DNO, RAK Petro to merge assets

Norwegian oil firm DNO and Emirates-based RAK Petroleum signed an agreement to merge RAK's Middle East and North African subsidiaries into a subsidiary of DNO, the Norwegian company said on Monday.

DNO shares were trading up 9.5 per cent at 6.57 Norwegian crowns by 0716 GMT.

The two companies signed a non-binding heads of agreement for DNO shares to be issued to RAK Petroleum in a price range of between 8.25 and 10 Norwegian crowns against RAK regional assets valued at between $250 million to $300 million, DNO said.

"The heads of agreement provides the basis of negotiation of definitive merger documents, including an integration announcement," DNO said in a statement.

DNO said that when the transaction closes, RAK Petroleum, based in the United Arab Emirates, is expected to have a total ownership interest in DNO of about 40 percent, compared with 30 percent today.

DNO Managing Director Helge Eide added: "The enlarged DNO will be a more robust company with higher production and stable cash flow from a more diversified portfolio."