Talos Energy Inc. will acquire US Gulf of Mexico producing assets, exploration prospects, and acreage from affiliates of ILX Holdings, Castex Energy, and Venari Resources for $640 million.
Talos signed definitive agreements to acquire all producing assets, primary term acreage, and prospects of ILX Holdings, all producing assets and certain primary term acreage and prospects of ILX Holdings II, all primary term acreage and prospects of ILX Holdings III, and certain subsidiaries of the Castex 2014 and Castex 2016 entities. In a separate transaction, Talos closed on the acquisition of all primary term acreage and prospects from Venari Resources.
The acquired assets produced 19,000 boe/d (65% oil, 72% liquids) in this year’s third quarter, increasing Talos’s pro forma daily production to 72,000 boe/d based on third quarter results. The transaction includes over 40 identified exploration prospects located on a total acreage footprint of 700,000 gross acres.
With the deals, Talos acquires working interest in key assets, specifically: 12% in Marmalard, 18% in Odd Job, 25% in Claiborne, 5% in Niedermeyer, 24$ in Barataria, 12% in Nearly Headless Nick, 12% in Son Of Bluto II, 14% in Blue Wing Olive, and 6% in Coelacanth.
The acquired Assets are expected to generate $150 million of free cash flow in 2019 from an estimated $210 million in adjusted EBITDA and projected capital spending of $60 million.
Funding sources for the deal consist of $250 million in new Talos shares to be issued to sellers at closing and cash from existing sources of liquidity. As part of its fall redetermination, the company's borrowing base has been increased to $950 million from $850 million and will be further increased to $1.15 billion at closing of the ILX and Castex acquisitions, which is expected in first-quarter 2020.
