Tullow CEO: Weigh Capricorn merger deal against real opportunities, not spreadsheets

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Palliser Capital, a 5% stakeholder in Capricorn Energy, sees the proposed merger with Tullow Oil as a poorly disguised attempt by the latter to take over Capricorn, and urged the board to consider alternatives. But Chief Executive Officer of Tullow Oil, Rahul Dhir, does not see it that way.

During Tullow’s Half Year earnings presentation for 2022, Dhir said, “I keep reminding people that the new company is going to be owned by both sets of shareholders, and there is very material value from the synergies, from the acceleration of the business plan and some of the opportunities that [we have].”

In a letter to the Board of Capricorn, Palliser Capital urged a withdrawal of the merger recommendation. On the heels of this, Dhir said that though Tullow has a good business, he believes better can be done with the merger that would create a lot of value for both sets of shareholders.

Tullow announced the proposed merger in June. It said it agreed with Capricorn on the terms of an all-share merger. The new company would have a material and diversified asset base and a portfolio of investment opportunities delivering visible production growth, Tullow said.

However, due to the concerns raised by shareholders, Capricorn’s chief executive officer, Simon Thomson said recently that the board is exploring expressions of interest relating to alternative transactions.

Dhir said Wednesday, “I think it’s a decision for the Capricorn board and their shareholders to say, ‘How does that value compare to any other real opportunities they have?’ Not spreadsheet opportunities but real opportunities.”

Both companies have operations in multiple regions of the world. Of note, the merged company, though Africa-focused, would have assets in Guyana. Tullow has a 60% operated interest in the Orinduik Block and a 37.5% non-operated interest in the Kanuku Block.


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