Tullow Oil buys Energy Africa, gets Kudu Gas

LONDON/JOHANNESBURG – Ireland’s Tullow Oil Plc has sealed a US$500 million takeover of Johannesburg-listed Energy Africa, forming one of the biggest oil firms focused on west Africa and effectively acquiring ownership of Namibia’s envisioned Kudu gas project.

Energy Africa and Tullow Oil said on Tuesday that more than 90 per cent of Energy Africa shareholders had accepted Tullow’s offer of US$4,8346 a share, payable in rand. This represents a slight discount to Energy Africa’s Monday closing share price of 37 rand (US$5,27).Tullow said it would raise around 120 million pounds (US$212,5 million) in a share placing to help fund the takeover.Tullow’s London-listed shares soared 11 per cent to 96 pence in morning trade yesterday.The stock had been suspended since late March while Tullow worked on the acquisition.”It’s a very good deal and at a very good price.It gives Tullow a much better balance between its oil and gas assets,” said Investec analyst Bruce Evers, who has a “buy” rating on Tullow shares.The deal will combine two businesses of similar size focused on West Africa and the North Sea.Tullow added that the enlarged group would also have a production capacity of over 50 000 barrels of oil equivalent per day (bpd).AFRICAN ASSETS Energy Africa had proven and probable oil and gas reserves of 57,9 million barrels of oil equivalent (boe) at the end of 2003 and produced 8,1 million that year.Its African operations include Equatorial Guinea, Gabon and Congo.Energy Africa also has a 90 per cent stake in the Kudu gas project situated about 180 nautical miles off Namibia’s Atlantic coast.The state-owned oil company, Namcor, owns the remaining 10 per cent stake in the project after buying the stake in December 2003.Earlier to that Chevron Texaco had announced its withdrawal from the Kudu project.Dr Roger Swart of Namcor explained that the acquisition of Energy Africa does not effect his company’s stake in Kudu project at all.”Its business as usual,” he said, adding that it won’t effect progress in the project.Kudu gas is still under evaluation and feasibility studies are being conducted.Swart said no final decision on going ahead can be expected before 2005 but that Namcor is looking forward to working together with the new project owners, although the takeover would only be finalised on May 26 with Energy Africa’s board approval.Energy Africa is 56,5 per cent-owned by Engen, a South African firm that is 80 per cent held by Malaysia’s Petronas.”The proposed acquisition of Energy Africa by Tullow will create a formidable independent oil and gas company with core areas in West Africa and the UK,” said Tullow chief executive Aidan Heavey.Tullow, which also reported on Tuesday a 41 per cent rise in annual operating profit, operates in the southern North Sea and south Asia.However, its main producing asset is the Espoir field in Ivory Coast, West Africa.”There is significant medium-term upside in Congo and Equatorial Guinea,” said Investec analyst Evers.ABN AMRO and Davy Corporate Finance advised Tullow Oil on the deal.Goldman Sachs and Rothschild advised Energy Africa.- Nampa-ReutersThis represents a slight discount to Energy Africa’s Monday closing share price of 37 rand (US$5,27).Tullow said it would raise around 120 million pounds (US$212,5 million) in a share placing to help fund the takeover.Tullow’s London-listed shares soared 11 per cent to 96 pence in morning trade yesterday.The stock had been suspended since late March while Tullow worked on the acquisition.”It’s a very good deal and at a very good price.It gives Tullow a much better balance between its oil and gas assets,” said Investec analyst Bruce Evers, who has a “buy” rating on Tullow shares.The deal will combine two businesses of similar size focused on West Africa and the North Sea.Tullow added that the enlarged group would also have a production capacity of over 50 000 barrels of oil equivalent per day (bpd).AFRICAN ASSETS Energy Africa had proven and probable oil and gas reserves of 57,9 million barrels of oil equivalent (boe) at the end of 2003 and produced 8,1 million that year.Its African operations include Equatorial Guinea, Gabon and Congo.Energy Africa also has a 90 per cent stake in the Kudu gas project situated about 180 nautical miles off Namibia’s Atlantic coast.The state-owned oil company, Namcor, owns the remaining 10 per cent stake in the project after buying the stake in December 2003.Earlier to that Chevron Texaco had announced its withdrawal from the Kudu project.Dr Roger Swart of Namcor explained that the acquisition of Energy Africa does not effect his company’s stake in Kudu project at all.”Its business as usual,” he said, adding that it won’t effect progress in the project.Kudu gas is still under evaluation and feasibility studies are being conducted.Swart said no final decision on going ahead can be expected before 2005 but that Namcor is looking forward to working together with the new project owners, although the takeover would only be finalised on May 26 with Energy Africa’s board approval.Energy Africa is 56,5 per cent-owned by Engen, a South African firm that is 80 per cent held by Malaysia’s Petronas.”The proposed acquisition of Energy Africa by Tullow will create a formidable independent oil and gas company with core areas in West Africa and the UK,” said Tullow chief executive Aidan Heavey.Tullow, which also reported on Tuesday a 41 per cent rise in annual operating profit, operates in the southern North Sea and south Asia.However, its main producing asset is the Espoir field in Ivory Coast, West Africa.”There is significant medium-term upside in Congo and Equatorial Guinea,” said Investec analyst Evers.ABN AMRO and Davy Corporate Finance advised Tullow Oil on the deal.Goldman Sachs and Rothschild advised Energy Africa.- Nampa-Reuters