Talos Energy announced the execution of definitive agreements to acquire EnVen Energy, a private operator in the deepwater US Gulf of Mexico, for $1.1 billion. The strategic transaction expands Talos’s Gulf of Mexico operations with high margin, oil-weighted assets.
Key transaction highlights include:
- Adds approximately 24,000 bbl/day of oil equivalent (BOED) of production (>80% oil, >90% operated).
- Increases production by 40% and gross acreage by 35%, significantly increasing operational scale and diversity.
- Doubles Talos’s operated deepwater facility footprint, adding key infrastructure in existing Talos operating areas.
- At least $30 million in expected annual run-rate synergies to be achieved in 2023, primarily consisting of general and administrative cost reductions.
- Reduces Talos’s GHG Emissions Intensity with deepwater operating footprint.
Talos President and CEO Timothy S. Duncan commented: “This transaction adds significant scale and diversity to our business through logical, in-basin expansion with an excellent strategic fit. 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.”
Consideration for the transaction consists of 43.8 million Talos shares and $212.5 million in cash, plus the assumption of EnVen’s net debt upon closing, currently estimated at approximately $50.0 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. Closing is expected by year end 2022, subject to customary closing conditions.
EnVen operates numerous platforms, including five major deepwater facilities with significant open capacity and holds an acreage footprint of approximately 420,000 gross acres in core deepwater areas for future infrastructure-led development, exploitation and exploration opportunities. EnVen’s infrastructure is backed by more than $160 million in restricted cash and receivables reserved against future abandonment obligations.
There are no anticipated changes to Talos senior management resulting from the transaction. Tim Duncan will remain CEO and will retain 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.
Ms Szabo previously spent 19 years with Anadarko Petroleum, most recently as the Vice President of US Exploration. She has technical expertise in the deepwater Gulf of Mexico and other key basins. Mr Sherrill is the President of Clean Aire Partners, a private energy transition company. He was previously the COO of Duke Energy Corporation.