Talos Energy LLC and Stone Energy Corporation announced that their Boards of Directors have unanimously approved the combination of Talos and Stone in an all-stock transaction that will create a premier offshore-focused exploration and production company. The company will be named Talos Energy, Inc. and is expected to trade on the New York Stock Exchange (“NYSE”) under the new ticker symbol “TALO.”
Highlights of the combined company will include:
- Pro forma estimated 2017 average daily production of approximately 47 thousand barrels of oil equivalent (Mboe/d);
- Pro forma proved reserves of 136 million barrels of oil equivalent (MMboe) as of June 30, 2017 based on SEC pricing, which are 69% oil and 74% located in the Deepwater Gulf of Mexico;
- Two recent discoveries, Tornado II and Rampart, provide near-term opportunities for growth;
- Long-term growth profile, underscored by the historic, world-class Zama oil discovery in the shallow waters of Mexico; and
- Strong pro forma balance sheet and credit profile, highlighted by low leverage and ample liquidity.
Under the terms of the transaction, each outstanding share of Stone common stock will be exchanged for one share of Talos Energy, Inc. common stock and the current Talos stakeholders will be issued an aggregate of approximately 34.2 million common shares. At closing, Talos stakeholders will own 63% of the combined company, with Stone shareholders owning the remaining 37%. Based on Stone’s stock price of $35.49 on November 20, 2017 and the terms of the proposed transaction, Talos Energy, Inc. will have an initial equity market capitalization of approximately $1.9 billion and an enterprise value of approximately $2.5 billion.
“This combination represents an important step in our goal of becoming the premier offshore exploration and production (“E&P”) company. We will have two core areas in the Deepwater U.S. Gulf of Mexico Deepwater and the outstanding new Zama discovery located in the shallow waters of offshore Mexico,” stated Timothy S. Duncan, Talos’s Chief Executive Officer. “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. We fully expect to achieve material operating synergies and maximize capital efficiency going forward. This transaction is a tremendous opportunity for both Talos and Stone as we create a Gulf of Mexico frontrunner.”
Neal P. Goldman, Stone’s Chairman, stated, “This transaction represents the successful culmination of Stone’s previously announced strategic review process and is a compelling opportunity for our shareholders to benefit from the significant upside and synergies of the combined company. Talos Energy, Inc. will have substantial scale, important asset diversification and a talented management team, along with the strong financial position to continue to grow value for our combined shareholder base. I am very proud of Stone’s success in growing shareholder value since its financial restructuring in February 2017 and I am confident Tim will lead the combined company to even greater success.”
James M. Trimble, Stone’s Interim Chief Executive Officer and President, stated, “I want to thank our employees for their focus and dedication in positioning Stone for this important transaction. The team’s management of Stone’s assets and business in a safe and environmentally responsible manner will continue our success for the combined shareholder base. The combined company will be strategically positioned to drive meaningful production growth through complementary acreage positions. We look forward to this partnership with Tim and the Talos team.”
