Talos Energy, Inc. · NYSE:TALO
Talos Energy — J.P. Morgan Chase Global High Yield & Leveraged Finance Conference 2022
37 slides from Talos Energy's conference presentation, Feb 28, 2022
Slide 1: Investor Discussion Materials
February 28, 2022 Investor Discussion Materials
Slide 2: Cautionary Statements
Cautionary Statements Cautionary Statement Regarding Forward-Looking Statements This presentation contains “forward-looking statements” for purposes of the federal securities laws. All statements, other than statements of historical fact included in this presentation, regarding our strategy, future
Slide 3: Business Overview
BUSINESS OVERVIEW 3
Slide 4: Building A Leading Independent Energy Company
Building A Leading Independent Energy Company Louisiana 2022 Drilling Focus Area Attractive Profile Texas CCS Opportunities ▪ 60 – 64 MBoe/d (2022E) River Bend ▪ 66% Oil, 75% Liquids CCS Site Texas GLO ▪ >70% Deepwater CCS Site Freeport LNG ▪ >65% Operated CCS Site ▪ High-quality, diverse asset base
Slide 5: A Unique and Attractive Energy Investment Case
A Unique and Attractive Energy Investment Case ▪ Conventional offshore strategy ▪ Strong free cash flow profile ▪ Solid balance sheet ▪ Exploration catalysts ▪ Carbon Capture leader ▪ Natural consolidator 5
Slide 6: Talos Strategic Approach to Full Lifecycle Management
Talos Strategic Approach to Full Lifecycle Management Success driven by investing across asset lifecycle and consistently enhancing opportunity set Advanced Seismic Reprocessing M&A Entry Asset Management In-Field Drilling Exploitation Exploration Low entry-cost Invest in recompletions Execute low-r
Slide 7: Compelling Equity Upside Story
Compelling Equity Upside Story Talos maintains significant upside to E&P peers, despite strong fundamental performance Talos Discounted by 1x+ turns to Various Peers Avg. Daily Production (MBoe/d) 5.0x 70 Normalized for Dry 63-68 Dock and Unplanned 60 Downtime 4.5x 64 60-64 50 55 52 4.0x 40 46 4.0x
Slide 8: Increasing Public Ownership and Trading Liquidity
Increasing Public Ownership and Trading Liquidity Legacy private equity investors are exiting 2012 Talos investment in orderly process ▪ Apollo and Riverstone approaching 10 years successfully invested in Talos 3x increase in Float ▪ Apollo exit driven by reduced ownership after recent sales, broade
Slide 9: 2022 Guidance
2022 GUIDANCE 9
Slide 10: 2021 Delivery & Positioning for 2022 Success
2021 Delivery & Positioning for 2022 Success 2021 Accomplishments 2022 Objectives ▪ Strong Free Cash Flow generation ▪ Maintain solid production base ▪ Significantly reduced leverage ▪ Further reduce leverage, increase liquidity ▪ Expanded production base ▪ Invest in more deepwater catalysts ▪ Major
Slide 11: 2022 Operational & Financial Guidance
2022 Operational & Financial Guidance Production Cash Expenses Capital Investments ▪ 66% oil, 75% liquids ▪ Inclusive of expected cost inflation ▪ Weighted primarily to 3Q and 4Q ▪ 3.0 – 4.0 MBoe/d of annual downtime impact: ▪ Incremental Y/Y expenses from CCS advancement ▪ ~50% of D&C adds 2023 or
Slide 12: 2022 Capital Guidance Overview
2022 Capital Guidance Overview Balanced capital program targeted at unique high-impact drilling and CCS opportunities Upstream Investments 55% upstream ▪ Floater and Platform Rigs reinvestment rate ▪ 3 Development projects Other ▪ 5-6 High Impact projects ~50% 10-15% ▪ Appraisal of Puma West of D&C
Slide 13: Attractive Long-Term Free Cash Flow Profile
Attractive Long-Term Free Cash Flow Profile Talos’s high-quality asset base generates material free cash flow in the current commodity environment ▪ Expect to generate over $1.0 billion in free cash Cumulative Upstream Free Cash Flow(1) flow from base business through 2025(1) $1,250 ▪ Provides long-
Slide 14: Current Priorities for Free Cash Flow
