The billion-dollar consolidation of Texas-based oil and gas moved offshore Jan. 15 with the $1.29 billion acquisition of QuarterNorth Energy by Talos Energy. The two Houston-based companies agreed to terms that included $965 million in cash and 24.8 million shares of Talos common stock.
QuarterNorth operates and holds a 50 percent working interest in the Katmai discovery in the Green Canyon region of the Gulf of Mexico off the Texas-Louisiana coast. The Green Canyon region includes E&P operations of Shell, Chevron and Marathon Oil. QuarterNorth’s producing assets include six major fields that are 95 percent operated and 95 percent in deepwater.
The combination will add about 30 MBoe/d for the full year of 2024, averaging about 75 percent oil along with proved reserves of about 69 million barrels of oil equivalent. The companies expect about $50 million in run-rate synergies once the transaction is closed, as expected, during the first quarter of 2024.
QuarterNorth is the successor to Fieldwood Energy, which was formed by creditors from Fieldwood assets after the company filed for bankruptcy in 2020. Tommy Lamme, general counsel of QuarterNorth was GC at Fieldwood. William Moss III, GC at Talos, was a partner at Mayer Brown in Houston before joining Talos in May 2013. Both Lamme and Moss are Dartmouth College alums. Moss is a University of Texas law grad; Lamme has his JD from the University of Houston Law Center.
PJT Partners and Greenhill (Mizuho Securities M&A) are serving as lead financial advisors to Talos, along with J.P. Morgan Securities and Intrepid Partners.
Barclays is serving as financial advisor to QuarterNorth.
Outside counsel includes Akin Gump Strauss Hauer & Feld for Talos and Holland & Knight for QuarterNorth.
The Holland and Knight team was led from Houston by Tim Samson and associates Cameron Haltom and Kelsie Knight. They were assisted by partners Paul Monsour, Roger Aksamit, Jim Noe, Neely Munnerlyn, Tony Campiti, Ashley Phillips and John Dierking, and associates Caroline Spiers and Eric Alborn.
The Akin team was also led from Houston by corporate partner John Goodgame, U.S. oil & gas practice leader Stephen Boone and counsel Dasha Hodge; and included tax partners Alison Chen and Julia Pashin; financial restructuring partner Sarah Schultz; environment & natural resources practice head David Quigley; senior counsel Andrew Oelz; counsel Leana Garipova, Aaron Vera and Aaron Farovitch and associates Mary Day Royston, Madeline Sullivan and Andrea Cabada.
Talos President and CEO Timothy Duncan said in the announcement that the deal should be immediately accretive to existing stockholders and is designed to help Talos deleverage its balance sheet.
“The addition of QuarterNorth’s overlapping deepwater portfolio with valuable operated infrastructure will increase Talos’s operational breadth and production profile while enhancing our margins and cash flow,” Duncan said.
Note: Claire Poole contributed to this story.