- The pending acquisition of EnVen Energy Corporation will expand Talos’s deepwater scale and increase the optionality of its exploration and development prospect portfolio.
- On September 22, 2022, Talos announced an agreement to acquire EnVen for ~$1.1 billion, consisting of 43.8 million shares of Talos common stock and $212.5 million in cash. Talos expects the transaction to close in late January 2023.
- EnVen brings ~23 MBOE/d (3Q22 average) of production and ~50.4 MMBOE (12/31/21) of proved reserves, representing increases of 40% and 31%, respectively, compared with Talos standalone. EnVen would also increase Talos’s Gulf of Mexico acreage position by 36% and add key infrastructure hubs in Talos’s key areas.
- Scale added to Talos’s core deepwater E&P business will provide the company with greater optionality in the prospect portfolio. Management will have greater cash flow allocation flexibility to design capital programs that expose the company to a balance of short- and long-cycle projects capable of driving production and reserve growth.
- Talos’s pro forma balance sheet will be healthy following closing. Cash on EnVen’s balance sheet should be sufficient to fund the cash portion of the transaction.
- We developed preliminary FY23 estimates to highlight the strong operational and financial impact the combination could have on Talos. The company is expected to provide a FY23 outlook post-closing.
- Our preliminary pro forma estimates suggest EBITDA and free cash flow gains of 50% and 77%, respectively, from Talos standalone.
The pending acquisition of EnVen Energy Corporation will expand Talos’s deepwater scale and increase the optionality of its exploration and development prospect portfolio.
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