Tullow Oil Secures Funding for Energy Africa Acquisition with Pounds 320m Deal

Strategic Insights -

Tullow Oil, an Irish exploration and production company, has secured funds to finance the acquisition of Energy Africa and an associated joint venture for a total of Pounds 320m. The funding includes the issuance of new shares worth about Pounds 123m and a Dollars 300m (Pounds 178m) loan. The acquisition is expected to create a "formidable" independent oil and gas company, with combined production exceeding 50,000 barrels of oil equivalent per day and combined reserves of 177.4m barrels.

Key Takeaways:

  • Tullow Oil has issued new shares worth about Pounds 123m to finance the acquisition of Energy Africa and an associated joint venture for a total of Pounds 320m.
  • The placing was three times subscribed at a price of 95p, amounting to more than a third of Tullow's market capitalisation.
  • More than 90% of Energy Africa shareholders accepted Tullow's offer of Dollars 4.8346 a share, while over 25% elected to receive Tullow shares instead.
  • Tullow will buy 50% of EAGHL, a joint venture between Energy Africa and African Petroleum Investment Limited in Gabon, for Dollars 70m.
  • The acquisition is expected to create a company with combined production exceeding 50,000 barrels of oil equivalent per day and combined reserves of 177.4m barrels.
  • Energy Africa has interests in nine African countries.
  • Tullow reported full-year results in line with analysts' expectations, with profit before tax rising to Pounds 26.6m from Pounds 22.5m last year.
  • Earnings per share were 2.92p, down from 3.56p last year due to increased tax and exploration costs.
  • Aidan Heavey, Tullow's chief executive, stated that the deal would create a "formidable" independent oil and gas company and one of the biggest oil firms focused on West Africa.
  • The acquisition is expected to provide a strong foundation for Tullow's growth and expansion in the region.

Statistics:

  • Pounds 320m: total value of the acquisition
  • Pounds 123m: value of new shares issued
  • Dollars 300m (Pounds 178m): loan taken by Tullow
  • 95p: price of shares issued
  • 90%: percentage of Energy Africa shareholders accepting Tullow's offer
  • 25%: percentage of Energy Africa shareholders electing to receive Tullow shares instead
  • 50,000 barrels of oil equivalent per day: combined production expected
  • 177.4m barrels: combined reserves expected
  • 9: number of African countries with Energy Africa interests
  • Pounds 26.6m: profit before tax for the full year
  • Pounds 22.5m: profit before tax for the previous year
  • Pounds 132.4m (Pounds 112.6m): record turnover for the full year
  • 2.92p: earnings per share for the full year
  • 3.56p: earnings per share for the previous year

Sources:

  • "Tullow Oil secures pounds 320m for Africa deal", Financial Times, 29 March 1996
  • "Tullow Oil reports full-year results in line with expectations", Financial Times, 29 March 1996