RAK Petroleum Public Company Limited, the oil and gas exploration and production company, announced Monday its merger with DNO International ASA. It said the board of directors of both firms signed a “definitive agreement” on September 3 following the completion of “due diligence relative valuations”. The transaction values DNO International at $1.64 billion corresponding to NOK9.50 per share and RAK Petroleum's subsidiaries at $250 million. As consideration, RAK Petroleum will receive 153,422,343 shares of DNO International of which 9,500,000 will be in treasury shares and the remaining 143,922,343 in new shares to be issued through an increase of the share capital of DNO International. Upon completion of the merger, RAK Petroleum will own 40 percent of the share capital of DNO International up from 30 percent currently. The transaction is contingent upon government approvals and affirmative votes by shareholders of both companies, with closing expected around yearend. The number of shares to be issued was determined through a relative valuation process based on an independent assessment of the two companies' oil and gas assets by international petroleum consultants DeGolyer & MacNaughton and preparation of Competent Person's Reports. Based on the June 30 working interest basis figures provided by DeGolyer & MacNaughton, DNO International´s net remaining proven and probable reserves consisted of 355 million barrels of oil equivalent in Iraq and Yemen. RAK Petroleum's net remaining proven and probable reserves consisted of 52 million barrels of oil equivalent in Oman and the United Arab Emirates. The calculation of shares to be issued includes a positive working capital balance of $15 million in the RAK Petroleum subsidiaries as at the June 30, 2011 economic date.
