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Dow Jones Newswires: Tullow Oil, Capricorn Energy agree to merge

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Tullow Oil PLC said Wednesday that it has agreed to merge with Capricorn Energy PLC.

The combined group could be valued at 1.42 billion pounds ($1.79 billion), based on Tuesday’s closing price.

Capricorn shareholders
CNE,
+0.76%

will receive 3.8068 new Tullow shares for each Capricorn share held, granting them a 47% stake in the enlarged entity.

Tullow
TLW,
-0.55%

said the merger would realize annual cost synergies of $50 million and create a leading energy company in Africa.

The two companies delivered aggregate production of 96,000 oil-equivalent barrels a day last year. Tullow forecast that the new group will deliver pre-financing free cash flow of $2.4 billion in 2022-2025 assuming a Brent price of $75 a barrel.

Tullow operates oil fields in Ghana, which are expected to yield net daily production of 55,000-61,000 barrels this year, and has exploration projects in Ivory Coast, Gabon and Kenya.

Capricorn last year acquired a portfolio of oil-and-gas assets onshore Egypt from Shell PLC, and its guidance for 2022 is 37,000-43,000 oil-equivalent barrels a day.

Upon completion of the merger, the chief executive of the group would be Tullow’s CEO, Rahul Dhir, the company said. Capricorn CEO Simon Thomson will step down, and Chief Financial Officer James Smith will retain his role in the combined entity.

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

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