With Mergers And New Discoveries. Talos Energy Poised For Future Growth

Houston-based Talso Energy Inc. is on a roll. In the past two years the company became the first American company to drill for oil in Mexico territory in more than 80 years. It also completed a major merger, an acquisitions and scored a major oil discovery in the Gulf of Mexico.

On Sept. 4, Talso Energy finalized the acquisition of Whistler Energy II, a company that currently produced the equivalent of 1,900 barrels of oil per day. This follows the late 2017 merger with Stone Energy Corporation. That all-stock transaction bolstered the position of Talos as one of the premier energy exploration companies in America.

Talos Energy made history in July of 2017 when it sunk a well off the coast of Tabasco, Mexico, in partnership with a British and Latin American partner. Mexico nationalized oil industry in 1938 and so no foreign entity has been allowed access to that country’s natural resources since that time.

But Mexico is now eager to change course and revitalize a flagging energy industry. To that end, they allowed Talso Energy, Sierra Oil and Gas and Premier Oil to make a foray into Gulf waters off the Mexican coast. Better yet, the newly-named ZAMA-1 well appears to have been a significant discovery. Early estimates suggest the site may hold $2 billion barrels of oil.

Talso Energy commands a 35% interest in ZAMA-1 and will take the lead on bringing this asset to full operation in coming years.

As for the Whistler deal, the purchase price for the company was $52 million. Talos negotiated the release of $77 million in cash collateral owned by Whistler. In short, Talso will gain $31 million and the seller will receive $46 million. Because Whistler also had a $7 million available cash balance when the deal was finalized, a $14 million cash consideration resulted for Talos Energy.

Industry observers described the Talos-Whistler deal as a “win-win” for both companies. The ultimate result was a transaction that makes for the equivalent of $9,333 acquisition metric of net Boepd.

With the Stone Energy Corporation merger, Talso Energy began to appear on the stock exchange as TALO.

Tim Duncan Is Keeping Talos Energy Afloat

The roads were blocked in Tim Duncan’s neighborhood in Kingwood, Texas after Hurricane Harvey hit. Tim Duncan put his wife, his son, and two dogs into a rescue boat. Duncan is Talos Energy’s Chief Executive Officer. He had planned a $2.5 billion merger with Stone Energy for four months. It would make his company a public entity without a public offering expense. He then went to Houston to camp out at his parents’ house. He negotiated the merger from their kitchen table. Most of his company’s assets will be in the Gulf of Mexico. Talos Energy takes chances on wells in Mexico and the U.S. The merger led to the production of 48,000 barrels each day.

Tim Duncan grew up in Egypt, Florida, and Texas as the son of an oil-company man. During the hurricane, he was also negotiating with Mackay Shields and Franklin Templeton Investments. His company’s largest asset is the Phoenix field. Chevron developed it by drilling 6 wells and installing a production platform. In 2005, the platform was capsized and carried away by the waters of Hurricane Rita. Talos now pumps 16,000 barrels each day in the Helix Producer ship. Talos is inheriting the Pompano platform from Stone Energy. Talos can combine new discoveries with the preexisting infrastructure.

Duncan began his oil industry career in 1996 with Zilkha Energy. He helped start Gryphon Exploration in 2000. He co-founded Phoenix Exploration in 2006, and he sold it to Apache Corp. in 2011. The offshore industry was negatively affected by the drilling moratorium. In response, Duncan founded Talos Energy in 2012. The company bought the Phoenix field and other assets for $620 million. The oil market crashed soon after causing companies to go bankrupt.

The Permian Basin is still pumping 1.6 million barrels each day. Talos has hit seven dusters in 28 drilling attempts in the last three years. Talos acquired auctioned acreage in Mexican water thanks to Tim Duncan. He is ready to get back home and fix his house up that has been under muddy water for three days.

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