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TUWOY Reiterates FCF Guidance, Sticks to Capricorn Merger Terms

Tullow Oil Plc TUWOY announced that it would go ahead with the planned merger with Capricorn Energy under the existing all-share payment plan. The company intends to brush aside criticism by some Capricorn investors who said that the deal undervalues the company.

The U.K.-based, West Africa-focused company stated that its board is dedicated to getting the merger with Capricorn done as recommended by both the Tullow and Capricorn boards under the current terms.

Tullow further mentioned that it believes that the proposed merger has the potential for value creation and has synergies that could be unearthed as part of the deal.

Earlier this year, Tullow agreed to take over its British competitor — Capricorn Energy — in an all-stock deal worth around 656.9 million pounds ($826.7 million). This will eventually lead to the creation of an Africa-focused energy firm with a market value of more than £1.4 billion.

The deal, however, needs authorization from no less than 75% of Capricorn shareholders. This might be at risk if hedge fund investors, who have been critical of the merger, turn their derivative investments into direct shareholdings.

TUWOY maintained its free cash flow guidance of $200 million this year, anticipating an average oil price of $95 per barrel. Moreover, the company recorded negative $205 million cash flow for the first half of the year due to an acquisition and an arbitration payment.

With a market capitalization of around $830.5 million, Tullow had net debt of around $2.3 billion at the end of Jun 30. The company anticipates its net debt to core profit ratio to fall to 1.5 by year-end.

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 #3 (Hold). Some better-ranked stocks from the energy space that warrant a look include NexTier Oilfield Solutions NEX, PBF Energy PBF and Marathon Petroleum MPC, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for NexTier’s 2022 earnings stands at $1.35 per share, suggesting an increase of about 413.9% from the year-ago loss of $2.81.

NEX beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 269.5%.

The Zacks Consensus Estimate for PBF Energy’s 2022 earnings stands at $19.96 per share, suggesting an increase of about 898.4% from the year-ago loss of $2.50.

PBF beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 78%.

The Zacks Consensus Estimate for Marathon Petroleum’s 2022 earnings stands at $21.15 per share, indicating an increase of approximately 763.3% from the year-ago earnings of $2.45.

MPC beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 56.7%.


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