Talos Energy Inc. will become operator of 11 of 16 selected US Gulf of Mexico shelf assets acquired in a newly-entered agreement with Castex Energy 2005 affiliates. The deal includes operatorship of 11 fields in which working interest was previously acquired in deals closed in February (OGJ Online, Dec. 11, 2019).
Castex Energy 2005 emerged from bankruptcy in 2018 and is controlled by prior first lien lenders. As of April 1, and based on an early June 2020 strip price case, the assets had proved reserves of 17.6 MMboe, with over 66% classified as proved developed reserves. For the year-to-date period ended May 31, the assets had an average daily production of 6,400 boe/d (15% oil, 85% natural gas).
Among the acquired assets are multiple producing fields originally discovered and/or operated by predecessor companies led by current Talos management. The acquired assets carry de minimis plugging and abandonment obligations over the next several years.
The purchase price of $65 million is to be paid through the issuance of some 4.95 million Talos Energy common shares at closing and $6.5 million of cash. The effective date of the transaction is April 1, with closing expected to occur in this year’s third quarter.
In the same release, Talos noted that its borrowing base has been confirmed at $985 million following its semi-annual redetermination process—a 14% reduction from its prior borrowing base of $1.15 billion.