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Talos goes on Gulf shopping spree
GULF OF MEXICO
HOUSTON-BASED Talos Energy announced last week that it had entered into a series of definite agreements to acquire a “broad port- folio” of assets in the US Gulf of Mexico from affiliates of ILX Holdings, Castex Energy and Venari Resources. The sellers are backed by Riv- erstone Holdings and other private equity firms. Talos will pay $640mn for the properties, which include producing assets, exploration prospects and acreage.
Talos agreed to acquire all of ILX Holdings’ producing assets, primary term acreage and prospects, all of ILX Holdings II’s producing assets and certain primary term acreage and prospects and all of ILX Holdings III’s primary term acreage and prospects. It also agreed to buy certain subsidiaries of the Castex 2014 and Cas- tex 2016 entities. In a separate transaction, Talos said it had executed a purchase and sale agree- ment (PSA) and closed on the acquisition of all primary term acreage and prospects belonging to Venari.
Houston-based ILX and Castex are both portfolio companies owned by New York-based Riverstone. Venari is backed by the private equity firms Warburg Pincus, Kelso & Co., Temasek
and the Jordan Co.
Talos said in a statement that the assets it is
buying collectively produced around 19,000 bar- rels of oil equivalent per day (boepd) during the third quarter of 2019. They are estimated to have proven and probable (2P) reserves of roughly 68mn boe as of July 1, 2019.
The transaction includes over 40 identified exploration prospects located across roughly 700,000 gross acres (2,833 square km). Closing of the ILX and Castex acquisitions is anticipated in the first quarter of 2020, Talos said.
Funding for the transaction will consist of $250mn in new Talos shares to be issued to sellers at closing, as well as cash from existing sources of liquidity.
“What makes this transaction unique is the combination of high-margin production and a deep portfolio of prospects,” Talos’ president and CEO, Timothy Duncan, said in a statement.
The deals come after Talos sold a majority stake in its Puma West prospect in the Gulf to BP in September in order to help cut costs and finance new acquisitions. At the same time, Talos acquired the Hershey prospect from ExxonMobil.
PERFORMANCE
EIA forecasts only modest shale production increase in January
US
North Dakota just announced a new
oil production record thanks to its portion of the Bakken play.
US tight oil production is set to continue grow- ing, but a slowdown in the pace of growth is becoming increasingly apparent. This week, the US Energy Information Administration (EIA) forecast that the leading seven shale regions in the US will experience an increase of only 30,000 barrels per day (bpd) in January compared with the projected figure for December.
The agency anticipates that combined oil out- put from the seven regions will reach 9.105mn bpd this month, and 9,135mn bpd in January. This is the second consecutive month that the EIA has forecast growth of less than 1%.
Indeed, oil production is predicted to fall in the Eagle Ford shale and the Anadarko Basin, remaining flat or only rising very mar- ginally in the Appalachia, Bakken, Haynes- ville and Niobrara regions. The Permian Basin is expected to show slightly higher growth of 48,000 bpd month on month to 4.742mn bpd, but declines in other regions are forecast to
partially offset these gains.
It is worth noting that Appalachia and the
Haynesville are gas-producing regions, so flat to little growth in oil output there is unsurprising. The slowdown is far more marked in the Eagle Ford and Bakken – where output is forecast to rise by 3,000 bpd to 1.526mn bpd in January – and indeed the Permian does not appear to be far behind in slowing further.
The EIA has been forecasting declines in Anadarko and Eagle Ford output for several months now, and these are now becoming more pronounced, while production gains in the Per- mian are gradually shrinking each month.
Despite the EIA projecting flattening growth in the Bakken, North Dakota – the state that holds the most productive portion of the play by far – announced this week that it had set a new oil production record of 1.5mn bpd in October. This came after output in the state grew 5% that month.
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