United Arab Emirates - PM Communications

UAE 3rd NOVEMBER 2007 RAS AL-KHAIMAH / 11Gaining strength through acquisitionA series of deals have raised the profile of oiland gas company RAK PetroleumEstablished in Ras Al-Khaimah in 2005 tobolster local energy requirements, the oiland gas exploration and production companyRAK Petroleum is increasingly active on theglobal energy scene, as illustrated by a run ofacquisitions during the past 12months or so.In April,the company acquiredUK-listed Gulf KeystonePetroleum,an independent oil andgas outfit with interests scatteredacross the Middle East and NorthAfrica. The deal gives RAKPetroleum strong exposure toAlgeria, in particular, where GulfKeystone has signed up half adozen blocks with strong oil andgas potential. Independent estimatesof the company’s resourceholdings in the North Africancountry suggest reserves of 3.9 billion barrelsof oil equivalent in place.Earlier, RAK Petroleum gained access tothe upstream market in Oman through a £194million deal, in which it acquired the entireOmani production portfolio of IndagoPetroleum.The company also has exposureto other hydrocarbon-rich destinations suchPETER SADLERChief Executiveof RAK Petroleumas Abu Dhabi and Iran.“All these neighbouring areas are what wecall our priority one target areas for exploration,development, and production projects,”says Chief Executive Peter Sadler.Andthere is clearly an appetite for morein the longer term.RAK Petroleum is owned by amix of local and regional shareholdersfrom across the Gulf that includesboth large corporations and smallerprivate investors.The largest shareholdersare RAK Investment Fundand RAK Gas Authority. In its firstyear of operation,the company postedimpressive gains.During the 461days ending 31 December 2006 netprofit amounted to AED180 million(£24 million).The Indago portfolio included productionand associated cash flow from the WestBukha and Bukha fields in Oman. It also expandedRAK Petroleum’s pool of oil and gas industrytalent to manage the company’s expandingcollection of assets,including the transfer tothe company of Mr Sadler himself.Last year,RAK Petroleum took over anotherUK explorer,Anzon Energy,which expandsthe portfolio beyond the company’s core areainto more distant terrain, including Indonesiaand Australia,both well-known oil and gas producers.Althoughthe Anzon portfolio is outsideits core geography, the transaction gavethe company access to both talent and technology,boosting its credibility.Despite being on the acquisition trail, MrSadler talks of the firm’s commitment to stewardshipduring these early days.This will be testedin the coming year as the group gets to gripswith its new asset portfolio.The challenge is toaccelerate the development of its upstream assetsand turn this into positive cash flow as quicklyas possible. “The evolution is from what isessentially a cash management company to ahydrocarbon producing company,” he says.This means getting cash from the sale of oiland gas rather than depending on the returnsfrom other financial investments, a sign of maturityfor any ambitious, young oil company. Ifthis can be done by 2008 it will be an impressiveachievement. “People will say: ‘This is acompany that knows what it is doing – it hasgot a focused strategy,is dynamic,moves quicklyand does not spend a lot on overheads.’People will want to invest in this company.”Assuming all goes well, the intention is towork towards an initial public offering sometimethereafter.London is a natural choice formany global oil and gas juniors, but there arealso hopes of getting a listing in the Middle EastDrilling at a site in Oman acquired byRAK Petroleum from Indagoin recognition of the company’s roots.“The earliest we can have a compelling storyto take to investors is early 2009,” says MrSadler. Going forward, the aim is to positionRAK Petroleum as a showcase for Ras Al-Khaimah in the global oil and gas industry.“RAK Petroleum can put that sort of footprintdown, not as a state oil company, but as an internationaloil company,” he says. ●