BY Richard Summerfield
Talos Energy has agreed to acquire QuarterNorth Energy in a $1.29bn cash and stock deal. QuarterNorth is a privately-held US Gulf of Mexico exploration and production company with ownership in several prolific offshore fields. Talos expects the deal to improve its base decline rate by approximately 20 percent.
Under the terms of the deal, QuarterNorth Energy will receive about 24.8 million shares of Talos’s common stock and around $965m in cash. The board of directors of both Talos and QuarterNorth have unanimously approved the deal, which is expected to close by the end of the first quarter of 2024, subject to certain customary closing conditions and regulatory approvals.
The deal will offer a significant boost to Talos’s operations in the Gulf of Mexico. QuarterNorth’s assets include six major fields in the region, predominantly in deep water. According to Talos, the acquisition will add production of about 30,000 barrels of oil equivalent per day (boe/d) expected for the full year 2024, averaging about 75 percent oil from approximately 95 percent operated assets proved reserves of around 69 million boe with a PV-10 of $1.7bn, high margin, low decline production, with low reinvestment rate requirements to sustain production and no meaningful near-term asset retirement obligations conducive to long-term high free cash flow generation.
“Today’s announcement marks one of Talos’s most significant milestones as we build a large-scale offshore exploration and production company,” said Timothy S. Duncan, president and chief executive of 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. 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,” he continued. “The expected financing structure of the Transaction accelerates de-leveraging, immediately improves our credit profile, is accretive on key metrics, and positions us to consider additional capital return initiatives following deleveraging in the near term. We look forward to completing this Transaction in the next few months and continuing our strategy of building a large-scale, diverse energy company.”
News: Talos Energy to acquire QuarterNorth Energy for $1.29 bln