Talos Energy Inc. (Houston) announced that it has entered into an agreement for the sale of its wholly owned subsidiary, Talos Low Carbon Solutions LLC (TLCS), to TotalEnergies E&P USA, Inc. (TotalEnergies) for a purchase price of $125 million plus customary reimbursements, adjustments and retention of cash, combined totaling approximately $148 million. The transaction was based on an effective date of January 1, 2024 and will close later today. Talos intends to use the proceeds from the sale to immediately repay borrowings under its credit facility and for general corporate purposes.
The sale includes Talos’s entire carbon capture and sequestration (CCS) business, including its three projects along the U.S. Gulf Coast: Bayou Bend CCS LLC, Harvest Bend CCS LLC (Harvest Bend) and Coastal Bend CCS LLC (Coastal Bend). Talos may realize additional future cash payments upon achievement of certain milestones at the Harvest Bend or Coastal Bend projects or upon a subsequent sale of these projects by TotalEnergies. Robin Fielder, Talos Executive Vice President, Low Carbon Strategy and Chief Sustainability Officer, will continue to serve in her role for a transition period before leaving Talos to pursue other opportunities.
After completion of the transaction, TotalEnergies will own a 25% share in the Bayou Bend project, alongside Chevron (50%, operator) and Equinor (25%). Bayou Bend project is a major CO2 storage project located along the Texas Gulf Coast, close to the Company’s assets in the region. TotalEnergies will also own a 65% operated interest in the Harvest Bend (Louisiana) project and a 50% interest in the Coastal Bend (Texas) project. With Coastal Bend and Harvest Bend being located farther away from the Company’s other existing assets, TotalEnergies’ intention is to divest its interest in these two projects after closing.
The Bayou Bend project is a carbon transportation and storage solution for industrial emitters located in the Houston Ship Channel and Beaumont – Port Arthur region, one of the largest industrial corridors in the United States. Comprising licenses dedicated to CO2 storage, offshore and onshore, covering about 600 km2, it could enable the storage of several hundred million tons of CO2. Thanks to its location, its size and favorable geological characteristics, Bayou Bend is a world-class opportunity for the development of the CCS business.
“TotalEnergies is pleased to enter the Bayou Bend project through the acquisition of Talos Low Carbon Solutions. Ideally located close to our Port Arthur refinery and our petrochemicals assets in La Porte, this project will be instrumental for the reduction of direct emissions from our US operations. This transaction gives momentum to the decarbonization of hard-to-abate US emissions and marks a milestone on our journey to get to Net Zero by 2050, together with society”, said Patrick Pouyanné, Chairman and CEO of TotalEnergies.
Talos President and Chief Executive Officer Timothy S. Duncan stated: “Since TLCS’s inception, we have successfully applied our energy expertise as an early mover aimed at developing decarbonization solutions along the U.S. Gulf Coast. Strong market interest during our capital raise provided the strategic option to fully monetize the business to TotalEnergies, an established global leader in CCS development. Robin and our entire CCS team did an outstanding job crystallizing value for Talos shareholders for a strong financial return. The transaction will further enable Talos to prioritize cash flow generation and optimal capital allocation in our core Upstream business. We are also continuing to explore business development and strategic M&A opportunities.”