Capricorn Energy finalized an agreement with Tullow Oil to merge in an all-stock deal worth $826.7 million, in which its Egyptian onshore gas fields will have the second biggest share in production, according to Reuters.
This merger will form a new company, the name of which has not been announced yet. It will focus its activities on African energy.
The new company is expected to produce around 100,000 barrels of oil equivalent per day (boe/d), with reserves of 343 million barrels of oil equivalent (mmboe). Its biggest share of production and reserves will come from Tullow’s offshore oilfields in Ghana with oil making up three quarters and gas one quarter.
This agreement will also enhance cash flow to allow investment in higher output and investors in Capricorn will receive 3.8068 new shares in Tullow, the bigger of the two companies, for each share they hold.
Tullow’s CEO Rahul Dhir will lead the combined group, as the majority of its shares owned by Tullow shareholders.
“What would the combined company do that we can’t do independently? One is we would have a different capital programme, which would… have acceleration in it,” Reuters stated quoting Dhir during a conference call.