Exit: Riverstone International Limited sells Castex and ILX assets to Talos


[Context: On December 11, Riverstone International Limited announced the sale of Castex 2014 to EnCap-backed Talos (NYSE: TALO) as well as undrilled primary acreage and prospects of ILX Holdings III. The assets were a portion of a $640m total deal announced by Talos. The exit implies a 0.3x gross multiple on invested capital, the company disclosed. Further details, advisors and related links are below.]

Riverstone Energy Limited Announces Sale of Offshore Gulf of Mexico Assets to Talos Energy Inc.

London, UK (11 December 2019) — Riverstone International Limited, the Manager of Riverstone Energy Limited (“REL”), together with Riverstone Holdings (“Riverstone”) have agreed to the sale of all offshore Gulf of Mexico assets owned by affiliates of Castex Energy 2014, LLC (“Castex 2014”) to Talos Energy Inc. (“Talos”, NYSE: TALO) (the “Castex 2014 Sale”). In addition, Riverstone agreed to sell all of the undrilled primary term acreage and prospects of ILX Holdings III (“ILX III”) to Talos for non-material consideration (“ILX III Sale” and collectively with the Castex 2014 Sale, the “Transaction” or “Sold Assets”). REL owns 25.1 per cent. of Castex 2014 and 33.3 per cent. of ILX III and has invested $52 million and $155 million in the companies, respectively.

The net consideration at closing of the Castex 2014 Sale and ILX III Sale is expected to be funded with the issuance of new Talos shares and cash from existing sources of liquidity. The purchase is subject to customary purchase price adjustments between the 1 July 2019 effective date and the closing date of the Transaction, which is expected in the first quarter of 2020.

The Castex 2014 Sale represents a full realization of REL’s Castex 2014 investment and implies a 0.3x Gross MOIC, which is consistent with REL’s 3Q 2019 valuation. The ILX III Sale includes only exploration prospects that ILX III did not intend to drill within its current equity commitment and has no impact on REL’s 3Q 2019 valuation of 1.2x Gross MOIC.

Talos is a technically driven independent exploration and production company with operations in the United States Gulf of Mexico and offshore Mexico. Talos leverages its geology, geophysics and offshore operations expertise to pursue the acquisition, exploration, exploitation and development of assets, with a focus on safely and efficiently maximizing cash-flows and long-term value.

Evercore Inc. and Latham & Watkins L.L.P. are serving as financial and legal advisors to Riverstone, respectively. Guggenheim Securities, LLC acted as lead financial advisor to Talos and delivered a formal fairness opinion with respect to the transaction. J.P. Morgan Securities LLC also provided financial advice to Talos with respect to financing. Vinson & Elkins L.L.P. acted as legal advisors to Talos.

About Riverstone Energy Limited:

REL is a closed-ended investment company that invests exclusively in the global energy industry across all sectors. REL aims to capitalise on the opportunities presented by Riverstone’s energy investment platform. REL’s ordinary shares are listed on the London Stock Exchange, trading under the symbol RSE. REL has 11 active investments spanning oil and gas, midstream, and energy services in the Continental U.S., Western Canada, Gulf of Mexico, Latin America and credit.

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