exploration and oil rig flanges gulf coast production companies focused on the Gulf of Mexico, announced on Tuesday plans to merge and create a new BOP Blow Out Preventer repair company gulf coast valued around $2.5 billion including debt, sending Stone's shares down nearly 13 percent.

"The idea of a reverse merger works very well for us, as we get a lot of talented people into the BOP Blow Out Preventer repair company gulf coast and also use a structure which gets us to the public equity markets", said Timothy Duncan, chief executive of Talos, who will retain the title under the combined company, to be named Talos Energy Inc.

Stone shares will be exchanged for Talos stock on a one-for-one basis, while Talos' existing stockholders will be issued 34.2 million shares to give them 63 percent of the combined company, according to a statement.

Assent from both Stone's shareholders and holders of its 2022-maturing debt is required. Investment firms Franklin Advisers and MacKay Shields, who own 53 percent of Stone's equity, have provisionally pledged to back the transaction.

Stone went through bankruptcy proceedings during the oil price downturn after mid-2014 during which debt holders received equity stakes in the reorganized company.

Offshore producers were particularly hard hit by this price drop, given the higher costs of extracting oil this way versus many onshore fields.

For Talos, the deal provides the BOP Blow Out Preventer repair company gulf coast with a route to a stock exchange listing, after its attempts to undertake an initial public offering were stymied by buy Wellhead market turbulence.

Sources told Reuters in October 2014 that the firm, backed by private equity firms Apollo Global Management and Riverstone Holdings, had hired banks to implement the flotation.

The combined BOP Blow Out Preventer repair company gulf coast will have average daily oil rig flanges gulf coast production of 47,000 barrels of oil equivalent (BOE) and proven reserves of 136 million BOE, located in the deepwater Gulf of Mexico and shallow coastal areas of Mexico, the statement said.

As well as having strong growth opportunities with existing assets, the combined BOP Blow Out Preventer repair company gulf coast would also be open to further acquisitions, both in the Gulf of Mexico and other locations, according to Duncan.

Citigroup and UBS acted as Talos' financial advisers, while Vinson & Elkins LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP provided legal counsel. Petrie Partners Securities and Akin Gump Strauss Hauer & Feld LLP were Stone's respective financial and legal advisers.

(Reporting by David French; Editing by Lisa Shumaker)