At a Glance

• ShaMaran Petroleum Ltd. is expanding its strategic partnership with HKN Energy into Federal Iraq by acquiring a 25% shareholding in HKN Hamrin Ltd. for the Hamrin oil development and production contract (DPC).
• The Hamrin field currently produces around 20 thousand barrels of oil per day (Mbopd), with a joint target to scale production to approximately 60 Mbopd by 2028 and long-term gross reserves estimated between 500 million and 1 billion barrels.
• To fund growth capital expenditures, refinance its existing 2029 bond of roughly $144 million, and optimize capital structure, ShaMaran has mandated Pareto Securities AS to explore a new bond issuance of up to $200 million.
• In a major corporate consolidation, ShaMaran and Gulf Keystone Petroleum Ltd. have signed a merger and combination agreement to form an expanded growth platform across the Kurdistan Region of Iraq and Federal Iraq.

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Independent oil and gas producer ShaMaran Petroleum has announced a major expansion of its regional footprint, scaling its cooperation with HKN Energy into Federal Iraq while simultaneously executing a corporate merger with Gulf Keystone Petroleum Ltd.

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Strategic Expansion into the Hamrin Field

• Asset Integration: Building on their joint ventures across the Atrush and Sarsang oil fields in the Kurdistan Region, ShaMaran and HKN are extending their partnership to the Hamrin oil field in Federal Iraq, previously operated by the state-owned North Oil Company.
• Production Targets and Reserves: Management estimates remaining gross reserves and resources in the range of 500 million to one billion barrels. The partners aim to maximize recovery over the 25-year DPC term, scaling output from current levels above 20 Mbopd to approximately 60 Mbopd by 2028, with subsequent phases targeting further doubling of production at estimated incremental capital expenditures of $2-3 per barrel.
• Transaction Structure: ShaMaran's 25% stake in the Hamrin JV involves a $35 million carry of HKN's share of initial project costs alongside a $15 million deferred payment payable out of future cash flows once initial investments and the carry are recovered in full.

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Elvis Pellumbi, Chief Financial Officer of ShaMaran, commented, “On the back of the attractive Hamrin investment, we are looking to raise a new bond to better reflect the improved credit profile of our expanded asset portfolio, fund Hamrin growth capex and reduce interest costs.

We see increased near-term cash flow from our existing assets due to the tri-party export agreement coupled with an enhanced long-term outlook from the addition of future Hamrin cash flows.”

ShaMaran has mandated Pareto Securities AS to be sole bookrunner and manager for a contemplated bond of up to $200 million in order to refinance its existing 2029 bond (ISIN NO0011057622) that has approximately $144 million currently outstanding. The proceeds from the new bond will be used to fund ShaMaran’s share of the Hamrin investment and for general corporate purposes.

The Company will host fixed income investor meetings, and a bond issuance may follow subject to market conditions and acceptable terms. It is the Company’s intention to exercise the applicable call option in the existing bond upon successful issuance of the contemplated new bond.

In parallel, ShaMaran and Gulf Keystone announced a definitive merger and combination agreement designed to create a powerful unified platform for oil and gas exploration and production spanning both the Kurdistan Region and Federal Iraq.

FYI

ShaMaran Petroleum is an independent oil and gas company listed in Oslo on Euronext Growth and in Stockholm on Nasdaq First North under the ticker SNM, and forms part of the Lundin Group of Companies. Alongside its new Federal Iraqi footprint, the company indirectly holds a 50% working interest in the Atrush Block and an 18% working interest in the Sarsang Block in the Kurdistan Region of Iraq.

Backed by improved cash flows from existing assets, bolstered by a tri-party export agreement and anticipated future Hamrin cash flows, ShaMaran is pursuing a new bond issue of up to $200 million, managed by Pareto Securities AS, to refinance its outstanding 2029 notes and support Hamrin capital expenditures and general corporate purposes.

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