36
Failure by the Group to replace depleted reserves, for these or other reasons, may materially adversely affect the Group’s
business, prospects, and financial condition.
The Group may choose to pursue investment opportunities in countries in which it has no previous investment
experience, including markets that have significant social, economic and political risks.
To date, the Group’s most significant projects and investments have been in the core MENA region, specifically in
Egypt, Iraq, Yemen and Oman. However, the Group’s focus is not restricted regionally, and although its current focus
remains on the core MENA region, the Group may pursue its strategy in other countries within greater MENA in which
the Group has had limited operating experience. It may therefore undertake projects and make investments in countries
in which it has little or no previous investment experience. The Group may not be able to fully or accurately assess the
risks of investing in such countries, or may be unfamiliar with the laws and regulations in such countries governing the
Group’s projects and investments. As a result, the Group may be unable to implement its strategy in new jurisdictions. In
addition, investment opportunities in certain jurisdictions may be restricted by legal limits on foreign investment in local
assets or classes of assets. The projects and investments that the Group makes in such markets could lose some or all of
their value and may generate returns that are substantially lower than those previously experienced by the Group’s other
projects and investments.
The Group is dependent on the efforts of certain members of management and on its ability to attract and retain key
technical staff.
The Group’s business is highly dependent upon skilled personnel and professional staff in the areas of oil and gas
exploration, appraisal and development, operations, engineering, and business development, and in particular on the
regional knowledge and relationships of senior management in the jurisdictions in which the Group operates. In
particular, the Group Chairman, Dr Manssour Aboukhamseen, the Chief Executive Officer, Sara Akbar, the Chief
Operating Officer, Mohammad Al Howqal and the Senior Vice-President for Iraq, Mohammed Aboush, have a number
of key relationships that are important to the success of the Group’s strategy. These named individuals and other key
members of management are employed on the basis of three-month notice periods, with no covenants not to compete
with the Group, and may leave the Group at any time. Were any of these key members of management to depart, the
Group may not be able to locate suitable replacement personnel in a timely manner, or at all. The departure of any of
these individuals, or any impediment to any of them performing their duties, may reduce the Group’s ability to
successfully implement its strategy and may have a material adverse effect on its business, prospects, financial condition
and results of operations.
Global competition in the oil and gas industry for management and technical personnel with relevant expertise and
exposure to international best practices is intense due to the small number of qualified individuals in the labour market.
The Group places a particular emphasis, as part of its strategy, on hiring local staff rather than expatriates wherever
possible, and as a result may have difficulty hiring and retaining qualified management and technical personnel in
countries which have a limited supply of such personnel available locally. The Group may be unable to retain its existing
senior management and technical personnel or attract additional qualified personnel as the Group grows its operations in
existing and new jurisdictions. As a result, the Group may face significant costs in attracting and retaining specialist
personnel necessary for the operation and expansion of its business, and there can be no assurance that it will be able to
do so in every or any case. Any failure to attract, retain or replace qualified technical personnel could significantly delay
or prevent the successful implementation of the Group’s strategy.
The Group’s ownership structure is subject to risks associated with foreign ownership restrictions in Kuwait.
Kuwaiti law contains local ownership requirements stating that nationals of Gulf Cooperation Council (“
GCC
”)
countries must retain ownership of at least 51% of the outstanding share capital of Kuwaiti companies. As a result of
these Kuwaiti law ownership requirements the Issuer has entered into certain arrangements (the “
KEC Kuwait
Restructuring
”) with entities established in the GCC to permit the Issuer to exercise ownership and control of KEC
Kuwait. As a result, under the Group’s current ownership structure, KEC Kuwait is a direct subsidiary of the Issuer, by
virtue of the Management Agreement and TRS as described in “
The Group’s business—Corporate structure.
” To
implement this ownership arrangement, the Issuer engaged in an ongoing exchange offer for the shares of KEC Kuwait.
At the date of this Offering Memorandum, shareholders holding over 51% of the shares of KEC Kuwait have transferred
their shares in KEC Kuwait (in exchange for ordinary shares in the Issuer) to a GCC SPV structure, with the SPV, Awal
II Shares and Securities Co. SPC (“
Awal II
”), maintaining legal title to the KEC Kuwait shares while the Issuer
maintains contractual rights to any economic benefit of such KEC Kuwait shares (by way of the TRS). See “
The Group’s
business—Corporate structure.
” Although the Group believes this structure sufficiently takes the requirements of
Kuwaiti law into account, if there is a change in the relevant foreign ownership laws of Kuwait or in their interpretation
or application, the Group’s ownership and control of KEC Kuwait could be challenged or unwound.
