Talos Energy to acquire QuarterNorth Energy for $1.3bn in major energy sector move
In a significant move within the energy sector, Talos Energy Inc. (“Talos”) (NYSE: TALO) announced the execution of definitive agreements to acquire QuarterNorth Energy Inc. (“QuarterNorth”) for $1.29 billion, a transaction expected to reshape the dynamics of deepwater exploration in the Gulf of Mexico. The deal, which involves a mix of stock and cash, is set to provide Talos with additional scale and high-quality deepwater assets, aligning with the company’s strategy of enhancing shareholder value through strategic acquisitions.
Details of the Transaction
The consideration for the acquisition comprises 24.8 million shares of Talos common stock and approximately $965 million in cash. The board of directors of both companies has unanimously approved the transaction, which is anticipated to close by the end of the first quarter of 2024, subject to customary closing conditions and regulatory approvals.
Talos Energy Inc. Announces Definitive Agreement to Acquire QuarterNorth Energy Inc.
Key Highlights of the Deal
– Addition of approximately 30 thousand barrels of oil equivalent per day (MBoe/d) expected for the full year 2024.
– Adds proved reserves of approximately 69 million barrels of oil equivalent (MMBoe).
– Accretive to Talos shareholders on key financial metrics.
– Expected annual run-rate synergies of approximately $50 million by year-end 2024.
– Improved balance sheet strength with a leverage ratio of 1.0x or less.
Strategic and Financial Implications
Talos President and CEO, Timothy S. Duncan, highlighted the significance of the transaction, emphasizing the alignment with Talos’s strategy to build a large-scale offshore exploration and production company. The deal is poised to enhance Talos’s operational breadth and production profile, while also accelerating de-leveraging of its balance sheet.
High-Quality Asset Base and Synergies
The assets acquired from QuarterNorth are expected to add significant production capacity and reserves to Talos’s portfolio. These include six major fields, primarily operated and located in deepwater. The transaction also brings a robust inventory of drilling opportunities, promising future development potential.
Governance and Timing
The leadership team of Talos will remain unchanged, and the board will be expanded to include an additional independent director. The transaction is subject to customary closing conditions, including antitrust approvals.
Advisors and Financial Strategy
PJT Partners and Greenhill (Mizuho Securities M&A) are serving as lead financial advisors to Talos. Akin Gump Strauss Hauer & Feld LLP is serving as legal advisor to Talos. Barclays and Holland & Knight LLP are advising QuarterNorth.