LONDON, UK: The boards of directors of Tullow Oil and Capricorn Energy have reached agreement on the terms of a recommended all-share combination of Tullow and Capricorn to create the Combined Group.

It is intended that the combination will be implemented by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act, where Tullow will acquire all of the issued and to be issued Capricorn shares. Under the terms of the combination, each Capricorn shareholder will be entitled to receive 3.8068 new Tullow shares for each Capricorn share.

On completion of the combination, Capricorn shareholders will hold approximately 47 per cent of the combined group and Tullow shareholders will hold approximately 53 per cent of the combined group (based on the fully diluted share capital of Capricorn and the fully diluted share capital of Tullow.

The Boards of Tullow and Capricorn believe the Combination has compelling strategic, operational and financial rationale, with the ability to deliver substantial benefits to shareholders, host nations and other stakeholders.

The Combination represents a unique opportunity to create a leading African energy company, listed in London, with the financial flexibility and human resource capability to access and accelerate near-term organic growth, add new reserves and resources cost-effectively, generate significant future returns for shareholders, and pursue further consolidation.

The Combined Group is committed to building a sustainable future through responsible oil and gas development, in close partnership and collaboration with joint venture partners and host governments.

The Board of the Combined Group will include a further 5 Non-executive Directors drawn from both companies, with 2 to be current Tullow Non-executive Directors and 3 to be current Capricorn Non-executive Directors. The Board composition as outlined will be finalised by agreement amongst the parties at Completion. The Board of the Combined Group is likely to evolve over time, to ensure a balance of skills and diversity including meaningful representation of the geographies in which the Combined Group will operate.

After almost 11 years as CEO of Capricorn, Simon Thomson will step down as CEO on Completion and will become Chair of the Integration Steering Committee to help with the integration of the two companies.

It is intended that, following completion of the Combination, the headquarters of the Combined Group will be at Tullow’s existing offices in London and it is intended that the Combined Group will also retain premises in Edinburgh and through the application of a flexible work policy enable employees to operate from both premises. The Combined Group will comply with any obligations to inform and consult with employees and their representatives in respect of these intentions.