DNO proposes $396 million acquisition of Capricorn Energy to enter Egypt's oil and gas market

en.Wedoany.com Reported - Norwegian oil and gas company DNO has reached an agreement with Capricorn Energy on a recommended cash acquisition. Under the terms of the transaction, DNO's wholly-owned subsidiary DNO Bidco AS proposes to acquire all of Capricorn's issued and to-be-issued ordinary shares, with the transaction to be implemented through a scheme of arrangement under Scottish court procedures within the framework of the UK Companies Act 2006. On a fully diluted basis, the transaction values Capricorn's entire share capital at approximately $396 million (approximately £292 million).

Capricorn shareholders will receive a total cash value of $5.214 per share for each share held, comprising $4.224 in cash from DNO, plus a special dividend of $0.99 that Capricorn proposes to distribute prior to the transaction becoming effective. The special dividend corresponds to a total of approximately $75 million. Based on the exchange rate at the announcement date, the per-share acquisition value is approximately 384 pence, representing a premium of about 45% over Capricorn's closing price of 266 pence on March 10, the date before the commencement of the offer period.

The offer also exceeds the previous acquisition proposal put forward by Genel Energy. DNO's per-share acquisition value is $0.474 higher than the Genel proposal, a premium of approximately 10%, corresponding to an increase of approximately $36 million in Capricorn's overall equity value. Capricorn's board has indicated that it intends to unanimously recommend that shareholders support the DNO proposal; previously, Capricorn shareholders had passed the Genel acquisition-related resolutions on August 18, but that proposal still required approval from the Egyptian authorities at the time.

Upon completion of the transaction, DNO will enter Egypt's upstream oil and gas market for the first time. Capricorn's principal assets are currently located in Egypt's Western Desert, including Obaiyed, Badr El Din, North East Abu Gharadig, and Alam El Shawish West, four main production areas, in which Capricorn holds working interests of 50%, 50%, 26%, and 20%, respectively. The related assets are being developed jointly by Capricorn with partners including Cheiron, with part of the production operations run through Badr El Din Petroleum Company, which is jointly owned by the Egyptian General Petroleum Corporation (EGPC), Cheiron, and Capricorn.

In 2025, Capricorn's Egyptian assets produced an average of 20,024 barrels of oil equivalent per day on a working interest basis, with liquids accounting for 40% of production; full-year revenue from Egyptian oil and gas operations was $134 million. The company's 2026 production guidance is 18,000 to 22,000 barrels of oil equivalent per day, with capital expenditure planned at $85 million to $95 million, maintaining four drilling rigs in operation, with a focus on advancing the Badr El Din area development and near-field exploration within the consolidated concession areas.

Capricorn's eight original development concessions in Egypt have been consolidated into a new Western Desert production sharing contract. The agreement was approved by the Egyptian Parliament in March 2026 and formally became effective after being signed by Egypt's Minister of Petroleum and Mineral Resources on May 19. DNO stated that following completion of the acquisition, it plans to develop Egypt into its third core operating region after the North Sea and the Kurdistan Region of Iraq, and will continue to invest in existing assets, participate in exploration and development, and pursue subsequent asset acquisitions.

Under the conditions disclosed in the announcement, the acquisition remains subject to approval by Capricorn shareholders, sanction by the Scottish court, and relevant consents from the Egyptian authorities. DNO and Capricorn will seek approval of the transaction from the Egyptian General Petroleum Corporation (EGPC). The scheme of arrangement requires approval by a majority in number of shareholders present and voting at the court meeting, representing at least 75% of the voting value; the related special resolution at the general meeting likewise requires at least 75% of valid votes cast in favor.