U.S. oil and gas company Kosmos Energy has abandoned its pursuit of a potential deal with West Africa-focused Tullow Oil. The announcement sent Tullow’s shares plummeting by 10%.
While the two companies had been in preliminary discussions, Kosmos decided not to proceed with an acquisition. The company did not provide specific reasons for this decision.
Had the deal materialized, the combined entity would have become a significant player in the West African oil and gas sector, with a combined production capacity exceeding 130,000 barrels of oil equivalent per day (boepd) across key operating areas such as Mauritania, Senegal, Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico.
“There was logic to considering a transaction given the shared assets in Ghana and scope for operational synergies,” said James Hosie, research analyst at Shore Capital Stockbrokers. “But any transaction would have required the support of the Ghanaian government and the creditors of both companies, which may have been challenging.”
Both companies are heavily indebted. Kosmos had until January 9, 2025, to make a firm offer for Tullow.
Tullow, acknowledging the decision, stated that it remains confident in its standalone business and plans to optimize its capital structure. The company also announced that CEO Rahul Dhir will step down and resign from the board next year.