, an oil and gas exploration and production company listed on the London Stock Exchange, said on Monday it was evaluating a merger with Middle East oil and gas firm Kuwait Energy, as per Hydrocarbonprocessing.

Its statement confirmed a Reuters report earlier on Monday that the two companies were in merger talks. A merger would provide a way for the Kuwaiti company to go public after it failed last year to complete an initial public offer of its shares on the London exchange, through which it hoped to raise about USD150 million.

SOCO, which has a market capitalisation of about USD500 million, said discussions with Kuwait Energy's newly constituted board were preliminary and no deal terms had been agreed. "SOCO confirms that, in the context of its stated objective to strategically reshape its business and grow its portfolio, it is evaluating a potential merger of equals with Kuwait Energy," the company said in a statement issued via the London Stock Exchange. Kuwait Energy declined to comment on the merger discussions.

SOCO's shares rose as much as 15 percent on news of merger talks and were up 9.9 percent at 123.4 pence at 1224 GMT.

Kuwait Energy has assets in Iraq, Oman, Egypt and Yemen. SOCO has a very different geographic exposure, with interests in Vietnam, Congo and Angola but no major assets in the Middle East.

Thomas Streater, head of investment research at MB Commodities Capital in Dubai, said the merger could benefit both companies.

"With volatile oil prices, it makes sense for small oil companies to merge as getting bigger scale gives them balance sheet to face volatility. SOCO would get a portfolio of low cost, attractive assets, and for Kuwait Energy it would be a way to monetise some of their holdings," he said. Streater added that Kuwait Energy's portfolio was quite attractive "but assets are in Iraq so straight away from an IPO perspective its seen as too risky. With the merger, the companys shareholders will probably get SOCO stock, and then theyll be able to sell at a later stage."

SOCO had USD132 million in cash as of September last year. Kuwait Energy had USD43 million in cash at the end of September.
Author:Anna Larionova
Tags:gas processing, gas pressure pipe.
Category:General News
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