Current Priorities for Free Cash Flow Prioritizing financial health, stability and successful long-term value creation ▪ Expect ~1.0x leverage at year-end 2022 Key Credit Statistics ▪ Disciplined and risk-balanced capital reinvestment ~$475 MM Liquidity ▪ Measured investments for transformative CCS
Slide 15: Catalysts Driving Future Value Creation
Catalysts Driving Future Value Creation Development & Exploration Pipeline Access to major catalysts is a unique differentiator Unprecedented for Talos and provides M&A Opportunity the basis for exceptional long-term value creation Low Carbon Initiatives 15
Slide 16: Catalysts: High-Impact Exploration
Catalysts: High-Impact Exploration Talos possesses the capability, acreage and prospects to generate significant value through future drilling Gulf of Mexico Geologic Ages Well-Positioned to Execute Norphlet Talos holds a strategic position in every major Venice geological trend in the basin: Polyph
Slide 17: 2022 Upstream Capital Program
2022 Upstream Capital Program Pompano Ram Powell Flat Top VK 989 Operated Platform Rig Program Seville MC 27 Venice ▪ Two Development and one Exploitation wells (100% WI) VK 912 Salamanca ▪ ~10 – 12 MMBoe of total gross unrisked resource MC 27 Lime Rock VK 1000 ▪ Expected online throughout 2022 Scar
Slide 18: Puma West Appraisal
Puma West Appraisal Pompano Ram Powell Project Overview Amberjack ▪ High-impact test of sub-salt Miocene exploration targets ▪ Middle, Lower Miocene objectives nearby bp’s Mad Dog field GC 18 <15 miles east) HP-1 Key Details & Statistics ▪ Project Category: Exploration ▪ Talos 25%, bp 50% (Operator)
Slide 19: What is Carbon Capture and Sequestration?
What is Carbon Capture and Sequestration? CCS involves capturing, transporting, injecting and permanently storing CO2 emissions from industrial sources back into the ground in saline aquifers Carbon Capture and Sequestration Value Chain Capture Transport Sequester CO2 emissions removed CO2 safely pi
Slide 20: CCS Growth Is Required to Meet Climate Objectives
CCS Growth Is Required to Meet Climate Objectives Talos has rapidly taken a leadership role in the developing market for global emissions reductions Additional CCS Capacity is Required to Meet Global Targets 800 REQUIRED 700 Total CCUS Capacity 600 Pipeline of Projects 500 Gap to IEA SDS(1) Objectiv
Slide 21: Applying Expertise Towards CCS
Applying Expertise Towards CCS Talos is building a large-scale decarbonization solutions business Complementary Skill Sets E&P CCS Conventional Reservoir Expertise, G&G Team Significant Gulf Coast / GOM Presence Vast Seismic Database Established Operator & Project Mgmt. Capabilities Strong HSE Track
Slide 22: Maturing Two CCS Project Types
Maturing Two CCS Project Types Regional Hub Point Source Source Clustered Industrial Base Single facility / Plant Operator / Turnkey Operator / Talos Role / Offering Project Mgr. Project Mgr. Third Parties Midstream Provider and / or Partners Talos Land / Site Large, regional lease Already secured;
Slide 23: Talos CCS Project Portfolio: 800 Million MT CO2 Storage
Talos CCS Project Portfolio: 800 Million MT CO2 Storage Supporting 150 MTPA of Regional Emissions on ~80,000 acres 3 1 Gulf of 2 Texas GLO Mexico (50%) River Bend Freeport LNG (30%) (50%) Coastal Bend (50%) 1 TX GLO 2 Freeport LNG 3 River Bend 4 Coastal Bend Project Type Hub Point Source Hub Point S
Slide 24: Complementary Businesses Increase Value Proposition
Complementary Businesses Increase Value Proposition Upstream ▪ High-return projects ▪ Step-change catalysts Exceptional Value Creation ▪ Ample inventory ▪ Uniquely positioned in U.S. GOM ▪ CCS and Upstream businesses form the foundation for a successful energy company in the future Complementary Uni
Slide 25: Appendix
APPENDIX TAL@S
Slide 26: Attractive Resource Base & Acreage Footprint
