Another O&G acquisition announced

Talos Energy said it will acquire Gulf of Mexico E&P company QuarterNorth Energy for US$1.29 billion.

The board of directors of both Talos and QuarterNorth have unanimously approved the transaction, which is expected to close by the end of the first quarter of 2024, subject to certain customary closing conditions and regulatory approvals.

According to Talos Energy, the acquisition adds production of approximately 30 thousand barrels of oil equivalent per day (MBoe/d) expected for the full year 2024, averaging about 75% oil from approximately 95% operated assets.

QuarterNorth Energy will also add proved reserves1 of approximately 69 MMBoe) with a PV-10 of US$1.7 billion.

“The addition of QuarterNorth’s overlapping deepwater portfolio with valuable operated infrastructure will increase Talos’s operational breadth and production profile while enhancing our margins and cash flow,” said Talos President and Chief Executive Officer Timothy S. Duncan.

Talos estimates QuarterNorth average daily production for the full year 2024 of approximately 30 MBoe/d (75% oil), inclusive of planned downtime. QuarterNorth’s producing assets include six major fields and are approximately 95% operated and 95% in deepwater.

QuarterNorth operates and holds a 50% working interest in the Katmai discovery in the Green Canyon region, producing an estimated combined 27 MBoe/d gross from two early-life wells. Talos expects the Katmai field to produce over 34 MBoe/d gross on average with minimal decline over the next several years based on a successful field development plan including two future well locations and a facilities upgrade project in early 2025. QuarterNorth’s interest in the Big Bend, Galapagos, Genovesa, and Gunflint fields represent attractive assets, each with strong production histories with nominal declines, and future development potential.

Talos expects to realize annual run-rate synergies of approximately US$50 million, consisting of both operational and general and administrative cost reductions. Talos expects to realize approximately half of the synergies throughout 2024 and expects full run-rate savings can be achieved by year-end 2024.