Caracal Energy and TransGlobe Energy, two Africa-focused junior oil companies, have announced plan to merge, the Financial Times has reported. The move with create a group worth nearly $2 billion with operations in Chad and Egypt. In a joint statement, the companies said the merger will “facilitate future organic and acquisition growth in Africa”.
The company created by merging Caracal and TransGlobe aims to lift oil production to 31,000-34,000 barrels a day this year, up from 25,100b/d in 2013. London-listed Caracal sees more upside in Chad as it plans to drill up to 42 wells there between 2014 and 2016. “Through the combination of complementary asset bases, we will create a solid regional platform for compounding reserves and production growth,” said Gary Guidry, chief executive of Caracal.
Guidry will be the head of the merged company. Before running Caracal, he was chief executive of Tanganyika Oil, a Calgary-based oil group with assets in Syria and Egypt that was bought by Sinopec of China for $1.8bn in 2008. Glencore Xstrata, the commodities trading house, is a partner of Caracal and holds 25 per cent of several of its oilfields in Chad following a $300m financing deal in 2012, when the group was known as Griffiths Energy.
According to the FT, the larger oil companies including Royal Dutch Shell, Total of France, and ConocoPhillips and Chevron of the US are selling some of their mature onshore assets in the continent to instead focus their attention on new growth areas, particularly in deep water offshore in west and east Africa.
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