Kuwait Energy is in talks with a London listed company over a possible merger that would allow the Middle Eastern firm access to the London Stock Exchange.
After failing to gain a listing on the London Stock Exchange last year, Kuwait Energy entered talks with SOCO International for an equal merger, according to two sources close to the discussions.
In May 2017, the Middle Eastern company said it was seeking an initial public offering (IPO) and hoped to raise $150 million from an issue of new shares. However, it was announced in June that the company would not be able to complete to IPO as it had intended.
At the time, the company said: “However, in light of positive feedback from potential investors, the company remains committed to obtaining a London listing and continues to explore its options”.
The merger would bring together two companies of a similar size and scale of operations, but very different locations. While Kuwait Energy holds assets in Iraq, Egypt, Yemen and Oman, SOCO International has interests in Vietnam, the Republic of Congo and Angola.
SOCO International is in a stronger position in terms of liquidity and mature assets, but Kuwait Energy has vast potential.
Thomas Streater, head of investment research at MB Commodities Capital in Dubai, said: “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”.