On Tuesday, Canadian oil company ShaMaran Petroleum and the British oil company Gulf Keystone Petroleum announced a $601 million merger that will result in the combined operation of their fields in the Kurdistan Region.

“The merger creates a stronger company with greater scale, a highly complementary portfolio, and a stronger cash flow profile. Expected near-term cash flow from ShaMaran’s assets complements the long-term growth potential of the Combined Company, enhancing our ability to invest in growth while delivering attractive and sustainable shareholder distributions,” Gulf Keystone Non-executive Chair David Thomas said.

Gulf Keystone’s 61.5% stake in the Shaikan Field will be combined with ShaMaran’s stakes in the Atrush (50%) and Sarsang (18%) fields, as well as its 25% shareholding in the company holding the Hamrin field contract.

“We view this combination as a natural next step for both companies. Bringing together Shaikan with the adjacent Atrush and Sarsang fields will deliver synergies and gives the enlarged company a significantly stronger platform to invest in the future development of Shaikan and Hamrin,” Gulf Keystone CEO Jon Harris added. “We also look forward to working with HKN Energy as an experienced operator and partner on ShaMaran’s assets.”

Last Thursday, Gulf Keystone Petroleum and ShaMaran Petroleum said that the first cargo of additional oil was allocated by Iraq’s State Oil Marketing Organization.