Talos Energy has announced the execution of definitive agreements to acquire EnVen Energy Corporation (EnVen), a private operator in the deepwater US Gulf of Mexico, for $1.1 billion.
The strategic transaction expands Talos’s Gulf of Mexico operations with high margin, oil-weighted assets, is accretive to Talos shareholders on 2023E Free Cash Flow per Share and is immediately de-leveraging.
Consideration for the transaction consists of 43.8 million Talos shares and $212.5 million in cash, plus the assumption of EnVen’s net debt upon closing, currently estimated at approximately $50.0 million at year-end 2022.
Following the transaction, Talos shareholders will own approximately 66 percent of the pro forma company and EnVen’s equity holders will own the remaining 34 percent.
The transaction has been unanimously approved by each company’s board of directors. Closing is expected by year end 2022, subject to customary closing conditions.
Talos president and chief executive officer Timothy S Duncan commented: “This transaction adds significant scale and diversity to our business through logical, in-basin expansion with an excellent strategic fit.
“EnVen’s high-margin, oil-weighted assets in key deep-water regions, operated infrastructure and significant overlapping acreage footprint will enhance our ability to accelerate shareholder value creation.
“The acquisition is financially attractive, expanding our operating margins and increasing free cash flow per share while immediately improving our credit profile before accounting for significant expected cost synergies.
“The enhanced cash flow profile will provide us with increased capital allocation optionality, including additional high-impact subsea tie-back opportunities, opportunistic acquisitions, accelerating our low-carbon initiatives and positioning Talos for a potential shareholder return of capital program in the future.
“We are excited for the numerous benefits that this transaction provides and look forward to closing around year end.”
The transaction, which is expected to close around year end 2022, is subject to customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the approval of Talos and EnVen shareholders.
Riverstone Holdings, which currently owns ~15 percent of Talos, has executed a Support Agreement in favor of the transaction.
A majority of EnVen shareholders have agreed to provide their written consents in favor of the transaction. Both Talos and EnVen boards of directors have unanimously approved the transaction.
For more information visit www.talosenergy.com