British International Oil Company (IOC) Capricorn Energy announced a proposed merger with NewMed Energy to create a Middle East and North Africa (MENA) energy champion.
The deal, which Capricorn said would create one of the largest upstream energy independents listed in London, signals a departure for the IOC from a previous proposal to merge with Tullow Oil.
The Capricorn/Tullow merger would have extended the interests of Capricorn shareholders to Guyana, as Tullow has stakes in two offshore blocks in the Guyana basin. However, a wedge was driven in the proposed merger with Tullow Oil when Capricorn shareholders raised concerns that it seemed like a poorly disguised takeover by the former. This caused the board to start seeking alternatives.
The new combination will be effected by Capricorn acquiring all of the partnership interest in NewMed in consideration for the issue of new Capricorn shares to NewMed unitholders.
The result of the merger will see Capricorn shareholders holding approximately 10.3% of the share capital of the combined group and NewMed unitholders, together with NewMed’s current general partner, holding in aggregate approximately 89.7% of the share capital of the combined group, a public release said.
The Combined Group will trade under the name NewMed Energy and expects to retain its existing Premium Listing on the London Stock Exchange (“LSE”). It intends to implement a listing of its entire issued share capital on the Tel Aviv Stock Exchange (“TASE”) to take effect on or as soon as possible after Completion of the Combination. It is expected that UK FTSE indexation will also be maintained.
The Board of the combined group will have a clearly defined governance structure, Capricorn said, in line with the United Kingdom Corporate Governance Code. During the combination process, it is proposed that Capricorn’s chief executive officer, Simon Thomson, will be the transitional chair of the Board. A search for an independent chair will be undertaken in due course.
The MENA champion expected to result from this transaction will have a diversified portfolio of high-quality producing assets in Israel and Egypt underpinned by 45.34% interest in the Leviathan gas field. They also expect to institute an attractive diversified exploration portfolio across Cyprus, Egypt, Israel, United Kingdom, Mexico, Mauritania, and Suriname. They are also committing to net zero carbon emissions by 2040 in Scope 1 and 2 emissions.