Tullow Oil plc and Capricorn Energy plc have announced plans for a recommended all-share merger to create one of the largest energy companies in Africa.
TERMS
In a joint statement today, the companies added that Capricorn shareholders would receive 3.8068 new Tullow shares for each Capricorn share held.
This would see Capricorn shareholders owning 47% and Tullow shareholders 53% of the combined group.
The new entity would hold a “robust cash generation and a resilient balance sheet, realising pre-tax net cash cost synergies of $50 million per annum” with “an annual dividend of $60m”.
The group would also commit to reduce emissions from its operating assets, targeting net zero Scope 1 and Scope 2 emissions by 2030.
INTERESTS
The new company would have interests in Ghana, Egypt, Gabon and Côte d’Ivoire.
Additionally, there is potential in the Kenya development project, Guyana and Mauritania.
PRODUCTION
The company would have pro forma reserves and resources of 343mmboe and 696mmboe with 2021A production of 96kboe/d.
This would position it as one of the largest, listed independent African focused energy companies today.
The combined group will supply gas in Egypt and Ghana to support industrial development.
DIRECTORS
Current chair of Tullow Phuthuma Nhleko will become chair of the combined group; chair of Capricorn Nicoletta Giadrossi will become senior independent director; Tullow chief executive Rahul Dhir will become CEO; and chief financial officer of Capricorn will become CFO.
The board will include a further five non-executive directors from both companies, two of which will be current Tullow non-executive directors and three current Capricorn non-executive directors.
Capricorn CEO, Simon Thomson will step down on completion of the merger to become chair of the integration steering committee.
The combined group’s headquarters will be at Tullow’s existing offices in London with retained premises in Edinburgh.
AMBITION
Mr Thomson said that the combined businesses would create a leading African energy company, with significant scale and opportunities for growth.
“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.”
Mr Dhir added that the combined group would have renewed focus and ambition, financial flexibility to accelerate organic growth while creating value for shareholders and host countries.
“Together, we are committed to building a better future through responsible energy development.”
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