US oil company Kosmos Energy has confirmed that it is in “very preliminary discussions” regarding a possible all-share offer for Africa-focused explorer and production company Tullow.

Texas-based Kosmos said there can be no certainty that any offer will be made, nor did it detail the terms on which any offer might be made.

Kosmos oil and gas assets in the Gulf of Mexico, Ghana and Equatorial Guinea, has until the close of play on 9 January to announce if it plans to make a firm takeover offer.

The combined company would have production of more than 130,000 barrels of oil equivalent per day (boepd), based on the two companies’ 2024 guidance

Last week Tullow said that Rahul Dhir would be stepping down next year and that the search for a successor was under way.

“This would be a sensible deal, given the shared assets in West Africa, and with Kosmos having a more diverse asset base and healthier balance sheet, would have the ability to take on the mountain of debt Tullow labours under,” said Panmure Liberum analyst Ashley Kelty.

“The fact that Tullow’s CEO is on the way out also makes the company weaker, with no clear direction on future strategy.”

Shares in Tullow rose 6.2% on Thursday but gave up just under 10% on Friday to close at 23.5p, giving it a market capitalisation of £342 million. Kosmos, which has listings in New York and London, is worth $1.49 billion.

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