-As Tullow Oil Faces Possible Takeover by Kosmos Energy
Ghana’s flagship Jubilee oil field finds itself at a crossroads as discussions of a possible takeover of Tullow Oil by its US rival Kosmos Energy unfolds.
The two companies have confirmed that preliminary talks are ongoing for a potential all-share acquisition, but they caution there is no guarantee of a formal offer being made.
This development comes at a time when Tullow, a major player in Ghana’s oil sector, is grappling with significant financial challenges.
Once a dominant force with a market valuation of £15 billion at its peak in 2012, Tullow’s worth has plunged to just £379 million today, according to LSEG data. The company is now working to cut its debt to $1.4 billion by the end of the year.
Shore Capital analyst James Hosie emphasized the operational logic of the potential deal noting: “The two companies share the same core assets – the Jubilee and TEN fields offshore Ghana – so there is a natural operational fit, and Kosmos will have a clear understanding of the opportunities within the assets.”
Hosie also noted that a merger would give Kosmos operatorship of both fields, creating opportunities for operational synergies. For Tullow, this could be a route to addressing its financial woes, including refinancing $1.3 billion of secured loan notes due in 2026.
However, he highlighted that a significant challenge would be finding a deal structure that satisfies both companies’ shareholders and creditors while ensuring a robust capital structure for the combined entity.
The Jubilee field, a cornerstone of Ghana’s oil production, has been underperforming in recent months. Tullow slashed its free cash flow forecast last month, attributing the drop to setbacks at Jubilee, raising concerns about its long-term stability.
Tullow Oil was once celebrated for its groundbreaking discoveries in Ghana and Uganda during the early 2000s. However, a series of unsuccessful exploration attempts and a mounting debt burden derailed its trajectory.
The global push toward net-zero emissions has added further strain, forcing Tullow to scale back exploration activities and focus on managing existing assets like Jubilee and TEN (Tweneboa, Enyenra, Ntomme).
Kosmos Energy currently operates in Ghana, Equatorial Guinea, and the US Gulf of Mexico. In the third quarter alone, Kosmos pumped 65,400 barrels of oil equivalent per day, slightly outpacing Tullow’s 63,700 barrels per day over the first half of the year.
Despite its production strength, Kosmos also carries a substantial debt of $2.7 billion, raising questions about its ability to drive significant investment into Ghana’s oil fields post-acquisition.
For Ghana, the implications of a Tullow-Kosmos deal are immense. The Jubilee field, a key revenue generator for the government, could see changes in production dynamics, potentially affecting the country’s oil revenues.
Additionally, Ghana’s local content policies, which ensure opportunities for Ghanaian workers and businesses in the oil sector, may come under scrutiny if operational shifts or restructuring follow a merger.
