Gulf Keystone Petroleum Ltd. and ShaMaran Petroleum Ltd. have agreed to an all-share merger that would create an independent oil producer focused on the Kurdistan Region of Iraq and Federal Iraq with a market capitalization exceeding $1 billion.

The combination would unite Gulf Keystone's Shaikan field (operated, 61.5% working interest) in Kurdistan with ShaMaran's non-operated interests in Atrush (50%, HKN Energy-operated) and Sarsang fields (18%, HKN Energy-operated) and its planned investment in the producing Hamrin field in Federal Iraq. Hamrin currently produces about 20,000 b/d. The combine would target about 60,000 b/d by 2028, with subsequent phases potentially doubling production. 

Together, Shaikan and Hamrin could increase the working interest production of the combined company towards 100,000 b/d of oil, Gulf Keystone said, while holding an estimated 323 million bbl of working-interest 2P reserves. 

"The merger creates a stronger company with greater scale, a highly complementary portfolio and a stronger cash flow profile," said David Thomas, Gulf Keystone non-executive chair. "Expected near-term cash flow from ShaMaran's assets complements the long-term growth potential of the combined company."

The transaction is contingent on ShaMaran's acquisition of a 25% interest in Hamrin field from HKN Energy, which must be completed before or simultaneously with the merger closing. Under that agreement, ShaMaran will carry $35 million of HKN's initial costs and make an additional $15 million payment from future cash flow. 

The merger between Gulf Keystone and ShaMaran is expected to close mid-2027, subject to customary conditions. Gulf Keystone will be the surviving entity. The deal values ShaMaran at $601 million.