Tullow-Capricorn Merger Creates Competitive Megafirm

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Tullow Oil. Bigstock

Oil majors Tullow and Capricorn have agreed on terms for an all-share combination of the two entities, creating a combined group among the largest listed independent African focused energy companies today.

The merger scheme, expected to become effective in this year’s fourth quarter, represents an $826.7 million cash deal, the combined group holding one billion barrels worth of resources with a $1.763 million market cap. Production from the new company is expected to reach 100,000 barrels per day by 2025. The advantages of the merger are substantial for the two firms: $1.8 billion of combined liquidity and $50 million per annum in pre-tax net cash cost savings seeing free cash flows of $2.4 billion estimated over the coming three years. 

The advantages of the merger between Tullow Oil and Capricorn are substantial for the two firms: $1.8 billion of combined liquidity and $50 million per annum in pre-tax net cash cost savings seeing free cash flows of $2.4 billion estimated over the coming three years.

Early indications show the combined group’s post-merger moves most likely to lie across Tullow Oil’s extant African reserves as well as Capricorn’s emergent presence on the continent in Egypt with infill drilling and low-cost exploration, alongside Kenya, Guyana and Mauritania – all countries with high prospective resource bases accessible with limited capital exposure.

The hybrid company will be London-listed owing to both firms’ UK bases, Capricorn shareholders holding 47% and Tullow Oil shareholders 53% following the combination of equals.

The post-merger company board will also be shared, notably, Tullow Oil’s current Chair, Phuthuma Nhleko taking over chairmanship over the combined board, whilst Capricorn’s Chair, Nicoletta Giadrossi assumes the role of Senior Independent Director. Rahul Dhir, current CEO of Tullow will hold the CEO post following the merger, Capricorn’s CFO, James Smith, doing likewise.

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Elliot Connor

Elliot Connor

Elliot Connor is Energy Capital & Power's Field Editor for the MSGBC region. He holds a PgD in Environmental Engineering and is currently pursuing a Masters in Business Administration. He is also a bestselling author, TED speaker and charity CEO, having priorly worked as a columnist for India’s largest newspaper: The Daily Pioneer.

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