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New Gulf Coast-Focused E&P Launched by Private Equity Giants

Private equity firms Apollo Global Management and Riverstone Holdings LLC took another bet in the energy sector on Wednesday by launching a Gulf Coast-focused exploration and production company with up to $600 million of equity commitments.

Talos Energy LLC, based in Houston, would operate primarily in shallow water where the management team, led by CEO Tim Duncan, previously has been successful.

"We believe with the right professionals and technical approach, the Gulf Coast and Gulf of Mexico continue to be a rewarding basin to acquire assets and use innovative techniques to develop another round of investment opportunities," said Duncan. "We will use the experiences of our previous successful efforts to build Talos into a significant exploration and production company."

Duncan, who also would be president of the firm, would be joined by Steve Heitzman, John Parker and John Harrison. The team has more than 10 years of experience in building private equity-backed companies that included Gryphon Exploration Co. and Phoenix Exploration Co. LP, a Riverstone portfolio company.

Gryphon was formed in late 2000 and sold in August 2005 for $297 million to Woodside Energy (see Daily GPI, Sept. 2, 2005). In April 2006 former Gryphon executives launched Phoenix (see Daily GPI, April 21, 2006). A group led by Apache Corp. bought Phoenix last August.

Apollo's Greg Beard, a senior partner, called the executive team formed to run Talos "top notch," and said "our investment in Talos is consistent with Apollo's approach of partnering with high quality management teams to buy physical assets at attractive valuations and drive value through operational excellence."

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