Friday, January 30th0.6°C
24779
23931

Caracal joins forces with TransGlobe to create Africa-focused explorer

CALGARY - Two Canadian companies are joining forces to create what they call an oil "powerhouse" in Africa.

Caracal Energy Inc. and TransGlobe Energy Corp. (TSX:TGL) — focused on Chad and Egypt, respectively — announced their friendly deal on the weekend.

With a stock market value of US$1.8 billion, the combined company will be among the top independent energy players in Africa, chief executives of the two firms said Monday.

"Within the next two years, we may not be No. 3, we may be pressing on No. 1 as an independent producer in Africa," said Caracal CEO Gary Guidry.

"This is going to be powerhouse," added TransGlobe (TSX:TGL) CEO Ross Clarkson, who'll be on the board of directors.

The combined company will carry on under the Caracal Energy name and will be led by Guidry.

Caracal shareholders will own about two-thirds of the new firm, with TransGlobe's current shareholders owning the rest, assuming the deal closes as expected.

Under the deal announced late Saturday, each TransGlobe shareholder will receive 1.23 shares of Caracal for each TransGlobe share they own.

Guidry and Clarkson have known each other for some time — until this month, Guidry sat on TransGlobe's board — and began discussing a possible merger in broad strokes about a year ago.

But when it came to considering an actual deal, Guidry recused himself because of his involvement on TransGlobe's board and investments in the company.

"We saw that as a huge opportunity and we just needed the right time to do it," said TransGlobe's Clarkson.

"We've been looking at Chad for at least two years and looked at several deals. But we always came back to Caracal."

And Egypt looked good to Caracal as a second platform from which to grow, said Guidry.

"Egypt is a country and a set of basins that we find as attractive as any in Africa," he said.

Caracal expects its average production in 2014 to be between 31,000 and 34,000 barrels of oil per day.

The increased size will help Caracal grow, the CEOs said.

"Scale matters a lot," said Clarkson.

"The critical mass that it gives us as a company is going to give us access to different capital markets," added Guidry. "We think it's going to give us access to different opportunities and be able to grow."

Caracal currently lists in London, but another listing on the Toronto Stock Exchange is planned.

Caracal used to be known as Griffiths Energy, which last year agreed to pay a $10.35-million fine for bribery related to its Chad operations. The offences took place before Guidry and a new management team took over in July, 2011 — and two weeks before founder Brad Griffiths died in a boating accident in Ontario's cottage country.

When the bribes were discovered by the new management, Griffiths essentially blew the whistle on itself. In May of last year, shareholders approved of a name change from Griffiths to Caracal.

TransGlobe's shares gained 12 cents or 1.4 per cent Monday to $8.53 on the Toronto Stock Exchange in Monday afternoon trading on the TSX. Caracal Energy (LSE:CRCL) shares dropped 6.1 per cent in London.

Follow @LaurenKrugel on Twitter

The Canadian Press


Read more Business News

24153


Recent Trending




Today's Market
S&P TSX14635.78-0.18
S&P CDNX669.44+2.33
DJIA17291.52-125.33
Nasdaq4668.572-14.834
S&P 5002008.11-13.14
CDN Dollar0.7854-0.0068
Gold1286.60-5.10
Oil47.30+0.86
Lumber322.70+0.90
Natural Gas2.87-0.111

 
Okanagan Companies
Pacific Safety0.120.00
Knighthawk0.010.00
QHR Technologies Inc1.400.00
Cantex0.035-0.005
Anavex Life Sciences0.174-0.006
Metalex Ventures0.040.00
Russel Metals23.38-0.20
Copper Mountain Mining1.00+0.02
Colorado Resources0.150.00
ReliaBrand Inc0.01+0.0031
Sunrise Resources Ltd0.050.00
Mission Ready Services0.2350.00

 



24667

FEATURED Property
21842172386 Bella Vista Street
$290,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Leaving a job: changing careers

Many people, who find themselves out of work and with time on their hands, and money in their pockets due to lay-off, start thinking about a career change. If you weren’t happy with the directio...


Service fit makes happy employees

Finding the right employees for the front lines of your company is key to developing a great service attitude within your company. It is just as important as hiring the right accountant, manager, sale...


How to price: workbook approach

In 2008 Self Counsel Press published my book - Pricing Strategies for Small Business. The book is now available in Europe, India, Russia and the United States. The purpose of the book was to make avai...

_








Member of BC Press Council


23646