Talos Energy, Inc. · NYSE:TALO
Talos Energy — JP Morgan Energy, Power & Renewables Conference 2024
44 slides from Talos Energy's conference presentation, Jun 18, 2024
Slide 1: Talos Energy JP Morgan Energy Conference
Talos Energy JP Morgan Energy Conference June 18, 2024 1
Slide 2: Cautionary Statements
Cautionary Statements Cautionary Statements significant, such revisions would change the schedule of any further production and development drilling. Accordingly, The information in this presentation includes “forward-looking statements” within the meaning of Section 27A of the reserve estimates may
Slide 3: Talos Has a Differentiated Offshore Strategy
Talos Has a Differentiated Offshore Strategy LA TX • High margin oil weighted production FL Offshore Gulf of Mexico • High quality and stable asset base • Significant growth potential Gulf of Mexico • Infrastructure focused • Short cycle offshore drilling inventory MEXICO • Material free cash flow g
Slide 4: Talos Continues to Execute Its Growth Strategy
1Q 2024 Solid Execution of Significant Milestones Talos Continues to Execute Its Growth Strategy DECEMBER 2023 JANUARY MARCH 18 Venice and Lime Rock first Capital Markets Transactions Divested CCS business to production • Refinanced ~$865 MM of second lien TotalEnergies • Ahead of timing and rate no
Slide 5: Solid Delivery in 1Q 2024
Solid Delivery in 1Q 2024 YTD HIGHLIGHTS 79.6 MBOE/D 71% / 80% Average Daily Production Oil / Liquids Record production at the high-end of the range coupled with strong financial performance $268 MM $42/BOE Announced and closed QuarterNorth Adj. EBITDA(1) Adj. EBITDA/BOE(1)(4) Closed sale of TLCS Pr
Slide 6: History of Stable Growth Through Organic Drilling and M&A
History of Stable Growth Through Organic Drilling and M&A 2013-2024E Average Daily Production (MBOE/D) 89-95 Targeting stable growth through a balanced focus on asset optimization, development and exploration and ongoing business development 66 64 60 55 52 46 29 26 24 22 18 2013 2014 2015 2016 2017
Slide 7: The Gulf of Mexico Is a Vast Hydrocarbon Basin
The Gulf of Mexico Is a Vast Hydrocarbon Basin GEOGRAPHICAL SIZE GEOLOGICAL BREADTH LA Permian Basin TX FL Gulf of Mexico Delaware 5,000’ 6,000’ Permian Leonardian Pleistocene (Bone Spring) Basin Marcellus 25,000’ 7,000’ Shale Wolfcampian (Wolfcamp) Eagle Pliocene Ford 13,000’ Bakken Shale Miocene G
Slide 8: Upstream Strategy Focused on Full Life Cycle Opportunities
Upstream Strategy Focused on Full Life Cycle Opportunities Talos utilizes seismic technology and business development to build Conventional value through drilling opportunities High-Impact Geology and Seismic Expertise Exploration across the full asset life cycle. Infrastructure Key Tenets to Talos’
Slide 9: Robust Inventory Near Talos Owned Infrastructure
Robust Inventory Near Talos Owned Infrastructure Talos Has the Capability, Acreage, and Prospects To Generate Significant Value Through Future Drilling Louisiana Viosca Knoll Project Inventory 29 Gulf of Mexico Shelf 52 115 Desoto Lobster Intra-well Waterflood Canyon Mississippi Canyon 34 EW 953 Ewi
Slide 10: 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 11: Venice and Lime Rock Wells Tracking Steady Production
Venice and Lime Rock Consistent with Infrastructure-Focused Strategy Venice and Lime Rock Wells Tracking Steady Production Combined Key Stats Ram Powell Gross Production First Oil Late Dec 2023 (BOE/D) Est. Resource (Gross MMBOE) 20 – 30 30,000 Initial Production Rate (Gross ~18.5 (~45% oil, MBOE/D)
