M&A moves

Houston energy company makes strategic acquisition in $1.29B deal

Talos, a technology-based energy company that aims to work towards low-carbon solutions, acquired QuarterNorth Energy Inc. Photo via talosenergy.com

Houston-based Talos Energy Inc. announced a $1.29 billion acquisition this month.

Talos, a technology-based energy company that aims to work towards low-carbon solutions, acquired QuarterNorth Energy Inc., which has ownership in several big offshore fields, and is a privately-held U.S. Gulf of Mexico exploration and production company. The acquisition of the assets are expected to provide additional scale from high quality deepwater assets “with a favorable base decline profile along with attractive future development opportunities” from QuarterNorth.

QuarterNorth's assets include six major fields and are 95 percent operated and 95 percent in deepwater. The deal will add production of around 30,000 barrels of oil equivalent per day expected for 2024, which will average 75 percent oil.Talos will now expect run-rate synergies of about $50 million a year to be by end of 2024.

QuarterNorth's assets will bring ”significant reserves upside beyond current production from both producing probable zones and near-term development opportunities in 2024 and 2025” according to Talos.

“The addition of QuarterNorth's overlapping deepwater portfolio with valuable operated infrastructure will increase Talos's operational breadth and production profile while enhancing our margins and cash flow,” Talos President and CEO Timothy S. Duncan says in a news release. “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.”

Talos secured $650 million in bridge financing from a syndicate of banks representing the majority sum of the company's reserves-based loan lender group.

“The expected financing structure of the transaction accelerates de-leveraging, immediately improves our credit profile, is accretive on key metrics, and positions us to consider additional capital return initiatives following deleveraging in the near term,” Duncan adds. “We look forward to completing this transaction in the next few months and continuing our strategy of building a large-scale, diverse energy company."

Trending News

A View From HETI

Houston-based Caliche Development Partners begins doubling natural gas storage capacity and building the world’s largest helium cavern, fueled by a key Texas deal completion. Photo courtesy of Caliche

With the acquisition of its Texas business now complete, Houston-based Caliche Development Partners is moving ahead with expansion of a natural gas storage project in Beaumont.

This milestone comes after a previously announced majority investment in Caliche by New York City-based investment firm Sixth Street, which has offices in Houston, Austin, and Dallas. Sixth Street recently closed on the Texas portion of the deal, and it expects to wrap up the California portion of the deal in mid-2025.

The amount of Sixth Street’s investment in Caliche wasn’t disclosed.

Completion of the deal’s Texas component gave Caliche the go-ahead to start spending Sixth Street’s money on the Beaumont project.

Caliche already has started construction on the 14 billion-cubic-feet expansion of its Golden Triangle Storage natural gas storage facilities. Two new caverns, expected to come online in 2026 and 2027, will double total storage capacity to 28 billion cubic feet (Bcf).

The Golden Triangle Storage system connects to seven major pipelines in the Beaumont-Port Arthur area.

Meanwhile, Caliche has started construction on what’s billed as the world’s largest helium storage cavern, also located at the Golden Triangle site. This cavern, along with Caliche’s planned carbon sequestration project just four miles west of Golden Triangle, are expected to begin operating in 2025.

Caliche is an acquisition and development company that specializes in underground storage of natural gas, industrial gasses like hydrogen and helium, and carbon emissions. Caliche’s projects are in the Texas Gulf Coast’s Jefferson County and Northern California’s Colusa County.

Trending News