Talos Energy has announced the execution of definitive agreements to acquire QuarterNorth Energy for $1.29 billion. QuarterNorth is a privately-held U.S. Gulf of Mexico exploration and production company with ownership in several prolific offshore fields. QuarterNorth's assets will provide additional scale from high quality deepwater assets with a favorable base decline profile along with attractive future development opportunities. The Transaction is immediately accretive to Talos shareholders on key metrics and is expected to accelerate de-leveraging of Talos's balance sheet.

Consideration for the Transaction consists of 24.8 million shares of Talos's common stock and approximately $965 million in cash. The board of directors of both Talos and QuarterNorth have unanimously approved the Transaction. The Transaction is expected to close by the end of the first quarter of 2024, subject to certain customary closing conditions and regulatory approvals.

Key Transaction Highlights:

• Adds production of approximately 30 thousand barrels of oil equivalent per day ("MBoe/d") expected for the full year 2024, averaging about 75% oil from approximately 95% operated assets.
• Adds proved reserves of approximately 69 million barrels of oil equivalent ("MMBoe") with a PV-10 of $1.7 billion.
• High margin, low decline production, with low reinvestment rate requirements to sustain production and no meaningful near-term asset retirement obligations ("ARO") conducive to long-term high free cash flow generation.
• Accretive to key financial metrics, including Cash Flow Per Share, Free Cash Flow Per Share, and Net Asset Value Per Share.
• Annual run-rate synergies of approximately $50 million are expected to be achieved by year-end 2024.
• Improves balance sheet strength with expected year-end 2024 leverage ratio of 1.0x or less.

Talos President and Chief Executive Officer Timothy S. Duncan commented: 
"Today's announcement marks one of Talos's most significant milestones as we build a large-scale offshore exploration and production company. 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. This Transaction aligns with Talos's overall strategy of leveraging existing infrastructure and complementary acreage to accelerate shareholder value creation. The pro forma footprint in the U.S. Gulf of Mexico should allow us to capture meaningful operating synergies. The expected financing structure of the Transaction accelerates de-leveraging, immediately improves our credit profile, is accretive on key metrics, and positions us to consider additional capital return initiatives following deleveraging in the near term. We look forward to completing this Transaction in the next few months and continuing our strategy of building a large-scale, diverse energy company."

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