Talos Energy has struck a deal to acquire privately held US Gulf of Mexico (GOM) exploration and production company QuarterNorth Energy in a cash-and-stock deal valued at $1.29 billion. The transaction will add about 30,000 BOE/D (75% oil) on average to Talos’ full-year 2024 volumes and adds about 69 million BOE in proved reserves.
QuarterNorth was the successor company to Fieldwood Energy, which filed for bankruptcy in 2020. A group of Fieldwood’s creditors formed QuarterNorth in 2021 when they acquired most of Fieldwood’s assets for $1 billion.
QuarterNorth’s producing assets include six major fields and are approximately 95% operated and 95% in deep water and bring significant reserves upside beyond current production from both producing probable zones and near-term development opportunities in 2024 and 2025.
QuarterNorth operates and holds a 50% working interest in the Katmai discovery in Green Canyon Blocks 39 and 40, producing an estimated combined 27,000 BOE/D gross from two early-life wells. The two wells are tied back to the QuarterNorth-operated Tarantula platform located in the South Timbalier Block 308 A.
Talos expects the Katmai field to produce over 34,000 BOE/D gross on average with minimal decline over the next several years based on a field development plan including two future well locations and a facilities upgrade project in early 2025.
QuarterNorth's interest in the Big Bend, Galapagos, Genovesa, and Gunflint fields have strong production histories with nominal declines and future development potential, according to Talos.
"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,” said Talos President and Chief Executive Timothy S. Duncan. “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 US Gulf of Mexico should allow us to capture meaningful operating synergies.”
QuarterNorth will receive 24.8 million shares of Talos’s common stock and approximately $965 million in cash. The board of directors of both Talos and QuarterNorth have unanimously approved the purchase, which is expected to close by the end of the first quarter of 2024, subject to customary closing conditions and regulatory approvals.
