Talos Production offers $1 billion of five-, seven-year secured notes

By Paul A. Harris

Portland, Ore., Jan. 23 – Talos Production Inc., a wholly owned subsidiary of Talos Energy Inc., began marketing a $1 billion two-part offering of senior secured second priority notes (B3/BB-/B+) on Tuesday, according to market sources.

The Rule 144A and Regulation S deal is coming in tranches of five-year notes with two years of call protection and initial talk in the 10% area and seven-year notes with three years of call protection and initial talk in 10½% area.

Pricing is set for Friday.

J.P. Morgan Securities LLC is leading the sale.

The Houston-based independent energy company plans to use the proceeds to fund a portion of the cash consideration for its pending acquisition of QuarterNorth Energy, Inc., as well as to pay off the Talos Production 12% second priority senior secured notes due 2026, with any remaining proceeds to be used for general corporate purposes, which may include repayment of a portion of the senior reserves-based revolver.

An aggregate of $340 million of the new notes will be subject to a special mandatory redemption if the QuarterNorth merger is not consummated on or before May 31, 2024.

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