 Kosmos Deal Would Ease Tullow Finances but Debt Presents Hurdle
by Bloomberg
A potential takeover by Kosmos Energy Ltd. could resolve Tullow Oil Plc’s balance sheet issues, but debt refinancing would be a challenge, according to analysts.
Both companies acknowledged early merger talks on Thursday, following media speculation. Together, they would create an Africa-focused explorer with production exceeding 120,000 barrels of oil equivalent a day. Under stock-exchange rules, Dallas-based Kosmos must announce whether or not it will make an offer by Jan. 9.
The discussions emerge days after Tullow Chief Executive Officer Rahul Dhir said he would step down after four years at the helm. While he refocused on the legacy assets in West Africa and improving the indebted firm’s finances, Tullow’s shares have slumped 39% this year.
The approach by Kosmos may be “somewhat opportunistic” due to the leadership change, James Hosie, an analyst at Shore Capital Group, said in a note. While a deal presents a way to address the balance sheet, a structure that appeases both shareholders and creditors remains a “key obstacle,” he said.
Tullow, headquartered in London, accumulated billions of dollars in debt from its free-spending days as a wildcatter. Part of that requires refinancing, according to Bloomberg Intelligence analyst Will Hares.
“A deal would resolve Tullow’s balance sheet issues, but will have to address its imminent refinancing of its 2026 $1.4 billion notes,” Hares said.
Tullow’s shares fell 10% in London on Friday, paring this week’s gain to 11%.
While Kosmos has operations spanning a wider swath of the continent, including a liquefied natural gas project with BP Plc in Senegal, it’s already a partner with Tullow in key fields in Ghana. |
A few disclosure RNS's this afternoon. |
Well I'd have to snap an offer like that up asap |
Looks like the debt will be the issue and what value they offer dependant on failing assets . Wouldnt be surprised to see an offer well below the current share price given the reaction to the news |
HTTPS://smallcappix.com/stockchallenge |
Yes shorters will be thanking their lucky stars or is somebody letting them out the back door on the cheap? |
With free cash flow around $150 to 200m, debt is manageable and likely repayable within 10 years (is there a plan for this?). Odd to be falling so much. |
Hey if the ce has left the take over will mean one less obstacle and money saving as welllol |
pally, says a lot for TLW's real value, tbf why would anyone want to buy a company so heavily in debt ? |
I think this will be taken out by a lowball.
I've switched back into Wood Group - a much better prospect |
Topped up this morning, let’s see Friday 13th and all. |
What happened to all the opening predictions |
Now we know why5 December 2024 - Tullow Oil plc (Tullow) today announces that Rahul Dhir will step down as Chief Executive Officer and resign from the Board during 2025 to pursue other business, academic and family interests. The Board has initiated a process to find his successor. Rahul will stay in his role until a date to be determined to ensure a smooth transition. |
Spivs cashing in illegal gains…once they wash out, I expect the shares to move up substantially. There is a bit of a false market so long as the ICC tax arbitration result is unknown. If Tullow are successful, the refinancing should be relatively straightforward and the shares should move nearer to 40-60p range. If there is progress in Kenya we will be north of 100p….all in my humble opinion of course . Booty |
Market is normally right Mkt cap 400m plus 1.4B debt for 60,000bpd |
The For sale sign is up and will focus minds over the holiday period,
Some years ago Ghana stopped Kosmos from selling up ,I wonder if Springfeild will emerge as preferred bidder.
interesting times. |
KOS have everything their way - they can take TLW out at a discount... |
Statement Regarding a Possible All-Share Offer for Tullow Oil plc by Kosmos Energy Ltd.
December 12, 2024 03:04 PM Eastern Standard Time
DALLAS--(BUSINESS WIRE)--Kosmos Energy Ltd. (“Kosmos”; or the “Company”;) (NYSE: KOS) notes today’s announcement by Tullow Oil plc (“Tullow”;) (LSE: TLW) regarding a potential transaction involving Tullow and Kosmos and confirms that it is in very preliminary discussions with Tullow regarding a possible all-share offer by Kosmos for Tullow.
There can be no certainty that any offer will be made, nor as to the terms on which any offer might be made. Pursuant to Rule 2.5 of the Code, Kosmos reserves the right to vary the form and/or mix of the offer consideration and vary the transaction structure. A further announcement will be made as and when appropriate.
As stated in today’s announcement by Tullow, in accordance with Rule 2.6(a) of the Code, Kosmos is required, by not later than 5.00 p.m. on 9 January 2025, to either announce a firm intention to make an offer for Tullow in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline can be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Code.
ABOUT KOSMOS
Kosmos is a full-cycle deepwater, independent oil and gas exploration and production company focused along the offshore Atlantic Margins. Our key assets include production offshore Ghana, Equatorial Guinea and the U.S. Gulf of Mexico, as well as a world-class gas development offshore Mauritania and Senegal. We also pursue a proven basin exploration program in Equatorial Guinea, Ghana and the U.S. Gulf of Mexico. Kosmos is listed on the New York Stock Exchange and London Stock Exchange and is traded under the ticker symbol KOS. As an ethical and transparent company, Kosmos is committed to doing things the right way. The Company’s Business Principles articulate our commitment to transparency, ethics, human rights, safety and the environment. Read more about this commitment in our Corporate Responsibility Report. For additional information, visit www.kosmosenergy.com.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.
THIS IS NOT AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND THERE CAN BE NO CERTAINTY THAT AN OFFER WILL BE MADE, NOR AS TO THE TERMS ON WHICH ANY OFFER MIGHT BE MADE. |
I'm up 6p in the last few weeks, I'm happy with that,never pays to be greedy. |
The fact the share price has done little suggests it won't exactly be a great offer if one comes at all the debt has always been the problem . They might get offered £1 for the company due to dept ..we will see but I wouldn't get your hopes up too much as the share price hasn't moved on the potential offer |
Take a profit and move. |
Comment; Interesting times. Note; some who still stand to never regain their losses post sceptical remarks as to the potential offer/terms. Recent investors; good job. |
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