Slide 12: Focusing on Execution: Progressing Strategic Priorities
Focusing on Execution: Progressing Strategic Priorities Successfully closed Ramping up for 2H 2024 Operational Execution QuarterNorth high-potential drilling • Expecting FY 2024 production at 89.0 – 95.0 MBOE/D transaction earlier than program • Expecting 2Q 2024 production at 93.0 – 96.0 MBOE/D exp
Slide 13: QuarterNorth Integration Substantially Complete
QuarterNorth Integration Substantially Complete High Quality Assets With Low Base Decline Synergistic Cost Savings Ahead of Schedule • High free cash flow generation with low reinvestment needs • Adds material scale while improving asset diversity across basin Projected Cost Savings ($MM/Year)(1) Im
Slide 14: 2024 Upstream Investments
2024 Upstream Investments Capitalized G&A • Expected reduction in Y/Y CAPEX from Talos and Other 5-10% standalone 2023 • Upstream CAPEX: $570 - $600 MM Plugging and Abandonment US Drilling and • P&A, Decommissioning: $90 - $100 MM 10-15% Completions 50-55% • Attractive reinvestment rate on a recent
Slide 15: 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 Lime Rock Exploitation Ram Powell Venice Exploitation Ram Powell Lobster Waterflood Development Lobster Drilling Water Injection Stimulation Green Canyon / 3-Well St
Slide 16: Exploitation Well to Materially Increase Proved Reserves
Greater Katmai Area Exploitation Well to Materially Increase Proved Reserves Key Data Points Structure Map Greater Katmai Area Est. Resource salt 180 – 200 Potential (Gross MMBOE) Katmai West Katmai West #2 Est. Spud Date 3Q 2024 Future Max. Est. Initial Rate (Gross 15 – 20 Well MBOE/D) Facility Con
Slide 17: Katmai West #2 Expected to Spud in 3Q 2024
Katmai West #2 Potential to Add Material Proved Reserves Expected to Spud in 3Q 2024 400’ Gross Pay Katmai West Structure Map salt ~100 MMBOE Tarantula Potential Talos: 100% WI Katmai West #2 Katmai West #1 Spud 3Q 2024 (50% WI) Producing (50% WI) Katmai West #2 Katmai West #1 Proved Lowest Producti
Slide 18: Daenerys: High-Impact Subsalt Miocene Exploration Opportunity
Daenerys High-Impact Subsalt Miocene Exploration Opportunity Key Data Points Structure Map Est. Spud Date 2H 2024 A Est. Resource (Gross MMBOE)(1) 100 – 300 Est. Initial Rate (Gross MBOE/D) 10 – 15 Proposed Reservoir Depth (Feet TVDSS) ~26,000-31,000 ft Wellsite Target Working Interest 30% ITW / 27%
Slide 19: Advancing Total Debt Paydown Objectives
Advancing Total Debt Paydown Objectives • Refinanced ~$865 MM in 2026 bond and extended maturities and reduced bond interest rates ~275-300 bps • Paid down $225 MM of debt since closing QuarterNorth (QNE) • Increased debt reduction target from $400 MM to $550 MM; Achieved leverage ratio of 1.0x • Ex
Slide 20: Talos Offers a Compelling Value Opportunity
Talos Offers a Compelling Value Opportunity • One of the highest exposures to oil in the E&P sector • One of the highest EBITDA/BOE margins in the E&P sector – 1Q 2024: ~$42 per BOE(1) • The highest free cash flow yield in the E&P sector 2024E % Liquids 1Q 2024E EBITDA Margin 2024E EBITDA Margin 20
Slide 21: Significant Shareholder Value From Proved Reserves (1P) and Probable Resources (2P)
Significant Shareholder Value From Proved Reserves (1P) and Probable Resources (2P) Pro Forma YE 2023 SEC Reserves 2P Product Mix MATERIAL Net PV-10 grossed UPSIDE 8.5% up for ARO then from Proved Reserves (1P) $6,083 deducted for clarification PV-10 NAV Value to current 22.3% $5,836 valuation 364 $
