Talos Energy, Inc. · NYSE:TALO
Talos Energy — Q3 2024 Earnings Presentation
34 slides from Talos Energy's earnings presentation, Nov 12, 2024
Slide 1: 3Q 2024 Earnings Conference Call & Webcast
3Q 2024 Earnings Conference Call & Webcast November 12, 2024 1
Slide 2: Cautionary Statements
Cautionary Statements Cautionary Statements upward or downward of estimates that were made previously. If significant, such revisions would change the schedule of any further The information in this presentation includes “forward-looking statements” within the meaning of Section 27A of the Securitie
Slide 3: Talos Has a Differentiated Offshore Strategy
Talos Has a Differentiated Offshore Strategy LA TX FL • High margin oil weighted production Offshore Gulf of Mexico • High quality and stable asset base • Infrastructure focused Gulf of Mexico • Short cycle offshore drilling inventory • Capital discipline MEXICO • Material free cash flow generator Z
Slide 4: Focusing on Execution and Capital Discipline
Focusing on Execution and Capital Discipline Operational Financial Focused Drilling Pursue Select Execution Execution Program Business • Achieved over $347 MM of • Capital discipline • Ewing Bank 953 discovery Development Adj. FCF YTD(1)(2) • Continue to generate • Katmai Opportunities • Completed i
Slide 5: Financial and Operational Highlights
Financial and Operational Highlights 3Q 2024 RECENT HIGHLIGHTS 96.5 MBOE/D 70% / 80% Consecutively beat 2024 quarterly consensus on Average Daily Production Oil / Liquids record production, and reported strong Adj. EBITDA and Adj. FCF Reduced debt and lowered leverage to 0.9x(1) ahead of schedule $3
Slide 6: Talos Is Delivering on Expectations
Talos Is Delivering on Expectations 1Q 2024 2Q 2024 3Q 2024 $121.5 $267.5 $77.7 $344.0 $148.0 $324.4 79.6 95.5 96.5 +38% +7% +10% +24% +4% +11% +3% +1% $251.1 +1% $312.9 93.3 $312.7 $70.1 94.6 78.7 $119.6 $87.9 Production Adj. EBITDA Adj. Free Cash Flow Production Adj. EBITDA Adj. Free Cash Flow Pro
Slide 7: Talos Ranks in the Top Quartile of Public E&P Companies for EBITDA Margin
Talos Ranks in the Top Quartile of Public E&P Companies for EBITDA Margin(1) One of the highest EBITDA/BOE margins in the E&P sector – 3Q 2024: ~$37 per BOE 3Q 2024A EBITDA Margin 2024E EBITDA Margin (Consensus) ($/BOE) (Consensus) ($/BOE) $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 $0 $10 $20 $30 $40
Slide 8: 2024 Capital Program Balances Risk With Material Resource Exposure
2024 Capital Program Balances Risk With Material Resource Exposure 2023 2024 2025 Prospect Category Host Facility 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Lime Rock Exploitation Ram Powell (Talos) Venice Exploitation Ram Powell (Talos) Lobster Lobster Waterflood Development (Talos) Drilling Achieved First Injecti
Slide 9: Focused High-Impact Drilling Campaign
Focused High-Impact Drilling Campaign Ewing Bank 953 1 Est. Resource Potential: 15-25 MMBOE(1) Host Facility: Megalodon Katmai Area Talos operated 2 Est. Resource Potential: up to 200 MMBOE(1) Host Facility: Tarantula Gulf of Mexico Shelf Daenerys Talos operated 3 Est. Resource Potential: 100-300 MM
Slide 10: Ewing Bank 953 – First Success in 2024 Multi-Well Drilling Program
Ewing Bank 953 – First Success in 2024 Multi-Well Drilling Program Strategic Elements Structure Map Megalodon • Discovered 127 ft of net hydrocarbon pay • Excellent rock properties and collected pressure and fluid EW 953 #1 samples SALT • Expect production in mid-2026 • Current plan is for a short t
Slide 11: Katmai West #2 Potential to Add Material Proved Reserves
