Talos Energy has agreed to acquire QuarterNorth Energy for $1.29bn in a bid to boost its deepwater asset portfolio in the Gulf of Mexico.

QuarterNorth’s assets include six major fields, predominantly in deep water.

The acquisition is set to provide Talos with additional scale from high-quality deepwater assets and attractive future development opportunities.

Under the deal, Talos will issue 24.8 million shares of its common stock to QuarterNorth and provide approximately $965m in cash.

The acquisition is expected to add around 30,000 barrels of oil equivalent per day to Talos's production in 2024, with approximately 75% oil from 95% operated assets.

It will also add proved reserves of around 69 million barrels of oil equivalent with a present value-10 (PV-10) of $1.7bn.

Talos estimates the average daily production of QuarterNorth for 2024 will be approximately 30mboe/d.

Talos president and CEO Timothy S Duncan said: "This announcement marks one of Talos's most significant milestones as we build a large-scale offshore exploration and production company. The addition of QuarterNorth's overlapping deepwater portfolio with valuable operated infrastructure will increase Talos's operational breadth and production profile while enhancing our margins and cash flow.

“This Transaction aligns with Talos's overall strategy of leveraging existing infrastructure and complementary acreage to accelerate shareholder value creation.

“The expected financing structure of the Transaction accelerates de-leveraging, immediately improves our credit profile, is accretive on key metrics, and positions us to consider additional capital return initiatives following deleveraging in the near term.”

With unanimous approval from both companies' boards of directors, the transaction is due for completion by the end of the first quarter of 2024, pending customary closing conditions and regulatory approvals.

Last year, Talos Energy agreed to sell a 49.9% stake in its Mexican unit to Zamajal, a wholly owned subsidiary of Grupo Carso.