Kosmos Energy withdrew from its proposed acquisition of Tullow Oil despite earlier discussions. Analysts cite financial constraints, though Kosmos may reconsider under specific conditions before January 2025
The potential acquisition of Tullow Oil by Kosmos Energy has hit rocks following the withdrawal by the US oil and gas company.
Kosmos in a statement announced that it will not proceed with the merger with UK Tullow Oil at this time despite preliminary discussions.
This deal, energy analysts had earlier touted as very significant and a game changer that could have dealt with Ghana’s declining oil production in addition to technical issues such as gas injectivity and water flooding the Jubilee Fields is grappling with.
The deal, if t had been successful was estimated to lead to the production of over 130,000 barrels of oil per day based on the two oil giants’ forecasts.
Although a statement from Kosmos failed to state the specific reasons for the withdrawal, it indicated that it has the right to reconsider its decision under certain conditions. Kosmos had up to January 9, 2025, to make a firm offer to Tullow.
“Kosmos Energy Ltd. (“Kosmos”) in relation to very preliminary discussions about Kosmos’ possible offer for Tullow, Kosmos now confirms that it does not intend to make a firm offer for Tullow at this time and is consequently bound by the restrictions under Rule 2.8 of the Code,” parts of the statement read.
However, there is a thin line of hope as Kosmos says it could reconsider its decision under some conditions, which are: if Tullow’s Board of Directors agrees to it, if another company announces plans to buy Tullow, if Tullow pursues a significant financial arrangement like a major merger or a deal that changes shareholder control, or if there is a major change in circumstances that the UK Panel on Takeovers and Mergers approves as grounds for Kosmos to revisit its decision.
Although Kosmos failed to state the specific reasons for backing out, some analysts believe the financially distressed positions of the companies could have been a hindrance or the possibility of a failure to obtain the approval of the creditors.
