Talos Energy: Focus On The Gulf Of Mexico Exploration Rig Driving Transformation

Talos Energy is a private oil and gas company with a management team that has years of experience in offshore oil exploration and production. The company is efficient in the use of modern seismic technology to optimize, exploit and explore deep-water assets and shelves. The company has a track record of good results, and previous successes have seen the company develop and sell two exploration companies operating in the Gulf of Mexico.

Back in May 2018, Talos Energy completed its strategic merger with Stone Energy Corporation. The new company now headquartered in Houston trades on the New York Stocks Exchange market under the “TALO” symbol. The move is transformational, and shareholders stand to benefit from the increased scale of operation and greater liquidity. The company’s current positioning aims to capitalize on its high-end asset portfolio in the Gulf of Mexico. It aims at looking to make further ground with potential business opportunities that may become available for its development.

The company has access to a new credit facility agreement with a base borrowing capability of $600 million, of which half of this amount is instantly available. The company also increases its liquidity to $450 million with $150 million being in cash form. In effect, the company controls 1.2 million acreages in the Gulf of Mexico with oil equivalent of 136 million barrels of proved reserves.

The transformation that was led by Citigroup and UBS Investment Bank as the financial advisors has translated to increased equity market capitalization of $1.9 billion. The enterprise value is also rising to $2.5 billion basing on Stone’s share price of $35.49 back in November. As currently stipulated, Talos shareholders have a 63% ownership of the new company, and stone shareholders retain the 37% balance.

The company emerged as the highest bidder for six deep and eight shallow water locations that came up for lease from the Bureau of Ocean Energy Management. In the expansionist move, Talo Energy is now poised to obtain an additional 14 exploration blocks on the Gulf of Mexico, this coming at the cost of $5.3 million in lease costs. This move aligns to their focus on expanding their Gulf of Mexico inventory exploration.

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