Through the transaction, Talos Energy, which presently operates in the US and offshore Mexico, is set to increase its production by around 30MBoe/d for the entire year of 2024, with an average of approximately 75% oil from roughly 95% operated assets
QuarterNorth Energy to be acquired by Talos Energy in a stock and cash deal. (Credit: swingingin from Freeimages.com)
Talos Energy has agreed to acquire QuarterNorth Energy, a privately-held exploration and production company operating in the US deepwater Gulf of Mexico, in a stock and cash deal worth $1.29bn.
The consideration for the deal includes 24.8 million shares of the common stock of the New York Stock Exchange (NYSE) listed Talos Energy and around $965m in cash.
The deal has been approved unanimously by board of directors of both firms. QuarterNorth Energy’s top shareholders, representing around 68% of the total ownership group of the company are backing the transaction.
Through the transaction, Talos Energy is set to increase its production by around 30 thousand barrels of oil equivalent per day (MBoe/d) for the entire year of 2024, with an average of approximately 75% oil from roughly 95% operated assets.
Additionally, the company will acquire proven reserves totalling about 69 million barrels of oil equivalent (MMBoe) with a PV-10 valuation of $1.7bn.
Talos Energy presently operates in the US and offshore Mexico.
QuarterNorth Energy’s portfolio includes six major fields, with approximately 95% of them being operated and 95% located in deepwater.
The company’s portfolio includes the Katmai discovery in the Green Canyon region, in which it has a 50% working interest. The asset produces an estimated combined 27MBoe/d gross from two early-life wells.
Talos Energy foresees the Katmai field achieving an average gross production of over 34MBoe/d with minimal decline in the coming years. This projection is based on a field development plan that includes two future well locations and a facilities upgrade project scheduled for early 2025.
QuarterNorth Energy also has interests in the Big Bend, Galapagos, Genovesa, and Gunflint fields with each having strong production histories with nominal declines and promising future development potential.
Talos Energy president and CEO Timothy Duncan said: “The addition of QuarterNorth’s overlapping deepwater portfolio with valuable operated infrastructure will increase Talos’s operational breadth and production profile while enhancing our margins and cash flow.
“This Transaction aligns with Talos’s overall strategy of leveraging existing infrastructure and complementary acreage to accelerate shareholder value creation. The pro forma footprint in the U.S. Gulf of Mexico should allow us to capture meaningful operating synergies.”
The completion of the transaction is anticipated by the conclusion of Q1 2024. It is contingent upon the fulfillment of specific customary closing conditions and regulatory approvals.
Talos Energy has enlisted PJT Partners and Greenhill (Mizuho Securities M&A) as its principal financial advisers, with additional financial advisory support from J.P. Morgan Securities and Intrepid Partners.
Akin Gump Strauss Hauer & Feld is providing legal counsel to Talos Energy. On the QuarterNorth Energy side, Barclays is acting as the financial adviser, and legal guidance is being provided by Holland & Knight.