Deal Insight
Tullow and Capricorn agree merger
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*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
London-listed stalwarts Tullow Oil and Capricorn Energy have reached an all-share merger agreement. The deal will consolidate the companies' Africa focused businesses, combining Tullow's oil-weighted assets mainly in Ghana and Capricorn's gas-weighted portfolio in Egypt. The trend of consolidation has been gathering pace lately and we think there's clear logic to this tie-up. Tullow's position in Ghana is generating substantial cash in the current price environment and it has a material development opportunity in Kenya; but managing its high leverage ratio (over 100%) has been the primary focus. Capricorn brings a strong balance sheet with a net cash position of around US$700 million; but beyond shareholder returns it has struggled to deploy capital to growth opportunities and fixed gas pricing in Egypt has weighed on its market performance.
Table of contents
- Executive summary
- Transaction details
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Upstream assets
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Tullow
- Ghana
- Cote d'Ivoire
- Gabon
- Kenya
- Exploration assets
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Capricorn
- Egypt
- Mexico
- Exploration assets
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Tullow
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Deal analysis
- Shareholder approval
- Financial outlook
- Emissions
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Upsides and risks
- Upsides
- Risks
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Strategic rationale
- Combined balance sheet strength
- Scale and diversity
- Cultural fit
- What next?
- Oil & gas pricing and assumptions
Tables and charts
This report includes the following images and tables:
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Tullow and Capricorn working interest productionDeal analysis: Table 1Oil & gas pricing and assumptions: Table 1
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Oil & gas pricing and assumptions: Table 2Deal analysis: Table 2Tullow and Capricorn cash flow and capexTullow and Capricorn absolute emissions and intensityBenchmark: peer group productionUpstream assets: Table 1
What's included
This report contains:
