Norwegian oil and gas operator DNO has launched a $300m (£228m) cash-and-share bid for Gulf Keystone, the struggling Kurdistan-focused explorer that recently announced a financial restructuring.
DNO, itself highly active in Kurdistan, an autonomous region of Iraq, has its sights on Gulf’s Shaikan field, which turns out 40,000 barrels of oil a day and earlier this month hit the milestone of 25 million barrels of output.
“Combining these two companies will create further scale and unlock operational synergies that will reinforce DNO’s already formidable presence in Kurdistan,” said Bijan Mossavar-Rahmani, executive chairman of the Oslo-based company.
Gulf Keystone put itself up for sale in February, after pursuing the Kurdistan government for $100m in payments for oil exports it said it had not received. In April it defaulted on a $26m debt repayment.
Earlier this month Gulf Keystone completed a financial restructuring in which its creditors agreed to a $500m debt for equity swap.
DNO said its offer was priced at a 20pc premium on the new shares offered by Gulf as part of its refinancing. The cash element of the offer is $120m, while the rest consists of shares in the enlarged company, which it said would “provide Gulf Keystone investors with continued exposure to the Shaikan field, in addition to DNO’s wider portfolio of assets, significantly larger market capitalisation, more robust cash flow, stronger balance sheet and proven operating and management capabilities”.
Gulf Keystone said: “The board of Gulf Keystone is currently reviewing this proposal and will update the market on its response in due course.”
Gulf Keystone’s market cap stood at $2.5bn in 2012 but shrank as the price of crude oil collapsed, now standing at just $46m. In the same time, the share price has tumbled from a peak of £3.45 to 4.7p this morning, when it jumped 20pc on news of DNO’s bid.
By Jon Yeomans
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