Talos Energy has executed definitive agreements to acquire EnVen Energy, a private operator in the deepwater US Gulf of Mexico, for a total consideration of $1.1bn.

Under the terms of the agreement, Talos will make a cash payment of $212.5m, issue 43.8 million shares of its common stock, and assume EnVen’s net debt to be around $50m.

The transaction has been unanimously approved by the board of directors of both companies

It is expected to close by the year-end of this year, subject to customary closing conditions.

Upon closing of the transaction, Talos shareholders will own around 66% of the combined company, while EnVen shareholders will own the remaining 34%.

Talos president and chief executive officer Timothy Duncan said: “This transaction adds significant scale and diversity to our business through logical, in-basin expansion with an excellent strategic fit.

“EnVen’s high-margin, oil-weighted assets in key deepwater regions, operated infrastructure and significant overlapping acreage footprint will enhance our ability to accelerate shareholder value creation.

“The acquisition is financially attractive, expanding our operating margins and increasing Free Cash Flow per Share while immediately improving our credit profile before accounting for significant expected cost synergies.”

EnVen currently produces around 24MBoe/d in the US Gulf of Mexico, which is more than 80% oil-weighted, over 90% operated and 95% from deepwater regions.

The company operates several platforms, including five major deepwater facilities with open capacity in core deepwater areas, with exploitation and exploration opportunities.

Talos said that the transaction is in line with its strategy of enhancing conventional resources located close to under-utilised infrastructure.

It will add material scale and diversity to its footprint, with more than 70% oil-weighted, over 75% operated and more than 80% focused in deepwater regions.

KeyBanc Capital Markets served as a financial advisor, while JP Morgan Securities served as the lead financial advisor and offered a fairness opinion to Talos, on the transaction.

Vinson & Elkins served as a legal advisor to Talos, while Intrepid Partners as a financial advisor and Davis Polk & Wardwell as a legal advisor to EnVen.