Asset A&D

Talos Energy Makes Bolt-On Gulf of Mexico Acquisition

By Deepak Sharma
June 23, 2020
2 minutes read
CNOOC Offshore Rig

Gulf of Mexico-focused independent E&P player Talos Energy Inc. has signed an agreement to acquire additional working interests in 16 properties in the U.S. Gulf of Mexico from various affiliates of Castex Energy 2005 LP.

Previously, in February this year, Talos executed a series of definitive agreements with various affiliates of ILX Holdings LLC, Castex Energy 2014 LLC, Castex Energy 2016 LP and Venari Resources LLC to acquire a broad portfolio of producing assets, exploration prospects and acreage in the U.S. Gulf of Mexico, for a total consideration of US$640 million. Talos aims to consolidate interests in the area to gain greater operational control over future drilling, asset management, maintenance and abandonment activities.

Talos will pay a total consideration of US$65 million for the acquisition, comprised of US$6.5 million in cash, with the balance being paid through the issuance of common shares to the sellers.

Talos already holds a working interest in the 16 acquired properties, and will assume operatorship over 11 of the acquired properties. The acquired assets have proven reserves of approximately 17.6 million barrels of oil equivalent (MMboe), of which over 66% are classified as proved developed. For the year-to-date period ending May 31st, 2020, the assets have produced approximately 6,400 boe per day (boe/d), of which 85% was natural gas.

“The acquisition includes operatorship of 11 fields in which working interest was previously acquired in the Company’s acquisitions closed in February 2020, consolidating interests and providing Talos with greater operational control over future drilling, asset management, maintenance and abandonment activities,” Talos said in a statement.

Timothy S. Duncan, President & CEO of Talos commented, “This tactical deal with a compelling valuation highlights the importance of continuing to remain opportunistic and commercial in the current environment.”

The deal is subject to customary closing and purchase price adjustments, and is expected to close in Q3 2020.

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