Talos Energy: Accretive Deal in Their GoA Backyard: Quick Thoughts on Shell Deepwater Bolt-On Acquisition

Research evidence excerpt

Talos Energy: Accretive Deal in Their GoA Backyard: Quick Thoughts on Shell Deepwater Bolt-On Acquisition

J P M O R G A N North America Equity Research

30 June 2026

Talos Energy Neutral

TALO, TALO US

Accretive Deal in Their GoA Backyard: Quick Thoughts Price (30 Jun 26):$12.91

on Shell Deepwater Bolt-On Acquisition

Oil & Gas Exploration & Production

JPM View: Stock Reaction: Positive. TALO announced an $850mm “headline” Arun Jayaram AC

property acquisition from Shell in the GoA, which appears highly accretive to the (1-212) 622-8541

company’s cost structure, oil mix, and margins. We view the deal as a logical arun.jayaram@jpmchase.com

extension of the company’s strategy to scale the company’s portfolio in assets that Jack Jerusalmi

are well known by the senior leadership team (CEO Goodfellow and EVP Langin (1-212) 622-6552

both had extended stints at Shell). One of the highly attractive features of the deal, jack.jerusalmi@jpmorgan.com

J.P. Morgan Securities LLC

which is expected to close before year-end, is the July 1, 2025 effective date, which

is expected to reduce the company’s outlay at transaction close to only $450mm to

$500mm. The Shell asset transaction is expected to be accretive to the company’s

cost structure and margin profile. In 1Q26, the assets delivered an EBITDA margin

of $56 per boe vs. $37 per boe for TALO on a standalone basis given much lower

LOE costs at $5 per boe vs. $16 per boe for TALO standalone. Assuming $70 per

bbl realized oil prices, the company estimates that the properties could generate

~$260mm of EBITDA in 2027, which equates to a 1.8x multiple assuming the ~

$475mm cash outlay at the close. This compares to TALO’s 2.3x multiple on our

2027 estimates calibrated to recent strip pricing. The deal is subject to a 50% upside