Talos Energy sells carbon capture business to TotalEnergies for $148m

Talos Energy Inc. (NYSE: TALO), a notable player in the energy sector, has officially announced the sale of its subsidiary, Talos Low Carbon Solutions LLC (TLCS), to TotalEnergies E&P USA, Inc. for a purchase price of $125 million, with additional reimbursements, adjustments, and cash retention bringing the total deal value to approximately $148 million. The transaction, effective as of January 1, 2024, is set to close later today. The proceeds from this sale are earmarked for the immediate repayment of borrowings under Talos’s credit facility and for general corporate purposes, signifying a strategic move within the energy industry landscape.

The acquisition encompasses Talos’s entire carbon capture and sequestration (CCS) business, highlighting projects like Bayou Bend CCS LLC, Harvest Bend CCS LLC, and Coastal Bend CCS LLC along the U.S. Gulf Coast. These projects represent significant advancements in the field of carbon management and environmental sustainability. Talos may also benefit from future cash payments related to certain milestones achieved at the Harvest Bend or Coastal Bend projects or from a subsequent sale of these projects by TotalEnergies.

Robin Fielder, the Executive Vice President of Low Carbon Strategy and Chief Sustainability Officer at Talos, will continue her role throughout a transition period before departing to explore new opportunities. This leadership continuity ensures the smooth transfer of expertise and knowledge critical to the success of the CCS initiatives.

Talos President and CEO Timothy S. Duncan expressed satisfaction with the transaction, stating, “Since TLCS’s inception, we have successfully applied our energy expertise as an early mover aimed at developing decarbonization solutions along the U.S. Gulf Coast.” He credited the CCS team for their exceptional effort in crystallizing value for Talos shareholders and emphasized that the sale would allow Talos to focus on cash flow generation and optimal capital allocation in its core upstream business.

The sale of TLCS to TotalEnergies, a global leader in CCS development, marks a pivotal moment in the energy sector’s transition towards more sustainable practices. This move not only underscores the growing importance of carbon capture technology in addressing climate change but also highlights the strategic realignment of companies like Talos Energy towards their core operations while leveraging partnerships to advance environmental goals.

The transaction between Talos Energy and TotalEnergies reflects a broader industry trend of investing in sustainable and low-carbon technologies. By divesting its CCS business, Talos is capitalizing on its early investments in decarbonization, enabling it to strengthen its balance sheet and refocus on its principal business areas. Meanwhile, TotalEnergies’ acquisition of TLCS signifies its commitment to expanding its portfolio in carbon management solutions, aligning with global efforts to combat climate change.