Talos Acquires GOM Shelf Assets for $65MM
Talos Energy Inc.’s borrowing base has been confirmed at $985 million following its semi-annual redetermination process. It has also initiated a deal for the bolt-on acquisition of assets from affiliates of Castex Energy 2005, according to a statement from the company.
The revised borrowing base represents a 14% reduction from the company's prior borrowing base. As of May 31, 2020, Talos had approximately $121 million of cash on hand and $650 million drawn under its credit facility.
Separately, the Gulf of Mexico shelf asset acquisition consists of 16 properties in which the company currently holds a working interest. As of April 1, 2020, and based on an early June 2020 strip price case, the assets had proved reserves of approximately 17.6 MMBoe, with over 66% classified as proved developed. For the year-to-date period ended May 31, 2020, the assets had an average daily production of 6.4 MBoe/d (15% oil/85% gas).
The purchase price of $65 million will be paid through issuing 4.95 million Talos shares at closing and $6.5 million of cash. The effective date of the transaction is April 1, 2020, and closing is expected in the third quarter of 2020. The acquisition includes operatorship of 11 fields.
"We are very pleased with the continuing strong support we've received from our bank group considering the historic dislocation in our industry in recent months,” President and Chief Executive Officer Timothy S. Duncan said in a statement. “As we look forward to the second half of 2020, we're highly confident in the financial strength of the company and believe we are well-positioned for continued growth."
Duncan continued: "The bolt-on acquisition includes additional ownership in an attractive set of positive cash-flowing assets in which we already have interests, and securing operatorship for the majority of these assets also provides us with greater control moving forward. This tactical deal with a compelling valuation highlights the importance of continuing to remain opportunistic and commercial in the current environment."
Castex Energy is a private oil and gas company focused on exploration and development in South Louisiana and the Gulf of Mexico Shelf. It is also one of Riverstone Holdings portfolio companies. In 2018 the company emerged from bankruptcy and it is currently controlled by prior first lien lenders.
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