Tullow, Capricorn pen merger deal
Tullow Oil and Capricorn Energy, two independent E&P companies active in Africa, have agreed to merge in an effort to "play a leading role" in African energy markets, Tullow Oil announced June 1.
The merger will entail a 53% to 47% share split between Tullow and Capricorn's investors, Tullow said. It is subject to approval by shareholders of both companies.
Capricorn Energy has upstream operations in Mauritania, Egypt and Suriname, as well as the UK, Mexico and Israel. In Egypt, Capricorn expects to yield 37,000 to 43,000 barrels of oil equivalent/day this year, bringing output to the peak of its guidance range. Capricorn has a number of production assets in the country. These include a 50% working interest in the Obaiyed concession, which Capricorn says contains Egypt's largest onshore gas field.
Tullow's portfolio incorporates the Jubilee and TEN oil projects offshore Ghana, in addition to a collection of assets in Egypt, Gabon and Cote d'Ivoire. By combining the two portfolios, Capricorn expects the merger to create a "diversified" pan-African upstream offering, underpinned by low-cost production and incremental, high-return capex opportunities.
The two companies have also agreed to a "sustainable" shareholder returns programme that will establish a base annual dividend of $60mn.
Capricorn's CEO Simon Thomson said: "The combination of our businesses will create a leading African energy company, with significant scale and opportunities for growth. Our two companies share a track record and continued vision of responsible energy production to support the economic and social development of our host communities.
"This combination will allow the two companies to accelerate investment in new opportunities across the continent, while retaining a resilient balance sheet and delivering attractive returns to shareholders."
Tullow CEO Rahul Dhir added: "Our two companies are a perfect fit and this combination draws on the proud heritage of both Tullow and Capricorn to create a leading African energy company.
"With renewed focus and ambition, the combined group will have the financial flexibility to accelerate organic growth and pursue further opportunities as they arise, while creating value for shareholders and host countries alike. Together, we are committed to building a better future through responsible energy development."