Talos Eenrgy LLC has one less competitor in the oil ad gas field after a recent press release announced their acquisition of Stone Energy Corp.
The merger, which is set to be finalized by the end of the year before operations resume around the second quarter of 2019 under the name Talos Energy Inc., comes after a few years of financial trouble for Stone Energy.
Chairman Neal Goldman said in a statement that the decision to merge cam after a bankruptcy filing in 2017 after collecting more than a billion dollars in debt. Still, with substantial holdings and territory it was approached by many potential buyers in November of last year, but Talos, another influential player in the Gulf of Mexico, receiving financial counseling from Citigroup and UBS Investment Bank, eventually won out.
This wasn’t Talos’s first time merging with a former competitor. In 2013 they absorbed Helix Solutions Group’s subsidiary Energy Resource Technology GOM Inc. for $620 million. The new size of Talos and their command of the energy industry undoubtedly played a role in their bid to the Mexican government to increase their exploratory efforts in their waters. By July 2017 Talos had already located nearly two billion barrels worth of oil.
This signals a new reality for stakeholders in either company. Those currently invested in Talos will retain 63 percent of the company, with 37 percent going to those from Stone and estimated value of $2.5 billion.
Talos’s new mission statement seems ambitious but in keeping with the company’s past operations. CEO Timothy Duncan said that a combined effort between personnel from both companies and expanded resources will aid them as Talos ventures deeper into Mexican waters in search of oil.
Duncan will continue on in his leadership position in the coming year, but will be working with a different board. The ten seats Talos used to have on its board will be reduced to six, making room for four chairman from Stone. Big decisions will still be made at Talos’s home office in Houston, and Stone’s facilities on Lafayette and New Orleans will be restructured to carry out other duties. To know more about the company click here.
When 2019 rolls around, Talos’s share of the gulf of Mexico will expand by 1.2 million acres. Estimates suggest they’ll be able to produce 47 thousand barrels of oil and increases reserves by 136 million. That production cost will be backed up by a billion dollar credit facility and a credit line of up to %600 million.