Soco and Kuwait Energy in merger talks

London-listed oil firm Soco International is in talks to merge with fellow upstream independent Kuwait Energy.

The potential "merger of equals" is part of Soco's "objective to strategically reshape its business and grow its portfolio," the company said today. The merger talks follow Kuwait Energy's failed bid to list on the main market of the London Stock Exchange last year.

Kuwait Energy is the larger of the two in terms of production and reserves, but Soco has the stronger balance sheet, with no debt and more than $130mn of cash reserves and liquid investments as of June 30 last year. "Given the relative sizes of Soco and Kuwait Energy, including their respective stated oil and gas reserves, any transaction would be likely to constitute a reverse takeover for Soco for the purposes of the UK Listing Authority's listing rules," Soco said.

Soco produced 8,600 b/d of oil equivalent (boe/d) in Vietnam in the first half of last year. It has undeveloped acreage onshore Angola and offshore Congo (Brazzaville). The firm had around 33mn boe of proven and probable reserves at the end of 2016.

Kuwait Energy has assets in Iraq, Egypt, Yemen and Oman. The company produced just under 27,000 boe/d in January-September last year. And its proven and probable reserves stood at 810mn boe at the end of 2016, the bulk of them in Iraq.

The firm has struggled with cost overruns and delays at key projects, particularly the Siba gas project in Iraq. Its board was overhauled in December after shareholders called an extraordinary meeting. Six new directors were appointed. Independent board member Abdel Badwi took over as interim chief executive, replacing founder Sara Akbar.