SOCO terminates merger talks with Kuwait Energy

Soco has formally terminated merger talks with Kuwait Energy over valuation differences. Full press release from Soco below.

On 8 January 2018, SOCO International plc (“SOCO”) announced that it was in preliminary discussions with the newly-constituted Board of Directors of Kuwait Energy plc (“Kuwait Energy”) regarding a potential transaction.

SOCO confirms that it has terminated these discussions because it could not reach agreement with Kuwait Energy on the basis for an acceptable transaction.

SOCO’s Board remains committed to its strategy of shareholder value creation through sustainable cash returns to shareholders and growth of the business. The SOCO team, which has a track record of delivering shareholder value through asset acquisition and monetisation, delivering large scale developments, and returning capital to shareholders, evaluates M&A opportunities with reference to strict strategic, financial and operational criteria and only pursues transactions if they are determined by SOCO’s Board to be in the best interest of shareholders. SOCO’s Board continues to evaluate opportunities in accordance with these criteria.

Source: https://www.socointernational.com/statement-on-discussions-with-kuwait-energy-plc

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Dragon Oil increases stake in Block 9 to 45% from Kuwait Energy

Kuwait Energy has farmed out a 15% interest in Block 9, Iraq to Dragon Oil. Kuwait Energy will reduce its interest to 45% and Dragon Oil will increase its stake to 45%.

The 15% will be made up of the following:

• 8.57% for USD100 million cash;
• 6.43% in settlement of a dispute in favour of Dragon Oil

Full press release by Kuwait Energy follows:
Kuwait Energy Company is pleased to announce the signing of the Block 9, Iraq Farm-out Agreement with Dragon Oil Plc (a wholly-owned subsidiary of Emirates National Oil Company Ltd, the national oil company of Dubai).

As per the Farm-out Agreement, Kuwait Energy will assign a 15% participating interest in the Block 9, Iraq service contract comprised of 8.57% participating interest in Block 9, Iraq to Dragon Oil in consideration for USD 100m in cash; and 6.43% participating interest in Block 9, Iraq to Dragon Oil in settlement of a dispute with Dragon Oil in relation to a non-controlling interest in Block 9, Iraq.

The agreement was signed on 11 February 2018 by Ali Rashid al Jarwan, Dragon Oil Chief Executive Officer (CEO); and Abby Badwi, the CEO of Kuwait Energy.

Abby Badawi, Chief Executive Officer of Kuwait Energy, said: "This is a great moment for Kuwait Energy and Dragon Oil. The extension of our Block 9 partnership with Dragon Oil has meant that both Companies can work as equal equity partners on the concession allowing us to best utilise our joint technical expertise in delivering the submission of the Block 9 full field development plan to the Iraqi government. The reduction in future Block 9 capital expenditure exposure coupled with the material cash injection strengthens Kuwait Energy liquidity position going forward."

The assignment of the 15% participating interest in Block 9, Iraq from Kuwait Energy to Dragon Oil remains subject to Iraqi government and partner approval. Post granting of these approvals, Kuwait Energy will remain the operator with a reduction in participating interest from 60%-45%, Dragon Oil participating interest will increase from 30%-45% with the remaining 10% participating interest being held by Egyptian General Petroleum Company.

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