Tullow Oil (TUWOY) to Acquire Rival Capricorn for $827 Million
U.K.-based, West Africa-focused Tullow Oil Plc TUWOY has agreed to take over its British competitor — Capricorn Energy — in an all-stock deal worth around 656.9 million pounds ($826.7 million). This deal will lead to the creation of an Africa-focused energy firm with a market value of more than £1.4 billion.
As part of the all-stock deal, Capricorn shareholders will receive 3.8068 Tullow shares for each share they own and have a 47% stake in the merged group, which will be headed by Tullow’s Chief Executive Officer, Rahul Dhir.
The combined entity will own 1 billion barrels of resources across Africa and is expected to produce around 100,000 barrels of oil equivalent per day. However, by 2025, the output is anticipated to reach 120,000 barrels a day.
Capricorn owns assets in Mauritania on Africa’s Atlantic coast and in Egypt’s Western Desert. Meanwhile, TUWOY mainly has projects in West and East Africa. The two firms stated that they believed the deal would create a “stronger, more resilient” African energy company that would be able to deliver sustainable shareholder returns while focusing on infrastructure-led exploration.
The two companies in a statement said, "the combination represents a unique opportunity to create a leading African energy company, listed in London, with the financial flexibility and human resource capability to access and accelerate near-term organic growth."
The new entity’s board will include two from Tullow’s current non-executive directors and three from Capricorn’s current non-executive directors.
Tullow Oil operates as an independent oil and gas exploration and production company in Europe. The company has a large portfolio of exploration and production assets, with a focus on balanced long-term growth. It is headquartered in London, the United Kingdom.
Tullow currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks from the energy space that warrant a look include Marathon Petroleum MPC, Centennial Resource Development CDEV and Valero Energy VLO, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Marathon Petroleum is valued at around $59 billion. Marathon Petroleum beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 65%.
The Zacks Consensus Estimate for MPC’s 2022 earnings is projected at $11.03 per share, up approximately 350% from the projected year-ago earnings of $2.45.
The Zacks Consensus Estimate for Centennial’s 2022 earnings is projected at $2.06 per share, which is an increase of approximately 198.5% from the projected year-ago earnings of 69 cents.
Centennial stock has increased 39.9% in a year. The Zacks Consensus Estimate for CDEV’s 2022 earnings per share has been revised from $1.59 to $2.06, up about 29.6%, in the past 60 days.
The Zacks Consensus Estimate for Valero’s 2022 earnings is projected at $14.30 per share, up about 408.9% from the projected year-ago earnings of $2.81.
Valero beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 84.3%. VLO is valued at around $56.6 billion.
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