The UAE's RAK Petroleum and DNO, the Norwegian oil and gas company in which it owns a stake, are to merge.
Yesterday the companies agreed to bring the Ras al Khaimah company's operations, which span Oman and the UAE, into the Oslo-based company. Under the agreement DNO is to issue shares to RAK Petroleum equivalent to the value of the Gulf company's assets, estimated between US$250 million (Dh918m) and $300m.
"There is a compelling logic in combining the DNO and RAK Petroleum operating assets to build a first rank independent MENA upstream operator," said Bijan Mossavar-Rahmani, the chairman of RAK Petroleum, in a company statement. Earlier this month Mr Mossavar-Rahmani was also made chairman of DNO.
By merging Middle East operations, the DNO will be able to align RAK Petroleum's Gulf operations with its existing fields in Yemen and Iraqi Kurdistan. DNO also operates in Mozambique, Equtorial Guinea and the UK.
Shares of DNO were trading at 7.9 per cent up at midday UAE times after rising as much as 12 per cent after the news, reaching 6.575 Norwegian krone on the Oslo exchange.
The deal, which has yet to be finalised, would transfer DNO shares to the UAE company priced between 8.25 and 10 Norwegian krone.
RAK Petroleum's stake in DNO is expected to increase from 30 to 40 per cent after the merger.
RAK Petroleum said DNO was also evaluating a potential listing on the London Stock Exchange, following in the footsteps of the Dubai oil services company Lamprell and the Dubai ports operator DP World.