Tullow Oil's $500m buyout of Energy Africa a sure thing
May 3, 2004
By Andrew Callus
London - Ireland's Tullow Oil is set to announce a $500 million (R3.4 billion) deal to buy Johannesburg-listed Energy Africa this week, creating the biggest independent oil and gas producer of its kind.
"Subject to all the documentation, we should be in a position to finalise things on Tuesday," Tullow chief executive Aidan Heavey said.
"$500 million is still the price."
Tullow said in March that it was considering making the offer, which would combine two businesses of similar size focused on west Africa and the North Sea.
The mainly cash deal is to be financed partly through debt and partly through the issue of new equity - an issue Heavey said had been "well oversubscribed, close to three times".
About 25 percent of Energy Africa shareholders had agreed to accept new Tullow shares in exchange for Energy Africa shares.
"It creates quite a large company focused on the UK gas basin and west Africa," said Heavey.
Both firms' shares have been suspended since the announcement. Tullow's annual results are scheduled to be released tomorrow morning.
Tullow has said the deal would be structured as a reverse takeover.
Energy Africa is 56.5 percent owned by Engen, a South African firm that is 80 percent held by Malaysia's Petronas. Petronas also holds 8.7 percent of Energy Africa directly. Analysts believed the company would be among those shareholders wanting cash for their stake.
Analyst Mark Redway of broker Canaccord described the deal, when it was first flagged, as "a bit of a coup" for Tullow, since Energy Africa's market value had fallen from $840 million to about $530 million before its shares were suspended.
If investors are going to be excited by the deal, their mood may be tempered by drilling news from Tullow's Lalmai in Bangladesh this week. Tullow said it had yet to demonstrate the presence of commercial gas there.
Tullow operates in the southern North Sea and south Asia but its main producing asset is the Espoir field in Cote d'Ivoire, west Africa.
Energy Africa, with proven and probable oil and gas reserves of 57.9 million barrels of oil equivalent at the end of last year, produced 8.1 million that year.
It operates in 10 African countries and the North Sea.
|
|
