Kosmos Energy Withdraws from Tullow Oil Deal, Shares Plummet

Kosmos Energy halted its acquisition of Tullow Oil, sparking a 10% drop in Tullow's shares. The deal envisioned a merged entity producing over 130,000 barrels daily in West Africa and the Gulf of Mexico. However, hurdles from Ghana's government and creditor support posed significant challenges.

Kosmos Energy has backed out of its initial acquisition talks with Tullow Oil, leading to a significant 10% decrease in Tullow's share prices. The announcement arrived with no detailed explanation, less than a week after both companies revealed early-stage negotiations for a potential merger focused on West African production.

Following the news, Kosmos Energy, listed on the New York Stock Exchange, saw its stock soar by nearly 13% during pre-market trading. The proposed merger would have resulted in a combined output exceeding 130,000 barrels of oil equivalent per day, covering regions from the U.S. Gulf of Mexico to multiple West African nations.

James Hosie, a research analyst at Shore Capital Stockbrokers, highlighted the potential advantages of the merger due to overlapping assets in Ghana. However, the necessity for endorsement from Ghana's government and both companies' creditors presented complications. Despite stepping back, Kosmos reserved the option to revisit its decision, with the previous deadline set for January 9, 2025.

In response to the halted negotiations, Tullow Oil maintains confidence in its independent operations and plans to optimize its capital strategy. Tullow's leadership transition, with CEO Rahul Dhir's impending departure, underscores the firm's ongoing restructuring efforts.

(With inputs from agencies.)