Talos to Acquire Gulf of Mexico Assets from Ridgewood, Castex, and Venari

Updated 1 year 3 months ago

Talos announced in December 2019 multiple agreements to acquire a portfolio of Gulf of Mexico assets from Ridgewood Energy, Castex Energy, and Venari Resources for $640 million. This includes all producing assets, primary term acreage, and prospects from ILX Holdings, ILX Holdings II, and ILX Holdings III as well as certain subsidiaries of Castex 2014 and Castex 2016 entities. In a separate transaction, Talos closed on the acquisition of all primary term acreage and prospects from Venari. This portfolio produces 19,000 barrels of oil equivalent per day with 2P reserves of 68 million barrels of oil equivalent as well as 40 identified exploration prospects located on 700,000 gross acreas.

The ILX and Castex acquisitions are expected to close in 1Q 2020. Talos estimates $150 million in free cash flow from these assets in 2019 and $210 million in adjusted EBITDA with projected capital spending of $60 million. These transactions were funded with $250 million from 11.0 million new Talos shares plus cash and other sources of liquidity. Talos entered into WTI swaps, including 1.1 million barrels of oil equivalent for 2020 at an average price of $55.46 per barrel. The ILX and and Castex acquisitions were approved by a subset of directors unaffiliated with Riverstone, and Talos controlling shareholders Apollo and Riverstone have approved the transaction. Guggenheim Securities served as a financial advisor to Talos while Evercore provided advice to Riverstone.

A majority of Talos shareholders approved the transaction in January 2020, and the ILX acquisitions were closed in March 2020 for $291.7 million (reduced from $385 million) and 110,000 shares of convertible preferred stock with $100 million in free cash flow since the effective date.