Tullow Oil will acquire Capricorn Energy in an all-stock deal worth 656.9 million pounds ($826.7 million), keeping a focus on African reserves amid soaring energy prices.
Investors in Capricorn, formerly known as Cairn Energy, will receive 3.8068 Tullow shares for each share they hold, the companies said on Wednesday. Reuters calculated the value.
"The combination represents a unique opportunity to create a leading African energy company, listed in London, with the financial flexibility and human resource capability to access and accelerate near-term organic growth," the companies said.
The Russia-Ukraine war has sent crude oil and gas prices higher as sanctions on Moscow squeeze supplies.
The combined group, to be led by Tullow boss Rahul Dhir and majority-owned by the West Africa-focused firm, is expected to have an output of 96,000 barrels of oil equivalent per day, with pro forma reserves of 343 million barrels of oil equivalent.
Tullow's flagship offshore oilfields in Ghana will make up the biggest share of the new group's reserves and production, three- quarters of which will be oil and one-quarter gas.
The larger company, which is expected to have a new name, will have production across Africa, including Egypt, Gabon, and Ivory Coast.
The merger will offer annual savings of $50 million and investors in the new group will get an annual dividend of $60 million, ending a payout drought for Tullow shareholders.
Shares in Tullow, which last closed at a price of 54.60 pence each, reversed initial losses to trade about 0.6% higher by 0759 GMT. Capricorn Energy shares were up 0.7%. The wider oil and gas index fell 0.6%.
Morgan Stanley and Rothschild & Co were Capricorn's financial advisers, while PJT Partners and Barclays advised Tullow. The boards of both energy companies backed the deal.
Separately, energy services provider Wood Plc WG.L agreed to sell its consulting unit for $1.9 billion.
Latest Stories
-
Narcotics Control Commission seizes 20.5kg of cannabis
6 mins -
One suspect arrested over killing of military officer at Kasoa
11 mins -
Maritime Security Threats: Global collaboration, commitment needed to overcome risks – Akufo-Addo
44 mins -
AWUSCO develops 6-year Scientific Strategic Plan towards digital transformation
52 mins -
May Day: I’m prepared to work with you again to meet Ghana’s needs – Mahama assures workers
56 mins -
Build digital skills to enhance employability – KNUST Vice-Chancellor urges students
1 hour -
5 simple steps to take when you’re completely emotionally exhausted so you can get your fire back
2 hours -
Fatawu Issahaku wins Leicester City Young Player of the Year award
2 hours -
Chieftaincy Ministry: Yagbonwura was never asked to stand and greet Akufo-Addo; ignore deliberate misreporting
2 hours -
Chief of Staff hands over new headquarters to Real Estate Agency Council
2 hours -
Should I get back with my ex after he cheated? 5 questions to ask yourself before getting back together
2 hours -
Bright Simons: How SML confused Ghanaian professors
2 hours -
Air Quality: World Bank unveils $1bn guarantee to bolster clean air projects globally
2 hours -
Chop bar owner fingered in 3 murder cases denies involvement
2 hours -
Esinam Osei: Postpartum depression and me
2 hours