Tullow Oil PLC (LSE:TLW) said it is “fully committed” to the US$1.4bn merger agreed with Capricorn Energy PLC (LSE:CNE, OTC:CRNZF), which said last week it is exploring alternatives following criticism of the deal by major shareholders.
Alongside its half-year results, Tullow said both companies’ boards continue to recommend the deal on the agreed terms and it "firmly believe(s) that the proposed merger has the potential for material value creation by implementing a combined business plan which accelerates investment in key projects and delivers very significant synergies".
Capricorn has received criticism from major investors including Legal & General, which said there was “no clear strategic rationale” for the combination, and hedge fund Kite Lake, which called it a “rights issue in disguise” for Tullow.
Tullow said it plans to hold a capital markets day for investors and issue a circular and prospectus in connection with the merger in the fourth quarter, ahead of a shareholder vote, with completion of the deal expected before the end of the year.
Tullow said production for the first half averaged 60.9k barrels of oil equivalent per day (boepd), in line with expectations.
It said its reserves of 242mln barrels were valued at roughly US$4.7bn, after hedging, at the end of June.
Meanwhile, net debt stood at US$2.33bn, up from US$2.29bn a year earlier, while gearing was reduced to 1.9 EBITDAX. It reported liquidity headroom and free cash of US$0.6bn.
On operations, it said the Ghanaian drilling programme was "ahead of schedule", with a further six wells expected to be drilled and two of these completed by year-end.