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Stone Energy (SGY) Board Okays Merger Deal With Talos Energy

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Stone Energy Corporation recently received approval from its boards of directors to merge with Talos Energy LLC.

The companies will create a leading exploration and production firm with extensive operations in offshore resources. Stone Energy anticipates the agreement to close either by the first quarter of 2018 or beginning of the second quarter.

Per the accord, every stockholder of Talos Energy will receive one Stone Energy share. The companies added that the initial market capitalization of Talos Energy Inc. – the proposed name of the combined entity – will be $1.9 billion, taking into consideration Stone Energy’s share price of $35.49 as of Nov 20.

Stone Energy will likely hold 37% stake in the combined entity while the remaining will be owned by Talos Energy. The newly-formed company will trade under the ticker mark "TALO" on the NYSE.

Stone Energy has estimated 2017 production from the entity of 47 thousand barrels of oil equivalent per day (Mboe/D). As of Jun 30, 2017, total proved reserves are estimated at 136 million barrels of oil equivalent (MMBoe) for the combined firm. Investors should know that 69% of the proved reserves is oil and majority of the crude plays are based in the Deepwater Gulf of Mexico. Stone Energy added that the balance sheet of Talos Energy Inc will be highly liquid, with less exposure to debt.

Headquartered in Lafayette, LA, Stone Energy is a leading upstream energy player with operations in the Gulf of Mexico. However, the stock lost 26.1% year to date, underperforming the industry’s 22.7% decline.

 

 

Stone Energy carries a Zacks Rank #3 (Hold), signifying that the stock will perform in line with the broader U.S. equity market over the next one to three months. 

A few better-ranked players in the energy space are China Petroleum & Chemical Corporation , Northern Oil and Gas, Inc. (NOG - Free Report) and ExxonMobil Corporation (XOM - Free Report) . China Petroleum and Northern Oil sport a Zacks Rank #1 (Strong Buy), while ExxonMobil carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.   

Headquartered in Beijing, China Petroleum is a leading integrated energy player. The company will likely witness year-over-year earnings growth of 59.1% in 2017.

Based in Minnetonka, MN, Northern Oil is an upstream energy player. The company’s 2017 revenues are estimated to grow almost 44%.

Headquartered in Irving, TX, ExxonMobil is the largest publicly traded energy firm. The company managed to beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 8.81%.

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