Vallares will merge with Turkeys Genel Energy International Ltd. in a US$2.1 billion deal that will see Vallares gain access to oil fields in Iraqs Kurdistan region.
The transaction will be completed as an all-share reverse takeover and leave current holders of Vallares and Genel Energy with equal stakes. The new company will trade in London as Genel Energy Plc, headed by former BP CEO Tony Hayward as the new CEO.
Genel produces 41,000 barrels a day, a figure projected to reach 90,000 barrels by 2013. It has proved and probable reserves of 356 million barrels, a figure Hayward said would rise quickly given the exploration potential of licenses held by Genel.
The cost of finding and developing the oil is low compared with other regions of the world at between US$2 and US$4 a barrel, he said.
"These are world scale producing fields," Hayward was reported as saying by Bloomberg. Kurdistan is one of the "last great frontiers in the oil and gas industry, with low finding and development costs, and proximate to significant markets."
Genel will drill five exploration wells in the next year, seeking total resources in excess of 750mn barrels, according to a statement.
Goldman Sachs and JPMorgan Cazenove advised Vallares on the transaction. Kurdistan's regional government is expected to approve the deal later this month, Vallares said.
Mehmet Sepil, Genel's CEO and owner of 29 per cent of its shares, will become president of the new company. He will nominate Murat Yazici to represent him on the board.
The company will be chaired by former BP executive and ex- Petrofac Chairman Rodney Chase. Mark Parris, a former US ambassador to Turkey, will become a non-executive director.