LONDON — London-based Harbour Energy and Talos Energy in Houston are reportedly in merger talks.
Financial analysts Stifel says the potential combination appears logical, with Harbour having been vocal in its criticism of the UK’s Energy Profits Levy on North Sea oil and gas production.
At the same time, the Gulf of Mexico (GoM), where Talos operates in the US sector and where the two companies are partners in the Zama project in the Mexican sector, is one of Harbour’s favored areas for investment.
According to Stifel, the current market capitalizations are about $2.3 billion for Harbour and close to $1.6 billion for Talos; following a merger, Harbour would account for about 70% of the combined production.
Stifle highlighted various benefits to Harbour in a combination:
- Better incremental ROI in the GoM than the UK, especially following the UK tax measure, with Talos planning 18 development/appraisal wells between 2023 and 2026;
- Near-term production growth from Talos offsetting the natural decline in the UK, where Harbour has started reducing capex as it claims the "windfall tax" has made investment uncompetitive;
- Expansion of the carbon capture and storage business, with Talos’ four projects targeting first injection in 2026/27, and Harbour's Viking CCS project in the UK southern North Sea area; and
- Lower CO2 intensity: Talos’ CO2 emissions for 2021 were 16kgCO2e/boe against Harbour's 20kg/boe, according to the latest available information.