Katmai West #2 Potential to Add Material Proved Reserves Spud 4Q 2024 Tarantula Strategic Elements Lower Miocene Structure Map Talos: 100% WI SALT • Katmai West #2 development well Katmai West #2 could materially increase proved Spud 4Q 2024 (50% WI) Katmai West #1 reserves Producing Currently (50%
Slide 12: Daenerys High-Impact Subsalt Miocene Exploration Opportunity
Daenerys High-Impact Subsalt Miocene Exploration Opportunity Strategic Elements Lower Miocene Structure Map TBD • Farm-in transaction covering 23,000 gross acres • Large Middle and Lower Miocene 4-way turtle structure Proposed Location • Partnership: • Talos – 27% (Operator) Proposed Location • Red
Slide 13: Wilcox Trend – A Prolific and Well-Established Growing Play
Wilcox Trend – A Prolific and Well-Established Growing Play Anchor (CVX) 20K Installation Green Canyon LOUISIANA Garden Total Recoverable Resource Potential(1) Up to 440 MMBO TEXAS Banks Productive Capacity 75 MBO/D D Dunharrow RE N Sparta X T Shenandoah O D C WILCOX TREN IL Yucatan Coronado W Monum
Slide 14: Monument – High-Impact Subsalt Wilcox Discovery
Monument – High-Impact Subsalt Wilcox Discovery Acquisition Transaction to Major Discovery with Material Resource Life Strategic Elements Wilcox Structure Map 2P Reserves Shenandoah • Wilcox discovery with two well penetrations (FID Feb 2024) • Good seismic image, faulted 4-way Discovery Well WR 271
Slide 15: Capital Discipline and Scale Provides Sustainable Free Cash Flow
Capital Discipline and Scale Provides Sustainable Free Cash Flow 2024 Adj. Free Cash Flow ($ Millions) $500 • Obtained scale from EnVen and $450 QuarterNorth transactions $400 Expected Free Cash Flow • Low decline asset base requires $350 Generation modest investment $347 $300 • Sustainable free cas
Slide 16: Continuing to Improve Credit Profile
Continuing to Improve Credit Profile Advancing Total Debt Paydown Objective Debt Balance ($ Millions) 2,000 800 • 3Q 2024 leverage ratio of 0.9x(1); 1, 00 Achieved target long-term leverage 1, 00 ratio below 1.0x ahead of schedule 1,400 4 0 1,200 • Increased 2024 debt reduction 1,000 target from $40
Slide 17: Significant Shareholder Value From Proved Reserves and Probable Resources
Significant Shareholder Value From Proved Reserves (1P) and Probable Resources (2P) Pro Forma YE 2023 Reserves at $70 Oil / $3 Gas 2P Product Mix $5,422 MATERIAL UPSIDE , 00 $5,391 ,000 from Proved Reserves (1P) PV-10 8% Net PV-10 inclusive of ($1,061) ARO then deducted NAV Value to current valuatio
Slide 18: Driving Value for Talos Shareholders
2024 Score Card Consistently beat 2024 quarterly consensus on record production, Adj. EBITDA and Adj. FCF Completed integration of QuarterNorth Driving value for Talos Employing capital discipline, leading to significant Adj. FCF(1) of $347 MM year-to-date Accreting Value to Shareholders: shareholde
Slide 19: Talos Is a Differentiated Company
Talos Is a Differentiated Company Capital Discipline High Quality One of Highest $/BOE Drives Significant and Stable Asset Base Netback Margins Free Cash Flow Modest decline requires limited in E&P Space Expected to generate investment to maintain production Significant exposure to oil ~70% signific
Slide 20: Appendix
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Slide 21: Lobster Intra-Well Waterflood
Lobster Intra-Well Waterflood Expecting Incremental Production of ~2,000 BO/D in 12-18 Months Bul-1 70/80 Sand Structure TEXAS LOUISIANA Strategic Elements • Targeting significant unswept reserves in Expect a rate increase Bul-1 70/80 of ~2,000 BO/D Gulf of Mexico • Bul1 Lobe 70/80 have exhibited we
Slide 22: Helm's Deep Sub-Salt Amplitude Exploitation Opportunity
