Tullow Oil and Capricorn Energy PLC have agreed to merge in an all-share combination, Tullow Oil said in a June 1 announcement.
The combine would result in a diversified pan-African upstream portfolio underpinned by low-cost producing assets, with a deep portfolio of incremental high-return investment opportunities in Ghana, Egypt, Gabon, and Côte d’Ivoire, Tullow said.
Capricorn holds development, production, and exploration assets with interests in the UK, Egypt, Israel, Mauritania, Mexico, and Suriname.
The combined company would hold reserves and resources of 343 MMboe and 696 MMboe with 2021 production of 96,000 boe/d.
Capricorn shareholders will receive 3.8068 new Tullow shares for each Capricorn share held, with Capricorn shareholders owning 47% and Tullow shareholders owning 53% of the combined company on completion. The deal is expected to be implemented through a court-sanctioned scheme of arrangement.
The combined group is expected to realize pre-tax net cash cost savings of $50 million on an annual run-rate basis by the second anniversary of the deal completion through the reduction of duplicate costs, Tullow said.
Phuthuma Nhleko, currently chair of Tullow, is expected to become chair of the board of the combine. Nicoletta Giadrossi, currently chair of Capricorn, will become senior independent director. Rahul Dhir, chief executive officer of Tullow, will become chief executive officer. James Smith, chief financial officer of Capricorn, will become chief financial officer. Simon Thomson, chief executive officer of Capricorn, will step down and become chair of the integration steering committee.
The board will include a further five non-executive directors drawn from both companies—two from Tullow and three from Capricorn.
Headquarters is expected to be at Tullow's existing offices in London with a retained premise in Edinburgh.
Completion of the deal is subject to, amongst other things, receipt of necessary antitrust or regulatory consents, governmental approvals or consents, material pre-emption rights or similar rights in jurisdictions in which companies operate.