SOCO International announced a possible merger transaction with Kuwait Energy as the company confirms that it is studying a potential merger of equals with Kuwait Energy. The transaction comes in context of SOCO’s objective to reshape its business strategically and to grow its portfolio, Egypt Oil & Gas reports.

The transaction would create a possibility for Kuwait Energy to go public after it failed in 2017 to complete an initial public offering (IPO) of its shares on the London exchange, as the Kuwaiti firm was hoping to raise around $150 million from the IPO, Reuters informed.

SOCO International’s talks with Kuwait Energy’s Board of Directors are preliminary and the two firms have not agreed upon any transaction terms yet.

The merger transaction could be beneficial for the two firms, Head of investment research at MB Commodities Capital in Dubai, Thomas Streater, stated, adding “with volatile oil prices, it makes sense for small oil companies to merge as getting bigger scale gives them balance sheet to face volatility. SOCO would get a portfolio of low cost, attractive assets, and for Kuwait Energy it would be a way to monetize some of their holdings.”

SOCO is an international oil and gas exploration and production company, headquartered in London and traded on the London Stock Exchange.