Talos Energy has entered into and completed a transaction to acquire Whistler Energy II. Year-to-date gross production from Whistler’s assets is approximately 1,900 BOED, or net production after royalties of approximately 1,500 BOED, of which 82% is oil.
The purchase price was $52 million and, as part of this acquisition, the company negotiated the release of approximately $77 million of cash collateral that had secured Whistler’s surety bonds that the company will not need to replace. As a result, of the total cash collateral released, the company received $31 million, with the seller entitled to the remaining $46 million. In addition, the company also benefited from the $7 million available cash balance at Whistler at the time of the close, resulting in a net cash consideration of $14 million to the company.
This transaction represents a significant win for both Whistler and Talos, where the seller received approximately $100 million in cash, but the Talos net cash payment was only $14 million, which represents an acquisition metric of $9,333 per net BOED.
The acquired assets include a 100% working interest in three blocks in the Central Gulf of Mexico – Green Canyon 18, Green Canyon 60 and Ewing Bank 988, which comprises 16,494 acres – and a fixed production platform located on Green Canyon Block 18 in approximately 750 ft of water. All leases are held-by-production.
The Green Canyon 18 Field was originally developed by ExxonMobil and sold to Whistler in 2012. It has cumulative production of more than 117 million BOE to date. The GC18 Production Facility, approximately 18 miles north of the Talos operated Phoenix Field and Tornado discovery, currently has a nameplate production capacity of 30,000 bbl/day and 30 million ft of gas per day, or approximately 35,000 BOE/D of total capacity, with potential for additional expansions.
The strategic benefit of this acquisition goes beyond the current producing leases. Talos had already licensed recent vintage wide azimuth seismic data in the area, which will be reprocessed to assist in the re-mapping of the producing reservoirs and potentially generate additional drilling prospects. Additionally, in the latest federal lease sale in the Gulf of Mexico, the company was the high bidder on new leases containing at least three drilling prospects that could be tied back to the GC18 Production Facility.
“We are excited about this bolt-on transaction, as it represents exactly what we look for when buying producing assets in our core areas: low entry costs, production facilities with unused capacity, and new seismic in a known hydrocarbon prolific area,” Timothy S. Duncan, President and Chief Executive Officer, said. “We will immediately engage in a detailed field study that we expect will lead to identifying additional drilling locations on the producing asset to complement our broader portfolio in the area, providing us with optionality on how we allocate capital. We believe the Green Canyon 18 Field is a great addition to our Green Canyon core area.”