Slide 22: Talos Is a Differentiated Company Focused on Upstream Growth
Talos Is a Differentiated Company Focused on Upstream Growth Significant Growth High Quality One of Highest EBITDA Potential and Stable Asset Base Margins in E&P Space Over 100 exploratory and Decline of ~20% requires modest Significant exposure to oil ~71% development projects with cash flow to mai
Slide 23: www.talosenergy.com NYSE: TALO
www.talosenergy.com NYSE: TALO 23
Slide 24: Appendix
Appendix 24
Slide 25: Private Equity Ownership Continues to Decline
Talos Continues To Attract High-Quality Long-Only Shareholders Private Equity Ownership Continues to Decline Trailing % Shares Outstanding Held by Investor Type 11 Days ADTV 1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 Average Daily Trading
Slide 26: Pro Forma YE 2023 SEC Proved Reserves
Pro Forma YE 2023 SEC Proved Reserves* PF SEC Reserves PF SEC PV-10(1) (MMBOE) ($MM) PDP 129 $4,214 PDNP 43 438 PUD 44 442 Total Proved (Net of P&A) 216 $5,094 Total Probable (Net of P&A) 148 $3,878 Product Mix Category Mix Proved PV-10 9% 21% 21% 9% 8% 216 216 $5.1 MMBOE MMBOE BN 71% 79% 83% Oil NG
Slide 27: Since 2012, Talos Has Successfully Completed Numerous Tactical and Transformational Deals
Over a Decade of Consistent Growth Through Acquisitions Since 2012, Talos Has Successfully Completed Numerous Tactical and Transformational Deals • Listed on NYSE through reverse • Acquired ILX Holdings, merger with Stone Castex, and Venari • Founded with • Acquired • Major discovery and Energy Comp
Slide 28: Lobster Intra-Well Waterflood
Lobster Intra-Well Waterflood Expecting Incremental Production of ~2,000 BO/D in 12-18 Months Locator Map Bul1 70/80 Sand Structure Expect a rate increase of ~2,000 BO/D Lobster Key highlights • Targeting significant unswept reserves in Bul1 70/80 • Bul1 Lobe 70/80 have exhibited weak water drive •
Slide 29: Helm’s Deep
Helm’s Deep Sub-Salt Amplitude Exploitation Opportunity Key Data Points Structure Map Est. Spud Date 1H 2025 A Est. Resource (Gross MMBOE)(1) 17 – 27 salt Est. Initial Rate (Gross MBOE/D) 9 – 11 ~500 Reservoir Depth (Feet TVDSS) 18,000 ft Acres salt Target Working Interest 50% Proposed Wellsite A’ L
Slide 30: EW Prospect
EW 953 Prospect Low Risk Exploitation Opportunity to Talos Infrastructure Key Data Points Structure Map Est. Spud Date 2H 2024 A’ EW 953 ~575 Acres Prospect Est. Resource (Gross MMBOE) ~18.0 shale Polygon Est. Initial Rate (Gross MBOE/D) 8 – 11 Reservoir Depth (Feet TVDSS) 19,000 ft Target Working I
Slide 31: Sunspear Discovery
Sunspear Discovery Key Data Points Structure Map Discovery Date 2Q 2023 Expected First Oil 2Q 2025 Est. Initial Rate (Gross MBOE/D) 8 – 10 ~350 Acres Sunspear A’ Reservoir Depth (Feet TVDSS) 22,000 ft Pay Sand Working Interest 48% Host Facility Prince GC 78 SS2 149’ Net Oil A Locator Map Section Lin
Slide 32: Green Canyon Lease Exchange
Green Canyon Lease Exchange Deepwater Green Canyon Gulf of Mexico Area Western Area • Executed Lease Exchange Agreements covering • 40% - 42.5% WI bp – Operator ~86,400 acres across 15 leases in the U.S. Gulf • 40% - 42.5% WI CVX of Mexico deepwater Green Canyon area • 15% - 20% WI Talos • Talos’s p
Slide 33: Neptune Area Seismic Reprocessing Joint Venture
