Tullow Oil and Capricorn Energy have agreed to merge in a deal worth 65 656.9 million ($ 826.7 million), which will generate dividends following a dividend payment drought and improve cash flow to allow investments in higher output.
Investors in Capricorn, formerly known as Cairn Energy, will receive 3.8068 new shares in Tullow, the largest of the two companies, for each one they own.
Tullow chief Rahul Dhir will lead the merged group, which will have a majority stake in Tullow.
It is expected to produce about 100,000 barrels of oil per day, with reserves of 343 million barrels of oil.
The merged group, which will have a new name that has not yet been announced, focuses on African energy and should be able to invest in expanding production, possibly capitalizing on higher energy prices.
“What would the merged company do that we can not do independently? One is that we would have a different program for the capital, which we would have accelerated,” Dhir told a news conference.
The merger, which has the support of the BoD. of both companies, will save $ 50 million and investors in the new group will receive an annual base dividend of $ 60 million.
Tullow shareholders last received a dividend in 2019.
Capricorn’s cash will also help Tullow reduce its net debt-to-earnings ratio to less than 1-fold, allowing the merged group to spend more on output growth.
Source: Capital
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