Talos Energy and Stone Energy have agreed to combine their businesses in an all-stock transaction valued at $2.5bn to create a new offshore-focused exploration and production company.
The combined company will be named ‘Talos Energy Inc’ and will have an estimated 2017 average daily production of approximately 47Mboe and proved reserves of 136Mboe.
Under the agreement, each outstanding Stone common stock share will be exchanged for one share of Talos Energy Inc common stock.
At closing, Talos stakeholders will hold 63% of the combined company, while Stone shareholders will own the remaining 37%.
Both parties will also become wholly owned subsidiaries of a new holding company at the closing of the deal.
Talos Energy CEO Timothy Duncan said: “This combination represents an important step in our goal of becoming the premier offshore exploration and production (E&P) company.
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“We will have two core areas in the US Gulf of Mexico Deepwater and the outstanding new Zama discovery located in the shallow waters of offshore Mexico.
“The combined talent, technical resources and balance sheet of the resulting company will allow us to accelerate development of our own robust project inventory, while also giving us the horsepower to pursue compelling transactional and exploration opportunities.”
The combined company is also expected to be benefitted from a deep inventory of identified exploration and development prospects and a significant acreage footprint in the Gulf of Mexico amounting to more than 1.2 million combined gross acres.
Furthermore, the new company will have increased financial flexibility and expects to achieve up to $25m in annual pre-tax synergies through supply chain management and by streamlining operations by the end of next year.
The transaction is expected to close towards the end of the first quarter or early in the second quarter of next year, subject to Stone’s shareholder and regulatory approvals, as well as customary conditions.