Kosmos Energy has ceased its efforts to acquire West Africa-focused Tullow Oil, leading to a significant 10% decline in Tullow's share value.

The US oil and gas company did not provide a reason for halting the potential deal, which had been in preliminary discussions.

Following the announcement, Kosmos Energy's shares surged nearly 13% in pre-market trading.

The merger would have combined the operations of both companies, potentially producing more than 130,000boepd by 2024, with assets spanning several West African nations and the US Gulf of Mexico.

Shore Capital Stockbrokers research analyst James Hosie was quoted in a report by Reuters as saying: "There was logic to considering a transaction given the shared assets in Ghana and scope for operational synergies.

"But any transaction would have required the support of the Ghanaian Government and the creditors of both companies, which may have been challenging." ​​

Both companies, which are burdened with substantial debt, currently collaborate in key oilfields in Ghana, the report added.

Kosmos had until 5pm London time on 9 January 2025, to submit a definitive offer for Tullow. However, in a statement, it noted that it reserved the right to revisit its decision under specific conditions.

Tullow Oil has expressed confidence in its ability to manage independently, stating its board's belief in the company's strong positioning to optimise its capital structure.

"I felt it (the potential deal) was somewhat opportunistic... coming soon after the news of Tullow's search for a new CEO," added Hosie.

Earlier in the month, Tullow announced the upcoming departure of CEO Rahul Dhir, who will also step down from the board next year.