Tullow Oil Ends Preliminary Merger Talks with Kosmos Energy
Tullow Oil Plc has announced the termination of preliminary discussions with Kosmos Energy Ltd regarding a possible all-share acquisition.
The decision follows Kosmos’ confirmation that it does not intend to make an offer for Tullow Oil, in line with Rule 2.8 of the Takeover Code.
The discussions, which were disclosed on December 12, 2024, after a media leak, were at an early stage and had not progressed to due diligence.
Despite this, Tullow Oil’s Board expressed confidence in the company’s standalone business strategy, highlighting its efforts to optimise its capital structure and address remaining debt maturities.
The termination of the merger talks with Kosmos Energy, follows the anticipated outcome of the Branch Profits Remittance tax arbitration with the International Chamber of Commerce (ICC) which is now in the final review phase of its draft decision.
Tullow Oil says it expects to receive the arbitration award imminently and has assured stakeholders of further updates as they become available.
Kosmos in Early Talks For Tullow Oil Takeover
Media reports were rife on December 12, that U.S. oil and gas company Kosmos Energy was in early talks for an all-share acquisition of Tullow Oil.
The merger of the two heavily indebted firms was to be the latest in a recent wave of energy industry consolidation as company boards look to boost performance by increasing scale and cutting costs.
The combined company would have production of more than 130,000 barrels of oil equivalent per day (boepd), based on the two companies’ 2024 guidance, spanning Mauritania, Senegal, Ghana and Equatorial Guinea on Africa’s western coast as well as the U.S. Gulf of Mexico.
Tullow Oil, whose CEO Rahul Dhir stepped down on December 4, 2024, announced the all-share acquisition by Kosmos Energy.
Tullow Oil was founded in the late 1980s as an exploration company focused on Africa, Britain and South Asia. It grew rapidly during the 2000s through a series of acquisitions and oil and gas discoveries, including the Jubilee field offshore Ghana.
Riding the energy boom, Tullow became a poster boy for the sector, reaching a market capitalisation of nearly $22 billion in 2012.
But it suffered a dramatic reversal of fortune after a string of operational issues at key oilfields, disappointing exploration results, leadership changes and the loss of investor interest in oil and gas drillers as the focus shifted to the energy transition.
Tullow’s market capitalisation stood at $480 million on Friday, December 13, 2024, when its shares dipped by more than 7%.
It has net debt of about $1.4 billion.
Kosmos Energy, based in the Texas, has a market cap of $1.5 billion. Its shares were down by about 15% after the news of its approach on Thursday, December 12.
The company has a net debt of $2.7 billion.