Helm’s Deep Sub-Salt Amplitude Exploitation Opportunity Strategic Elements Structure Map TBD • Exploitation prospect targeting Subsalt Upper Miocene sands • Strong amplitude support with SALT positive Class III AVO and downdip conformance • Analogous to GC 390/478 O ut Khaleesi/Mormont and GC 943 al
Slide 23: Conventional Offshore Well Profiles
Conventional Offshore Well Profiles Outstanding Conventional Rock Properties Allow for Lower Decline Rates and Extraordinary Production Rates Differences from Unconventional (Shale) Onshore Benefits in the GOM • Every offshore reservoir is unique in geologic properties • ~80% of economics returned i
Slide 24: Pro Forma YE 2023 SEC Proved Reserves
Pro Forma YE 2023 SEC Proved Reserves* Talos SEC Reserves PF SEC Reserves PF SEC PV-10(1) (MMBOE) (MMBOE) ($MM) PDP 97 129 $4,214 PDNP 35 43 438 PUD 21 44 442 Total Proved (Net of P&A) 153 216 $5,094 Total Probable (Net of P&A) 87 148 $3,878 Product Mix Category Mix Proved PV-10 9% 21% 21% 9% 8% 216
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands) September 30, 2024 June 30, 2024(4) March 31, 2024(4) December 31, 2023(4) Reconciliation of Net Income (Loss) to Adjusted EBITDA: Net Income (loss) $88,173 $12,381 $(112,439) $85,898 Interest expense $46,275 $48,982 $50,845 $44,295 Income ta
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands) September 30, 2024 Reconciliation of General & Administrative Expenses to Adjusted General & Administrative Expenses: Total General and administrative expense $41,866 Transaction and other (income) expenses(1) $(5,696) Non-cash equity-based c
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands) September 30, 2024 Reconciliation of Adjusted EBITDA to Adjusted Free Cash Flow (before changes in working capital): Adjusted EBITDA $324,359 Capital expenditures $(118,922) Plugging & abandonment $(35,946) Decommissioning obligations settled
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands) June 30, 2024 Reconciliation of Adjusted EBITDA to Adjusted Free Cash Flow (before changes in working capital): Adjusted EBITDA $343,984 Upstream capital expenditures ($122,812) Plugging & abandonment ($22,221) Decommissioning obligations set
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands) March 31, 2024 Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow excluding CCS (before changes in working capital): Net cash provided by operating activities(1) $96,426 (Increase) decrease in operating ass
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended, September 30, 2024 ($ thousands, except per share amounts) Basic per Share Diluted per Share Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss): Net Income (loss) $88,173 $0.49 $0.49 Transaction and other (income) expenses(1) $(17,687) $(0.
Slide 31: Reconciliation of PV-10 to Standardized Measure
Reconciliation of PV-10 to Standardized Measure Reconciliation of PV-10 to Standardized Measure Reconciliation of PV-10 to Standardized Measure PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable GAAP financial measure, because it does
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands) September 30, 2024 Reconciliation of Net Debt: 9.000% Second-Priority Senior Secured Notes – due February 2029 $625,000 9.375% Second-Priority Senior Secured Notes – due February 2031 $625,000 Bank Credit Facility – matures March 2027 $125,00
Slide 33: Talos Hedge Book as of November 6, 2024
Talos Hedge Book as of November 6, 2024 Avg. Daily Instrument Type W.A. Swap W.A. Sub-Floor W.A. Floor W.A. Ceiling Volume Crude – WTI (BBLs) (Per BBL) (Per BBL) (Per BBL) (Per BBL) October - December 2024 Fixed Swaps 38,674 $76.07 — — — Collar 1,000 — — $70.00 $75.00 Long Puts 4,000 — — $70.00 — Sh
Slide 34: www.talosenergy.com NYSE: TALO
www.talosenergy.com NYSE: TALO 34