Attractive Resource Base & Acreage Footprint Key Statistics Sensitivity of Proved Reserves PV-10 ($MM) $6,000 $5,721 162 >2/3 84% $5,000 $4,949 MMBoe Oil Proved $4,176 Proved Reserves Weighted Developed PV-10 of Proved Reserves ($MM) $3,926 $4,000 $3,399 $3,000 $2,000 45% Primary Term 1.3 Million He
Slide 27: Inventory Overview – Generic Project Categorization
Inventory Overview – Generic Project Categorization ▪ Talos prioritizes a balance of project risk, impact, cost and cycle time in developing its capital planning for future periods ▪ As project risk increases, Talos generally targets a lower working interest, thereby increasing the number of net pro
Slide 28: U.S. Gulf Coast: World-Class CCS Market Opportunity
U.S. Gulf Coast: World-Class CCS Market Opportunity Emissions concentrated along the Gulf Coast are adjacent to best-in-class storage capacity & infrastructure America’s Industrial Epicenter ▪ Critical power generation, industrial and petrochemical corridor ▪ 100+ facilities emitting >1 MM MT of CO2
Slide 29: Advancing Short and Medium-Cycle Project Types
Advancing Short and Medium-Cycle Project Types Illustrative Schedule for CCS Projects Year 1 Year 2 Year 3 Year 4 Year 5 Project Quarter Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Point Source Project FEED Work Stratigraphic Well Test Class VI Permitting Project FID Construction & We
Slide 30: Texas GLO CCS Project Overview
Texas GLO CCS Project Overview Regional Hub Project for Beaumont / Port Arthur, Texas region (Jefferson County) Key Highlights Regional Map ▪ First major offshore CCS site in the United States Louisiana ▪ First-of-its-kind public CCS project (State of Texas) PORT ARTHUR Sabine Lake ▪ Selected from 1
Slide 31: Freeport LNG CCS Project Overview
Freeport LNG CCS Project Overview Point Source Project at Freeport LNG Key Highlights Regional Map ▪ One of the largest LNG liquefaction and export facilities in the world Texas ▪ Potentially first commercial CCS project on the U.S. Gulf Coast FREEPORT Gulf of Mexico ▪ <1/2 mile from capture to inje
Slide 32: River Bend CCS Project Overview
River Bend CCS Project Overview Regional Hub Project along Mississippi River corridor Key Highlights Regional Map ▪ First major CCS site in MS River industrial region BATON ROUGE Mississippi River ▪ Composed of three distinct, strategically positioned EnLink Pipelines sequestration sites with expans
Slide 33: Coastal Bend CCS Project Overview
Coastal Bend CCS Project Overview Point Source Project at the Port of Corpus Christi Key Highlights Regional Map ▪ One of the largest ports in the U.S. – $200 billion in Texas economic impact, >200 active customers Howard Pipelines ▪ MOU with Howard Energy Partners secures midstream component of val
Slide 34: Advancing Environmental Performance
Advancing Environmental Performance Talos is committed to lowering its emissions intensity and maintaining strong environmental standards Driving Down Talos GHG Intensity ESG Initiatives (Gross Operated Production, MT CO2 Equivalent/MBoe) 25.0 Selected 2021 Emissions Reduction Initiatives Committed
Slide 35: Improving Safety Performance
Improving Safety Performance Talos consistently outperforms industry safety averages and continues to improve performance Lost Time Incident Rate (LTIR) Total Recordable Incident Rate (TRIR) (Average Combined Rates – Employees & Contractors) (Average Combined Rates – Employees & Contractors) 0.25 1.
Slide 36: Hedge Book as of February 24, 2022
Hedge Book as of February 24, 2022 Crude – WTI Natural Gas – HH NYMEX Boe Avg. Daily Weighted Avg. Avg. Daily Weighted Avg. Swap Avg. Daily Quarter Volume (bbls) Swap Price (per bbl) Volume (mmbtu) Price (per mmbtu) Volume (Boe) Jan. – Mar. 2022 29,600 $50.84 61,000 $2.89 39,767 Apr. – Jun. 2022 27,
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