Sometimes, no deal is better than a bad one—or so Kosmos Energy seems to think. The U.S. oil and gas firm abruptly called it quits on its potential takeover of West Africa-focused Tullow Oil, sending Tullow’s shares into a 10% tailspin on Tuesday. Kosmos didn’t offer up a reason, but “challenging” seems to be the word of the day: operational overlaps, debt-heavy balance sheets, and the ever-delicate dance with the Ghanaian government likely threw a wrench in the works.

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Kosmos shareholders clearly appreciated the decision to stay single; the stock surged 13% in pre-market trading. Tullow, meanwhile, played the ever-dignified jilted partner, insisting its standalone future remains bright. After all, it’s still looking to optimize its capital structure, even with its growing pile of debt and shaky demand projections.

Of course, Kosmos reserved the right to reconsider under “certain conditions”—a classic corporate ‘maybe later.’ But for now, the message is clear: when it comes to West African oil deals, Kosmos is swiping left.

Tullow Oil has had its share of setbacks in its development plans in East Africa, where the Kenyan government rejected the company’s plan to develop the South Lokichar project in Kenya this summer.

But this year, Tullow Oil was able to more than double its profit after tax for the first half of 2024 amid higher oil and gas production and increased crude oil realizations. Tullow Oil said it expects “a significant free cash flow uplift” in the second half of 2024. Full-year free cash flow guidance was reiterated at $200 million -$300 million at $80 per barrel oil price.

By Julianne Geiger for Oilprice.com

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