Neptune Area Seismic Reprocessing Joint Venture Talos-Repsol JV Reprocessing Project Green Canyon • Seismic reprocessing project covering 74 OCS Blocks (20 Talos Blocks and Neptune Field) utilizing state of the art FWI technology • Multiple seismic datasets will be merged and reprocessed, creating h
Slide 34: Recent Lease Sale Results
Recent Lease Sale Results Key Statistics MC 26 95K Gross Acres VK 1001 GC 166 EW 959 EW 744 17 Blocks with High Bid MC 652 12-15 AT 314 GC 111 AT 359 GC 247 Potential Drilling GC 695 Talos Acreage Locations WR 159, 160 Talos Seismic GC 871 Lease Sale Acreage Talos Facility Keathley Canyon Walker Rid
Slide 35: Zama – Grupo Carso Transaction Overview
Zama – Grupo Carso Transaction Overview Sale of Minority Stake in Talos Mexico Increases Visibility and Bolsters Value Proposition About Grupo Carso Highlights of Grupo Carso Transaction(1) • A diversified global conglomerate in Latin America owned by Carlos Slim ~$125 MM 49.9% $250-$263 MM Purchase
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands, except per BOE amounts) March 31, 2024 Reconciliation of Adjusted EBITDA to Revised Adjusted EBITDA: Adjusted EBITDA $257,676 CCS Costs: Equity method investment loss $7,970 General and administrative expense $1,965 Other operating expense $(
Slide 37: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands) March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 Reconciliation of Net Income (Loss) to Adjusted EBITDA: Net Income (loss) $(112,439) $85,898 $(2,103) $13,677 Interest expense $50,845 $44,295 $45,637 $45,632 Income tax expens
Slide 38: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands) March 31, 2024 Reconciliation of General & Administrative Expenses to Adjusted General & Administrative Expenses excluding CCS: Total General and administrative expense $69,841 CCS Segment $(1,965) Transaction and other (income) expenses(1) $
Slide 39: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands, except per BOE amounts) March 31, 2024 Calculation of Revised Adjusted EBITDA excluding CCS and workover expense margin: Adjusted EBITDA excluding CCS $267,548 Add: Workover expense $36,600 Revised Adjusted EBITDA excluding CCS and workover e
Slide 40: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands) March 31, 2024 Reconciliation of Adjusted EBITDA to Adjusted Free Cash Flow excluding CCS (before changes in working capital): Adjusted EBITDA $257,676 Upstream capital expenditures $(112,435) Plugging & abandonment $(27,907) Decommissioning
Slide 41: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ 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) $96,426 (Increase) decrease in operating ass
Slide 42: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended March 31, 2024 ($ thousands, except per share amounts) Basic per Share Diluted per Share Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) excluding CCS: Net Income (loss) $(112,439) $(0.71) $(0.71) Transaction and other (income) expenses(1
Slide 43: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ thousands) March 31, 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 $325,000 Total Debt $1,575,000
Slide 44: Talos Hedge Book as of May 7, 2024
Talos Hedge Book as of May 7, 2024 Instrument Type Avg. Daily Volume W.A. Swap W.A. Sub-Floor W.A. Floor W.A. Ceiling Crude – WTI BBLs per BBL per BBL per BBL per BBL April - June 2024 Fixed Swaps 43,522 $75.13 — — — Collar 1,000 — — $70.00 $75.00 Long Puts 4,000 — — $70.00 — Short Puts 1,000 — $60.
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