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Capricorn explores other deals as Tullow merger faces backlash

·2-min read

By Muhammed Husain

(Reuters) -Capricorn Energy, whose planned merger with rival Tullow Oil has faced investor backlash, said on Tuesday it was exploring alternative deals after unnamed parties expressed interest.

Oil and gas producer Capricorn's proposed $827 million deal with Tullow has faced stiff opposition from investors, who have called for a strategic review of the business.

The Edinburgh-based firm, whose market capitalisation has risen to $856 million, said it was in talks with parties that have expressed interest, but declined to comment further as the talks were confidential.

In an analyst call, Capricorn said it would take its share value into consideration as it considers its deal with Tullow and any alternative transactions.

The group said in a statement it continues to believe its proposed merger with Tullow can deliver significant long-term value for shareholders through the creation of an Africa-focused energy firm.

Oil and gas producers have seen a boost in earnings after a two-year slump thanks to a rapid recovery in demand after the end of COVID-19 lockdowns and a surge in prices driven by Russia's invasion of Ukraine.

Capricorn's operating losses narrowed to roughly $37 million for the six months ended June 30 from $47 million in the same period of the previous year.

Shares of the London-listed group, which was previously called Cairn Energy, were up 1.3% at 237.4 pence as of 0930 GMT.

Its stock rose despite Capricorn cutting its annual production expectations to 33,000 to 36,000 barrels per day for the year due to delays in commissioning rigs and importing staff in Egypt.

The group, which holds interests across four main concession areas in Egypt, said it expects to overcome the delays by the end of the year and will focus on ramping up production in Egypt in 2023.

(Reporting by Muhammed Husain and Sinchita Mitra in Bengaluru; Editing by Uttaresh.V and Jan Harvey)