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(Adds response from Gulf Keystone, share movement)
OSLO/BENGALURU, July 29 (Reuters) - Norwegian energy firmDNO ASA expanded its foothold in Iraqi Kurdistan onFriday by offering to purchase rival Gulf Keystone Petroleum Ltd for $300 million, following the latter's junk bond dealthis month.
DNO, which will become by far the largest foreign oilproducer in the Kurdish-run region, offered to buy shares at a20-percent premium to the price at which Gulf Keystone willissue new shares as part of a wider restructuring.
Shares in Gulf Keystone, which operates the Shaikan oilfieldin Iraqi Kurdistan and produces about 40,000 barrels per day(bpd), rose as much as 28 percent to a high of 5 pence.
DNO, together with Gulf Keystone and London-listed Genel, operates in the region, in which it runs the Tawkefield that in May averaged close to 118,000 bpd.
Gulf Keystone saw a third of its market value wiped outafter announcing its bondholders had agreed to swap $500 millionof its debt for equity.
With a market value of $3 billion in its heyday four yearsago, Gulf Keystone is currently worth around $60 million.
International operators in Kurdistan, which is estimated tohold 45 billion barrels of oil reserves, have faced delayedpayments, falling oil prices and a worsening geopoliticalsituation in areas run by the Kurdistan Regional Government.
Iraq's Kurds said they are ready to strike an agreement withthe central government in Baghdad to increase oil exports if itguarantees them monthly revenue of $1 billion, more than doublewhat they make currently from selling oil.
Gulf Keystone said separately on Friday that it wasreviewing the DNO proposal.
DNO's move could offer a way out for those note and bondholders who may be unable or unwilling to hold Gulf Keystoneequity for an extended period.
The additional offer of 170 million DNO shares, or about13.6 percent of DNO share capital after completion of the deal,would give Gulf Keystone investors a small stake in the Shaikanfield, as well as DNO's other assets.
DNO shares were up 0.9 percent.Source text for Eikon: Further company coverage: (Reporting By Ole Petter Skonnord in OSLO and Esha Vaish inBENGALURU; Writing by Amanda Cooper; Editing by Dale Hudson)
