Tuesday, Aug 25, 2009
By Dania Saadi
Of ZAWYA DOW JONES
DUBAI (Zawya Dow Jones)--Kuwait Energy Co., an independent oil and gas firm, is eyeing acquisitions in the Middle East this year and an initial public offering in 2010 as the company seeks to more than triple oil and gas output.
"We are focusing on the core countries of Egypt, Yemen, Kuwait and Iraq for the next five years," Sara Akbar, Kuwait Energy's chief executive officer, said in a telephone interview from Kuwait on Monday.
"We are looking at acquisitions, but it is mainly in these countries, mainly producing assets in our region. One of them will materialize this year definitely. It will be much larger than the Oil Search acquisition."
The Kuwait-based company bought Australia's Oil Search Middle East and North Africa for $200 million in 2008, giving it assets in Egypt and Yemen, the main source of its current production.
Persian Gulf-based energy companies, including the United Arab Emirates' Dana Gas, are eyeing deals in countries such as Iraq as they seek to develop reserves in the world's biggest energy-exporting region.
Kuwait Energy is forecasting production to rise by about 50% to 15,000 barrels a day of oil equivalent in 2009 from about 10,000 barrels a day of oil equivalent in 2008, and hopes to reach 50,000 barrels a day of oil equivalent by the end of 2010.
The company, which was set up in 2005, is eyeing an initial public offering in 2010 to help generate cash to finance exploration and development activities in its operations in Oman, Yemen, Egypt, Russia, Ukraine, Latvia, Cambodia and Pakistan.
"The market today is not ready for an IPO. We expect the markets will be better in the first quarter of next year," Akbar said.
"It will be around 25% to 30% of the market value because I am sure many of our shareholders would like to keep some of their stakes," she added.
To finance its acquisitions and development programs, Kuwait Energy is seeking a $50 million financing facility from the International Finance Corp., which the company expects to be finalized in two weeks time, Akbar said.
Kuwait Energy also plans to sell 260 million in outstanding shares in the coming months to help finance its operations, which will help test investor appetite for the IPO, she added.
The company is almost doubling its expenditure on development and exploration this year to $135 million from 2008 as it seeks to boost production levels.
"If we do this acquisition, definitely the expenditure level on capex and opex next year will be exponentially higher," Akbar said.
Kuwait Energy is boosting spending although oil prices have nearly dropped by half from last year's peak of $147 a barrel, which helped the company increase net profit by 45% to $29.9 million in 2008 from $20.6 million a year earlier.
The company is forecasting a lower net profit in the range of $20 million to $25 million this year due to the drop in oil prices to the $65 to $70 a barrel level, Akbar said.
"For the first half we have not made the profit that will generate the $30 million to $35 million that we were envisaging before the crisis," she said.
Kuwait Energy expects its proven and probable reserves to rise this year to 65 million barrels of oil and gas equivalent from 43.4 million barrels in 2008 as it drills more wells in Egypt and in the Ukraine.
The company earlier this year submitted together with South Korea's Daelim a bid to develop an early production facility of 100,000 barrels of crude a day in west Kuwait, and is still interested in bidding to develop the Siba gas field in Iraq, she said.
-By Dania Saadi, Dow Jones Newswires, +9714 364 4960; dania.saadi@dowjones.com
Copyright (c) 2009 Dow Jones & Co.
(END) Dow Jones Newswires
25-08-09 1104GMT
