ShaMaran is an intriguing oil company with producing assets in Iraqi Kurdistan, listed on the Canadian stock exchange and First North in Sweden. Founded in 2009 by the Lundin family, ShaMaran initially focused on oil exploration but shifted its attention to the Atrush license, which began production in 2017. In 2022, ShaMaran acquired a stake in the Sarsang oil field from Total Energies and bought out its partner Taqa from the Atrush field last year.
Currently, ShaMaran holds interests in two producing fields in Iraqi Kurdistan, with Sarsang producing light oil similar to Brent and Atrush producing slightly heavier oil. Both fields are operated by the American company HKN, with the Kurdish government as a co-owner of the licenses. ShaMaran’s share of oil production is around 20,000 barrels per day, despite selling its high-quality oil for an average of $37 per barrel due to limited export options.
The closure of the export pipeline to Turkey has significantly impacted ShaMaran’s revenue, forcing them to sell oil at lower local prices. However, recent developments suggest a potential resolution between Erbil and Baghdad regarding oil sales from Kurdistan, which could lead to a reopening of the export pipeline and a substantial increase in ShaMaran’s cash flow.
In terms of financial performance, ShaMaran’s outlook varies depending on the scenario. In a conservative scenario where the pipeline remains closed, the stock shows minimal upside. However, if the pipeline reopens, ShaMaran’s value could more than double, presenting a significant opportunity for investors.
Given the geopolitical risks in the region, ShaMaran’s strategy focuses on acquisitions rather than exploration, targeting undervalued assets in the area. While larger oil companies have exited Iraqi Kurdistan due to political considerations, ShaMaran sees potential in acquiring smaller companies and streamlining operations to enhance profitability.
With a clear focus on managing its outstanding debt and potential for dividend payouts or share buybacks in the future, ShaMaran remains a compelling investment opportunity for those willing to navigate the complexities of the region. The company’s largest shareholder, the Lundin family, demonstrates a strong commitment to ShaMaran’s success, further bolstering investor confidence in the company’s prospects.