Tullow Oil has confirmed its merger with Capricorn Energy, a fellow British oil and gas company that offers the combined entity oil reserves in excess of a billion barrels across multiple countries in Africa.
According to the company, it is intended that the Combination will be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act, where Tullow will acquire all of the issued and to be issued Capricorn Shares.
A statement from Tullow noted that: “The boards of directors of Tullow Oil PLC (Tullow) and Capricorn Energy PLC (Capricorn) are pleased to announce that they have reached agreement on the terms of a recommended all-share combination of Tullow and Capricorn (the Combination) to create the combined group.
“This is a Merger of equals creating a leading African energy company with a material and diversified asset base and a portfolio of investment opportunities delivering visible production growth. Capricorn Shareholders to receive 3.8068 New Tullow Shares for each Capricorn Share held, with Capricorn Shareholders to own 47% and Tullow Shareholders to own 53% of the Combined Group on Completion,’ it added.
The statement added that the move delivers a Combined Group with robust cash generation and a resilient balance sheet, realising pre-tax net cash cost synergies of $50 million per annum.
It also establishes the basis for a sustainable shareholder returns programme, with a base annual dividend of $60 million and is committed to reducing emissions from within its operating assets, targeting net zero Scope 1 and Scope 2 emissions by 2030, and continuing a proven track record of safe, low-cost operations.