Norway's DNO and RAK agree to merge assets in Middle East and North Africa

City A.M. Reporter
NORWEGIAN oil firm DNO and Emirates-based RAK Petroleum have signed an agreement to merge RAK’s Middle East and North African subsidiaries into a subsidiary of DNO, the Norwegian company said yesterday.

The two companies signed a non-binding heads of agreement for DNO shares to be issued to RAK Petroleum in a price range of between 8.25 and 10 Norwegian crowns against RAK regional assets valued at between $250m (£155m) to $300m, DNO said.

“The heads of agreement provides the basis of negotiation of definitive merger documents, including an integration announcement,” DNO said in a statement.

DNO said that when the transaction closes, RAK Petroleum, based in the United Arab Emirates, is expected to have a total ownership interest in DNO of about 40 per cent, compared with 30 per cent today.

DNO managing director Helge Eide added: “The enlarged DNO will be a more robust company with higher production and stable cash flow from a more diversified portfolio.”

DNO investors welcomed the announcement, sending the company’s shares up more than 16 per cent yesterday to close at 6.99 Norwegian crowns, valuing the company at 5,699m crowns.