Talos Energy Inc. Strikes Acquisition Deal with QuarterNorth Energy
The stock of Talos Energy Inc. (TALO) has surged following a momentous $1.29 billion acquisition pact with QuarterNorth Energy Inc. The terms of the deal involve approximately $965 million in cash and 24.8 million shares of Talos. The agreement, unanimously approved by the boards of both companies, is slated to culminate by the end of Q1 2024, contingent upon customary closing terms and regulatory endorsements.
Anticipated Gains from the Acquisition
The acquisition is anticipated to bestow Talos Energy with an estimated production of 30 thousand barrels of oil equivalent per day (MBoe/d) in 2024, with about 75% oil, mainly from 95% operated assets. Additionally, it foresees QuarterNorth yielding an average daily production of approximately 30 MBoe/d (75% oil) for 2024, factoring in planned downtime.
Moreover, the integration will contribute proved reserves totaling about 69 million barrels of oil equivalent (MMBoe) with a PV-10 of $1.7 billion, demonstrating significant potential for the stock’s performance.
Financial Implications and Strategic Outlook
Talos Energy projects the transaction to enhance key financial metrics and expects to realize annual synergies of roughly $50 million in 2024. Half of these synergies are anticipated to materialize within 2024, with the full run-rate savings achievable by year-end 2024. Timothy S. Duncan, President and CEO of Talos Energy Inc., underscored the benefits of this strategic alignment. He expressed confidence that the incorporation of QuarterNorth’s deepwater portfolio would elevate the company’s operational breadth and production profile, ultimately bolstering margins and cash flow.
Duncan remarked, “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.”
These forward-looking projections are underpinned by Talos Energy’s robust financial position, with around $752.9 million of liquidity, including approximately $13.6 million in cash, as of September 30, 2023.
At last check Tuesday, TALO shares were up 0.44% at $13.57 premarket, illustrating a buoyant response from the market following the acquisition announcement.
