Tim Duncan, Chief Executive of Talos Energy has been the process of putting together the right plan to assemble the necessary elements to complete the 2.5 billion merger of his privately held company (Stone Energy) both bankrupt and publicly traded. The risk is high, however the offset is that there’s no need for a public offering and it would make Talos Energy a public entity. In addition, while performing the process of putting together the deal Mr. Duncan was right in the middle of Hurricane Harvey, riding in a rescue boat with his family. Tim Duncan decide to not use his current situation as an excuse to stop looking for the necessary means to figure out a way to complete the merger deal. In May, Mr. Duncan the merger and now he presides over an oil company that has $700 million in debt against $2.3 billion in assets primarily in the Gulf of Mexico. However, to get access to the potential assets it will cost large amounts of money (millions) paired with the possible spills which will demand substantial fines to rectify.
Talos Energy currently produces 48K barrels per day and they plan to produce much more. It is Talos Energy hope to increase production by employing hydraulic fracturing (a new technology) to extract oil from old reservoirs. The main concern that Talos Energy has, is that the ways they can obtain oil has many road blocks. If Talos Energy goes the fracturing method, then they have to deal with the unpredictable, political environment and the US population. On the other hand, if Talos Energy tries to extract the oil from the Gulf Of Mexico, then there’s the potential for the high cost and possible oil spills. Regardless of the method used to obtain the oil, Tim Duncan is very eager to make things work. Even during the hurricane, Mr. Duncan held critical negotiations with Mackay Shields and Franklin Templeton Investments about restructuring in excess of $800 million of combined debt. In addition, Apollo Management and money managers Riverstone, Talos’ equity principal owners were part of the negotiations.
Tim Duncan has a keen ability to capitalize on problematic situations and as a result of Hurricane Harvey, his resilient abilities continue to grow stronger. Mr. Duncan is now about to capitalize on a jewel asset (Pompano Platform) for implementation for several new suitable prospects for new drilling and ease bondholders with his hedging abilities in the form of selling over 80% of 2018 output (future trades at $55 per barrel).