Gulf Keystone Petroleum and ShaMaran Petroleum agreed to merge in an all-share deal that values ShaMaran at about $601 million, the two Kurdistan-focused oil producers said on Tuesday.
ShaMaran shareholders will receive 0.07533958 new Gulf Keystone shares for each ShaMaran share. Shareholders of each company will own about 50% of the combined group.
The offer represents a 22.9% premium to ShaMaran’s closing share price on October 19. Gulf Keystone intends to pay its existing shareholders a special dividend of $50 million, or $0.23 a share, when the deal closes.
The merged company will combine Gulf Keystone’s operated 61.5% working interest in the Shaikan field with ShaMaran’s non-operated stakes of 50% in the Atrush field and 18% in the Sarsang field, both in the Kurdistan Region of Iraq.
It will also include ShaMaran’s planned 25% shareholding in HKN Hamrin Ltd., which holds the development and production contract for the Hamrin field in Federal Iraq. ShaMaran announced that investment on Tuesday.
The companies put combined working-interest 2P reserves at 323 million barrels and pro-forma working-interest production at 53,000 barrels a day. They expect general and administrative cost savings of up to $5 million a year.
“Bringing together Shaikan with the adjacent Atrush and Sarsang fields will deliver synergies,” Gulf Keystone Chief Executive Jon Harris said. He said the enlarged company would have a stronger platform to invest in developing Shaikan and Hamrin.
The Lundin family, ShaMaran’s largest shareholder with about 25.6%, and Lansdowne Partners, which manages about 13% of Gulf Keystone, said they intend to vote in favor. The Lundin family will become the combined company’s largest shareholder with a 12.8% stake.
William Lundin, chief executive of International Petroleum Corp., will be proposed as non-executive chair. Gulf Keystone Chair David Thomas will become vice chair, and Harris will remain chief executive.
Gulf Keystone plans to move its primary listing to the main list of Euronext Oslo Børs and later end its London listing. Shareholder meetings are expected on or about December 22, and completion is expected in mid-2027, subject to conditions including approval from the Kurdistan Regional Government.
ShaMaran also began marketing a new bond to refinance about $144 million outstanding on its bond due 2029. Gulf Keystone said it is considering a bond issue to help fund development spending at Shaikan.
