The Truth About Talos Energy: The Unbelievable Story

After a couple days of Hurricane Harvey’s devastation, the roads of Tim Duncan’s suburban isle north of Houston were insurmountable. The night was falling and the power was out when news came that an added 6 feet of floodwaters from the hurricane was incoming. Plodding through waist-high floodwater, Duncan raised Christy, his wife, his two dogs and 6-year-old son to a FEMA rescue vessel.

The 45-year-old chief executive of Talos Energy, Duncan, was by himself. For the last few months, he had been organizing a $2.5 billion merger with his privately owned company and Stone Energy Company that was publicly exchanged and bankrupt.

Obtaining a distressed outfit roughly the size of his own was quite dangerous, however, it would allow Talos to be a public entity with none of the expenses of public offering. “I have got to get the deal fulfilled,” Duncan said to himself. “The flood will not be an excuse.”

He requested the aid of a private airplane to bring him and his family into Alabama. Upon returning to Texas, he lodged out of his parents’ place which was in Houston but not harmed. After dinner, Duncan would seize the kitchen table and run late into the night for weeks. “I sold this deal in my mom’s kitchen,” he mentions.

Upon the finishing of the merger in May, Talos will assume control over Stone’s listing and Duncan is going to manage an oil organization with an annual income of $900 million.

Nearly all of Talos’ equity will be located in the Gulf of Mexico. It is low-risk profit margin ($2.3 billion in assets against $700 million in debt) that hardly offsets the enormous operating uncertainty in that place where a platform for drilling is hundreds of millions of dollars and the chance of a catastrophic accident is ever present.

This bet is contrarian. The best is somewhere else, in well-trodden areas such as the Permian Basin where modern methods (hydraulic fracturing) can be utilized in old reservoirs. Talos is a lot like a traditional wildcatter, betting on wells not only in U.S. areas but also in politically risky Mexico.

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