DNO ASA, the Norwegian oil and gas operator, this morning unveiled a proposal to acquire for USD 300 million all of the enlarged share capital in Gulf Keystone Petroleum Ltd following the latter’s contemplated financial restructuring announced earlier this month.

The terms of the DNO proposal, which would comprise cash and shares, reflect a 20 percent premium to the share price of USD 0.0109 at which, on 14 July 2016, Gulf Keystone issued shares representing 5.6 percent of its share capital, and also reflect a 20 percent premium to the price at which Gulf Keystone intends to issue further shares in its restructuring.

In addition, for the Gulf Keystone guaranteed noteholders the DNO terms reflect 111 percent of par value compared to 99 percent under the contemplated restructuring, and for the convertible bondholders the DNO terms reflect 18 percent of par value compared to 15 percent under the contemplated restructuring.

By offering USD 120 million in cash (approximately 40 percent of the consideration), DNO would provide an early exit for those noteholders and bondholders who may be unable or unwilling to hold equity for an extended period. The additional offer of 170 million DNO shares (approximately 13.6 percent of the post transaction DNO share capital) would provide Gulf Keystone investors with continued exposure to the Shaikan field in addition to DNO’s wider portfolio of assets, significantly larger market capitalization, more robust cash flow, stronger balance sheet and proven operating and management capabilities.

DNO has been active in the Kurdistan region of Iraq since 2004 and ranks number one among the international oil companies in oil production (50 percent), oil exports (60 percent) and proven oil reserves (50 percent). DNO holds a 55 percent stake in and operates the Tawke oil field at a current production level of around 120,000 barrels of oil per day (bopd) of 27 degree API crude.

Gulf Keystone holds a 58 percent stake in and operates the Shaikan oil field at a current level of around 40,000 bopd of 17 degree API crude. Production from Shaikan is transported daily by road tanker to DNO’s unloading and storage hub at Fish Khabur for onward pipeline transport to export markets.

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 (pictured), DNO’s Executive Chairman.

We understand Shaikan’s challenges and opportunities and we are well positioned to focus financial, technical, commercial and logistical support to maintain and then grow production at this field to the benefit of both Kurdistan and our investors,” he added.

Gulf Keystone, a Bermuda incorporated and London listed company, has called a special general meeting for 5 August 2016 to consider its contemplated financial restructuring. DNO has written to the board of directors of Gulf Keystone to present its proposal and to facilitate immediate engagement with Gulf Keystone’s investors ahead of the meeting to ensure sufficient time for these investors to carefully consider the enhanced terms proposed by DNO.

DNO has retained Pareto Securities AS as financial adviser and Freshfields Bruckhaus Deringer LLP, Advokatfirmaet Thommessen AS and Conyers Dill & Pearman Limited as legal counsel in connection with the transaction.

The Board of Gulf Keystone is currently reviewing this proposal and has said it will update the market on its response in due course.

(Sources: DNO, GKP)

By John Lee.

Genel Energy‘s chief executive has said he may step down as CEO as early as the end of this year to become Chairman.

Reuters reports that Tony Hayward (pictured) also told the FT Commodities Summit in Lausanne, Switzerland, on Wednesday that low oil prices will trigger consolidation in the oil industry in Iraqi Kurdistan, potentially making Genel both a consolidator and an acquisition target.

But the Financial Times says he also predicted oil prices would soon return to near $80 a barrel, describing the Organization of Petroleum Exporting Countries (OPEC) as “the most successful cartel in history.”

(Sources: Reuters, FT)

By John Lee.

Shares in Gulf Keystone Petroleum (GKP),  operator of the Shaikan field (pictured) in the Kurdistan Region of Iraq, jumped 65 percent on Wednesday after the company announced that it has recently engaged in discussions with a number of parties in relation to possible asset transactions or a sale of the company.

GKP advised that these discussions are preliminary and, as such, there can be no certainty that any offers will be received and any transaction concluded, or any certainty as to the terms on which any offer might be made. Further announcements will be made by the company as and when appropriate.

As at today’s date, the Company’s cash balance is US$69.3 million and it has been informed that a further US$26 million gross payment (US$20.8 million net to Gulf Keystone) for Shaikan crude oil sales has been received by the Company’s bank and is expected to be credited to the Company’s account shortly.

Concurrently, and in view of strategic discussions and its current liquidity position, and with the intention of meeting its existing debt payment obligations, the Company is undertaking a review of its financing options and in that context will engage in discussions with its key stakeholders.

The Company has appointed Deutsche Bank and Perella Weinberg Partners as financial advisers.

(Sources: GKP, Yahoo!)

By John Lee.

Shares in Gulf Keystone Petroleum (GKP) have gained around 10 percent this week on rumours of a takeover.

Bloomberg reports that, as the world’s biggest oil companies look for untapped fields, the company is sitting on a giant oil field in Iraqi Kurdistan that wouldn’t look out of place in a major’s portfolio.

With the KRG completing a pipeline for direct crude exports to Turkey by the end of the year, exports could be set to boom.

Chief Executive Todd Kozel (pictured), told Bloomberg:

Exports are what we’ve been waiting for since 2007, so the pipeline is very big and instrumental for a company like Gulf Keystone.

But added:

We are a public company, and consolidation is the next phase in Kurdistan. But that’s not in our plans now.

(Source: Bloomberg)