Talos Energy acquires EnVen Energy for $1.1B, adding deepwater assets to its portfolio

offshore staff

HOUSTON Talos Energy Inc. announced it has signed definitive agreements to acquire EnVen Energy Corp., a private operator in the deep-water US Gulf of Mexico (GoM), for $1.1 billion.

The strategic transaction expands Talos’ GoM operations with high-margin, oil-weighted assets, is profitable for Talos shareholders through free cash flow per share in 2023E and results in immediate deleveraging.

Consideration for the transaction consists of 43.8 million Talos shares and $212.5 million in cash, as well as assumption of EnVen’s net debt at closing, currently estimated at approximately $50 million at year-end 2022. Following the transaction, Talos shareholders will own approximately 66%. The remaining 34% will own the pro forma company and EnVen shareholders. The transaction was unanimously approved by the boards of directors of both companies.

The transaction is expected to close by the end of 2022.

The proposed acquisition was first announced on August 1st.

Important transaction highlights:

  • Adds ~24 Mboe/d production (>80% oil, >90% operated).
  • Increases production by 40% and gross area by 35%, significantly increasing farm scale and variety.
  • Duplicates the deep sea facility operated by Talos and adds critical infrastructure in existing Talos operational areas.
  • ~$460 million of 2022E adj. EBITDA (~$630 million unhedged) and ~$170 million of 2022E free cash flow.
  • >13% value appreciation for Talos shareholders on 2023E free cash flow per share.
  • Implied enterprise value equals 2.4x 2022E hedged adj. EBITDA (1.7x unhedged), a discount to Talos’ current metrics.
  • Immediate deleveraging with an estimated year-end pro forma net debt ratio of less than 0.8x.
  • At least $30 million in projected annual run rate synergies to be realized in 2023.
  • Reduces Talos’ GHG emissions intensity with deep sea farm space.
  • Addition of seven fully independent directors plus CEO of Talos to Board of Directors.
  • Talos will present a proposal to abolish its secret voting structure so that all directors are elected annually.
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Asset base aligned with the Talos strategy:

EnVen produces approximately 24 Mboe/d in the US GoM that is more than 80% oil weighted, more than 90% operated and more than 95% deepwater source.

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EnVen operates multiple platforms, including five large deepwater facilities with significant open capacity, and has approximately 420,000 gross acres of acreage in core deepwater areas for future infrastructure-driven development, exploitation and exploration opportunities. EnVen’s infrastructure is backed by more than $160 million in committed cash and receivables set aside for future abandonment obligations.

Talos said the transaction is well aligned with its strategy, which is focused on creating value through the acquisition and development of conventional resources in close proximity to under-utilized infrastructure, utilizing Talos’ extensive seismic inventory and advanced reprocessing. EnVen’s assets significantly expand the footprint of Talos, which is already a leading independent public offshore company in the United States, Talos said. On a pro forma basis, Talos expects to be more than 70% oil weighted, more than 75% operated and more than 80% deepwater focused.

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leadership and governance

No changes in the management of Talos are expected as a result of the transaction. Tim Duncan remains CEO and retains a seat on the expanded board of directors, which will include six Talos directors (CEO and five independent directors) and two independent directors of the EnVen board, Shandell Szabo and Richard Sherrill.

Robert Tichio, Riverstone Holdings’ appointed representative on the Talos board of directors, will step down concurrently with the closing of the transaction.

Shandell Szabo is an independent director of EnVen and was previously with Anadarko Petroleum Corp. for 19 years. most recently as Vice President of US Exploration. She has technical expertise in the deep sea GoM and other important basins.

Richard Sherrill is also an independent director of EnVen and President of Clean Aire Partners, a private energy transition company. Previously, he was COO of Duke Energy Corp.


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