Talos Energy will increase its oil and gas production by 40% via its $1.1-billion deal to acquire private deepwater Gulf of Mexico (GOM) operator EnVen Energy. The transaction expands Talos's GOM operations with high-margin oil-weighted assets including interests in the Brutus/Glider, Neptune, Prince, Cognac, and Petronius fields, among others.
The deal adds around 24,000 BOE/D to Talos’ existing production in the GOM; more than 80% of the new volumes are oil with more than 90% coming from operated assets. The deal effectively doubles Talos’ operated deepwater GOM facility footprint, adding key infrastructure in existing Talos operating areas.
The EnVen acquisition follows Talos' $640-million purchase of GOM properties from
affiliates of ILX Holdings, Castex Energy, and Venari Resources in 2019.
Under the terms of the EnVen cash and stock transaction, Talos will offer 43.8 million common shares and $212.5 million in cash, plus the assumption of EnVen's net debt upon closing, estimated at approximately $50 million at year-end 2022.
Following the transaction, Talos shareholders will own approximately 66% of the pro forma company and EnVen’s equity holders will own the remaining 34%. The transaction has been unanimously approved by each company's board of directors.
"This transaction adds significant scale and diversity to our business through logical, in-basin expansion with an excellent strategic fit,” said Timothy Duncan, president and chief executive at Talos Energy. “EnVen’s high-margin, oil-weighted assets in key deepwater regions, operated infrastructure, and significant overlapping acreage footprint will enhance our ability to accelerate shareholder value creation. The enhanced cash flow profile will provide us with increased capital allocation optionality, including additional high-impact subsea tieback opportunities, opportunistic acquisitions, accelerating our low-carbon initiatives, and positioning Talos for a potential shareholder return of capital program in the future.”
EnVen operates numerous platforms, including five major deepwater facilities with significant open capacity and holds approximately 420,000 gross acres in core deepwater areas for future infrastructure-led development, exploitation, and exploration. Key facilities include the Brutus tension-leg platform (TLP) (100%), Neptune spar (65%, operator), Prince TLP (100%), and the Petronius compliant tower (50%). Talos will also become operator and majority owner in the Lobster and Cognac fixed platforms.
The combined company's acreage and key asset holdings in the US GOM. SOURCE: Talos Energy
The combined company expects to be more than 70% oil-weighted, more than 75% operated and more than 80% focused in deepwater regions.
Talos is currently running one rig in the deep GOM. Seadrill’s Seven Louisiana is on location at the operator’s Bulleit field in Green Canyon Block 21.
There are no anticipated changes to Talos senior management resulting from the transaction. Duncan will remain chief executive andretain one seat on the expanded board of directors, which will include six Talos directors (CEO and five independents) and two independents from the EnVen board of directors, Shandell Szabo and Richard Sherrill. The board of directors will have no private-equity representatives post-closing. Robert Tichio, the appointed Riverstone Holdings representative currently on Talos's board, will resign from the board at the time of closing. Riverstone Holdings (about 10% pro forma ownership) and EnVen's top two equity holders (around 20% pro forma combined) will enter lockup agreements at closing.
Riverstone Holdings has executed a support agreement in favor of the transaction. A majority of EnVen shareholders have agreed to provide their written consents in favor of the transaction. Both Talos and EnVen boards have unanimously approved the transaction.
