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TotalEnergies (TTE) Advances Its Carbon Capture Initiatives

TotalEnergies TTE, a global multi-energy company,has entered into an agreement to purchase 100% of Talos Low Carbon Solutions LLC (“TLCS”) from Talos Energy, Inc. TALO. TotalEnergies will acquire Talos’ carbon capture and sequestration (CCS) business for a total consideration of $148 million.

There are three major projects along the U.S. Gulf Coast, Bayou Bend CC, Harvest Bend CCS and Coastal Bend CCS, which are included in the sale. Post completion of the transaction, TotalEnergies will own a 25% share in the Bayou Bend project, a 65% operating interest in the Harvest Bend project and a 50% interest in the Coastal Bend project.

The Bayou Bend Project is located along the Texas Gulf Coast, which is close to TTE’s existing assets in the region. However, Coastal Bend and Harvest Bend are located away from the company’s assets. After the deal’s closure, TotalEnergies intends to divest its interests in the two projects.

The Bayou Bend project is operated by Chevron, who owns a 50% stake, and TotalEnergies and Equinor own a 25% stake each. The project is located in the Houston Ship Channel and Beaumont – Port Arthur region, which is among the largest industrial corridors in the United States. The project offers a comprehensive carbon transportation and storage solution for industrial emitters in the region.

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Bayou Bend covers an extensive area of about 600 km2, comprising licenses for both onshore and offshore CO2 storages. It is anticipated to have a storage capacity of several hundred million tons of CO2. Per TTE, Bayou Bend represents a leading-edge prospect for the development of the CCS business, given its size, favorable geological characteristics and convenient location.

TotalEnergies has highlighted that the acquisition of Talos Low Carbon Solutions and its involvement with the Bayou Bend project will be of significant importance in reducing direct emissions from its U.S. operations. The transaction is aimed at decarbonizing hard-to-abate U.S. emissions and aligns with the company’s broader goal of achieving net zero targets by 2050.

Talos stated that the transaction will allow the company to focus on cash flow generation and also allocate more capital toward its core upstream business.

Zacks Rank and Other Key Picks

Currently, TTE carries a Zacks Rank #3 (Hold), while Talos has a Zacks Rank #5 (Strong Sell).

Investors might want to look at some better-ranked stocks in the energy sector, such as Sunoco LP SUN and Archrock, Inc. AROC. Sunoco currently sports a Zacks Rank #1 (Strong Buy), while Archrock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sunoco LP is one of the largest distributors of motor fuel in the United States. The partnership distributes fuel to independent dealers, commercial customers, convenience stores as well as distributors. Its current distribution yield is greater than the composite stocks in the industry, providing unitholders with consistent returns.

Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.

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Sunoco LP (SUN) : Free Stock Analysis Report

Archrock, Inc. (AROC) : Free Stock Analysis Report

Talos Energy Inc. (TALO) : Free Stock Analysis Report

TotalEnergies SE Sponsored ADR (TTE) : Free Stock Analysis Report

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