Talos Energy Inc. (Talos) (TALO) announced that it has entered into two separate agreements with BP plc (BP) and Exxon Mobil Corporation (ExxonMobil) related to new exploration opportunities in the U.S. Gulf of Mexico. The Company will work with BP to drill and evaluate the Puma West prospect (Puma West), located in Talos-owned Green Canyon Block 821, in the fourth quarter of 2019. Additionally, Talos has acquired from ExxonMobil the Hershey prospect ("Hershey"), located on Green Canyon Blocks 326, 327, 370 and 371.
Talos President and Chief Executive Officer Timothy S. Duncan commented: "Our strategy of leveraging deep technical expertise across our extensive seismic database and our growing infrastructure footprint is applicable to both the acreage we acquire and control as well as to third party acreage where we can execute on new opportunities. As these transactions prove, Talos is well-positioned to continue unlocking material resource opportunities in our basin through multiple creative business development avenues. We are excited to add these two significant, oil-weighted prospects to our portfolio."
On the Puma West opportunity, Talos will retain a 25% working interest, with BP, as operator, holding the remaining working interest. The initial exploration well is expected to be spud before the end of October 2019 using the Seadrill West Auriga ultra-deepwater drillship. The prospect consists of sub-salt, Miocene target zones believed to be similar to the prolific Mad Dog field located less than 15 miles from the proposed well location. The original Mad Dog spar has produced over 230 MMBoe since inception, and BP is currently constructing the Argos platform for the Mad Dog II project, which will add 140 thousand barrels of oil per day of additional production capacity to the field. The Puma West prospect was identified and permitted by Talos following a significant seismic reprocessing effort in the Company's Green Canyon core area.
Duncan commented: "I am extremely proud of the Talos team for identifying and accelerating this opportunity through a rigorous exploration portfolio review and technical evaluation that leveraged our substantial seismic database and reprocessing experience in the basin. Exploration of the Puma West prospect is a timely and material opportunity for Talos. While not scheduled in our original 2019 drilling program, by moving quickly the Company is able to work with a world-class operator in a potentially significant subsea tie-back project located on Talos acreage. We believe that coupling Talos's initial prospect evaluation with BP's known expertise in the region provides the best opportunity for success, and we look forward to initiating the project within the next 30 days."
Under a separate agreement with ExxonMobil, Talos has acquired a 100% working interest in the Hershey prospect from ExxonMobil and will become designated operator of Green Canyon Blocks 326, 327, 370 and 371, which constitute approximately 23,000 gross acres. Hershey is a large, sub-salt Miocene prospect with potential for several stacked horizons. Based on preliminary estimates, Talos believes that the prospect may contain oil-weighted, gross unrisked resources of 100 – 300 MMBoe if successful. Hershey could be developed as a subsea tie-back to multiple Talos-controlled Green Canyon facilities or with new, dedicated infrastructure.
Duncan added, "The acquisition of the Hershey prospect, located less than 10 miles from our Phoenix complex, adds another high-impact exploration opportunity to our portfolio that can leverage our nearby infrastructure and operating experience in the area. The transaction structure, which is 100% contingent-based and contains no well commitment, provides Talos with significant financial and commercial optionality in evaluating the potential resource. I applaud both teams for identifying and developing this win-win opportunity following our acquisition of the Antrim prospect from ExxonMobil earlier this year."