Fresh off its $1.29 billion acquisition of QuarterNorth Energy, Talos Energy is selling off its carbon capture business to TotalEnergies as the offshore E&P positions itself for additional M&A.

Talos said March 18 that it agreed to sell subsidiary Talos Low Carbon Solutions LLC for approximately $148 million, including various reimbursements and adjustments. Talos said it will use the proceeds from the sale to repay debt and for general corporate purposes.

Talos, partnered with Chevron Corp. since March 2023, spent nearly three years building its low carbon venture. Talos and Chevron’s portfolio of carbon capture and sequestration (CCS) projects along the Gulf Coast includes 263,000 gross acres in Texas and Louisiana. 

For TotalEnergies, the acquisition targets the Bayou Bend CCS project. TotalEnergies said it will own a 25% share in the Bayou Bend project in Texas, alongside Chevron (50%, operator) and Equinor (25%). TotalEnergies described the Bayou Bend project as a major CO2 storage project located along the Texas Gulf Coast, close to the company’s regional assets. The project area encompasses the Houston Ship Channel, Beaumont and Port Arthur regions.

TotalEnergies will also own a 65% operated interest in the Harvest Bend project in Louisiana and a 50% interest in the Coastal Bend project in the Corpus Christi, Texas, area. With Coastal Bend and Harvest Bend located farther away from the company’s other existing assets, TotalEnergies said it plans to divest its interest in the two projects after closing.

Talos Gulf Coast CCS Projects
(Source: Talos Energy)

Talos said it 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.

"Ideally located close to our Port Arthur refinery and our petrochemicals assets in La Porte, [the Bayou Bend project] will be instrumental for the reduction of direct emissions from our U.S. operations”, said Patrick Pouyanné, chairman and CEO of TotalEnergies. “This transaction gives momentum to the decarbonization of hard-to-abate U.S. emissions and marks a milestone on our journey to get to Net Zero by 2050, together with society.”

Talos President and CEO Timothy S. Duncan said that since its inception, Talos Low Carbon Solutions has successfully applied the company’s energy expertise as an early mover aimed at developing decarbonization solutions along the 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,” Duncan said. “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."

Robin Fielder, Talos’ 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.

The transaction will have an effective date of Jan. 1 and is expected to close March 18.

Morgan Stanley & Co. LLC served as financial adviser to Talos and Latham & Watkins LLP served as legal adviser.

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