Caracal joins forces with TransGlobe to create Africa-focused explorer

CALGARY – TransGlobe Energy Corp. (TSX:TGL) are up in the first day of trading since it announced plans to join forces with Caracal Energy Inc. to create an Africa-focused oil explorer worth $1.8 billion.

The combined company will carry on under the Caracal Energy name and will be led by Caracal CEO Gary Guidry, who recused himself from considering the deal because he sat on the TransGlobe board until this month and is an investor in the Calgary-based company.

TransGlobe’s shares gained 37 cents or 4.4 per cent Monday to trade at $8.78 on the Toronto Stock Exchange. Caracal Energy (LSE:CRCL) shares dropped 6.7 per cent in London.

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

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

TransGlobe’s current shareholders will own about one-third of the combined company and Caracal shareholders will own two-thirds, assuming the deal closes as expected.

Caracal used to be known as Griffiths Energy, which last year agreed to pay a $10.35 million fine for bribery related to its operations in the African country of Chad — offences that took place before Guidry and a new management team took over.