Caracal Energy and TransGlobe Energy have announced a merger to create a US$1.8bn venture to focus on oil production in North Africa
The Canadian explorers said that they have entered into an agreement to merge through an exchange of shares, according to Wall Street Journal.
The transaction reportedly comes as the companies showed a renewed appetite for deal making after a slow 2013.
A combined press statement said that the Caracal Energy-TransGlobe Energy deal would result in an ‘improved financial position’ with a pro forma cash position of US$302mn.
Gary Guidry, president of Caracal Energy, said, “This transaction will clearly benefit both companies and their shareholders, as the enhanced scale will expedite production growth and increase cash flow.”
The joint venture company would have oil production in Chad and Egypt and an interest in assets in Yemen, the companies added.
Under the merger deal, each TransGlobe Energy shareholder will receive 1.23 new common shares of Caracal Energy in exchange for each TransGlobe common share.
It is expected Caracal Energy shareholders would hold about 65.6 per cent and former TransGlobe Energy shareholders would hold approximately 34.4 per cent of the shares in the new company.
