Following completion of due diligence and agreement on relative valuations, the Boards of Directors of DNO International ASA ("DNO International") and RAK Petroleum PCL ("RAK Petroleum") signed definitive documents on 3 September 2011 to merge RAK Petroleum's oil and gas operating companies into DNO International in exchange for DNO International shares (the "Transaction"). The Transaction values DNO International at USD 1.64 billion corresponding to NOK 9.50 per share and RAK Petroleum's operating subsidiaries at USD 250 million (before working capital adjustments).
"By combining our two companies' assets and people, the enlarged DNO International will be positioned not only to extract greater value from the existing exploration and production properties but to play an even more active role in the Middle East and North Africa or MENA region," said Helge Eide, DNO International's Managing Director. He added that while the new and enlarged entity will be present in five MENA countries, the company is committed to further expanding its operations in the Kurdistan Region of Iraq.
Gunnar Hirsti, DNO International's Deputy Chairman, who led the merger negotiations for the Company, stated that given the related party nature of the transaction special care was taken to conduct thorough due diligence using both internal and external resources and to secure the best possible terms and conditions, including relative valuations. "The current merger discussions were initiated by DNO International's management in July 2011 with full support of the independent directors and we are very pleased with the outcome and believe it ultimately serves all our shareholders and stakeholders," according to Hirsti.
The merger is part of DNO International's strategy to expand its operations in the MENA region while securing a more diversified asset base through acquisition of existing reserves and production as well as additional exploration acreage, both onshore and offshore.
The Company's current working interest production averages 45,000 barrels per day of oil equivalent. Following the merger, the immediate production contribution from RAK Petroleum's MENA operating subsidiaries to the Company will be around 7,500 barrels per day of oil equivalent, climbing to around 15,000 barrels per day of oil equivalent within a year with the successful implementation of the Saleh field re-development program offshore Ras Al Khaimah.
Presentation/webcast and conference call
A presentation and webcast will be held today, 5 September 2011 at the Continental Hotel in Oslo at 10:00 CET. A live webcast of the presentation will be available on the DNO International website www.dno.no or by following this link: http://presenter.qbrick.com/?pguid=d2a1a56b-06fb-49a9-8b6f-e7f60ee99671
An analyst conference call will be held today, 5 September 2011 at 15:00 CET. The conference call will mainly be conducted as a Q&A session. Participant telephone numbers are +47 23 50 04 86 (Norway Toll) or +44 (0) 20 3106 4822 (International Toll). Conference ID is 5976184.
A presentation for the webcast and conference call will be published prior to the events.
For more information, see attached press release.
Oslo, 5 September 2011
DNO International ASA
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.