Kosmos Energy, a US-based oil and gas firm, has declared its intention to withdraw from plans to acquire its rival, Tullow Oil.
Kosmo announced on Tuesday that it will not proceed with the planned acquisition of the company, just a week after expressing interest.
The company, however, did not provide any reason for backing out from the deal, as per a report by Reuters.
Following its latest announcement, the New York-listed company’s stock surged almost 13% in pre-market trading following the news.
Kosmos stated that it reserves the right to reconsider its decision under specific conditions.
The oil major noted that these conditions could include Tullow’s board agreeing to revise its current stance, the emergence of a competing offer from a third party, or a significant change in circumstances as determined by the UK Panel on Takeovers and Mergers.
Tullow Oil reactions
On their part, Tullow Oil in a statement, acknowledged Kosmos’ decision to terminate the talks, reiterating that the discussions were still at an early stage and before due diligence had progressed between the parties.
According to the two firms’ 2024 prediction, if the acquisition had been completed, the merged company could have produced over 130,000 barrels of oil equivalent per day (boepd) across the U.S. Gulf of Mexico and the western coast of Africa, including Mauritania, Senegal, Ghana, and Equatorial Guinea.
Moreover, the two heavily indebted firms still remain partners in key fields in Ghana.
“There was logic to considering a transaction given the shared assets in Ghana and scope for operational synergies.
“I felt it (the potential deal) was somewhat opportunistic … coming soon after the news of Tullow’s search for a new CEO.
“But any transaction would have required the support of the Ghanaian government and the creditors of both companies, which may have been challenging,” James Hosie, research analyst at Shore Capital Stockbrokers told Reuters.
