Talos Energy, Inc. · NYSE:TALO
Talos Energy — J.P. Morgan Energy Conference 2019
29 slides from Talos Energy's conference presentation, Jun 19, 2019
Slide 1: J.P. Morgan Energy Conference
J.P. Morgan Energy Conference June 2019
Slide 2: Legal Disclosure
Legal Disclosure 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 opera
Slide 3: Talos Energy Overview
Talos Energy Overview Talos is a technically driven offshore independent oil and gas company with significant track record of shareholder value creation through exploration success and accretive M&A. Talos consistently generates free cash flow. 53.4 149 197 Talos Key Assets Amberjack PRODUCTION MBoe
Slide 4: US Gulf of Mexico Assets – Poised for Growth
US Gulf of Mexico Assets – Poised for Growth Through our extensive seismic footprint and the latest advancements in reprocessing, Talos continues to develop its exploration portfolio around infrastructure and the established Miocene deepwater trend Talos Seismic Expertise – US Gulf of Mexico Ram Pow
Slide 5: Gulf of Mexico Investment Thesis
Gulf of Mexico Investment Thesis Why Gulf of Mexico? WTI Differentials Better than WTI One of the most important and prolific oil basins in the US, second only to the Permian basin in total current oil production Long history of production, with year-over-year production growth since 2013, and f
Slide 6: Talos Core Competencies and Focus Areas
Talos Core Competencies and Focus Areas Geology & Geophysics 3 Targeting prolific Pliocene --> Miocene window 2 Excellent rock properties and advances in seismic lead to direct hydrocarbon indicators (DHI’s) 1 Reduce risk and increase exploration success Offshore Operations Top-tier offshore
Slide 7: Applying Best Practices to Improve Seismic Imaging
Applying Best Practices to Improve Seismic Imaging Talos Energy expertise in seismic reprocessing saves money, improves the ability to find new prospects and reduces risk. ~40 miles 2010 Original Spec. Cequi Beam Data (Closest well that found the same Zama-1 Miocene section ~40 miles away) Cox #1 Ba
Slide 8: Illustrative Deepwater Project Economics
Illustrative Deepwater Project Economics High-margin barrels flowing through existing fixed cost infrastructure generates attractive returns Illustrative Deepwater Project IRR’s at $50 $70/bbl In-Field Phoenix Complex Tie-Back 100% 90% Price Sensitivity 80% $50 $70 70% 60% IRR, % 50% 40% 30% 20%
Slide 9: Talos Energy – Core Areas
Talos Energy – Core Areas GREEN CANYON MISSISSIPPI CANYON GOM SHELF / OTHER OFFSHORE MEXICO 2P Reserves1 95 mmboe 67 mmboe 35 mmboe - 1Q19 Production2 17.9 mboe/d net, 20.6 mboe/d net, 15.6 mboe/d net, - ~84% oil ~77% oil ~56% oil Key Assets Phoenix Pompano Ewing Bank 305/306 Zama Tornado Ram Powell
Slide 10: Green Canyon Core Area
Green Canyon Core Area GC 18 Facility Bulleit Prospect Bullwinkle Facility Orlov Antrim Phoenix GREEN CANYON Complex HP-1 Facility Talos Future tiebacks Green Canyon 18 – Strategy in Motion Recent strategic acquisition of the GC 18 platform with active production and significant available capacity
Slide 11: Green Canyon Phoenix Complex
Green Canyon Phoenix Complex Phoenix Complex Lay-Out Material rate and reserve growth since acquiring Recently drilled and completed Boris 3 and Tornado 3 Reached a production milestone in May 2019 of ~43 MBoe/d Phoenix Field: Rate and Reserves Since Acquiring 11
Slide 12: Active in All Business Development Areas
Active in All Business Development Areas Stranded Discoveries & Exploration, Development JVs Single Asset Acquisition Working with partners in Low cost of entry on all metrics deepwater plays to pull Typically sold by Majors portfolio value forward Sellers main focus is on protection Disco
Slide 13: Recent Business Development Activity
Recent Business Development Activity Single Asset Acquisition Roll-Up of Private Company Single Asset Acquisition Stranded Discoveries & Expl., Dev. JVs RAM POWELL GREEN CANYON 18 GUNFLINT ANTRIM Seller: Shell, ExxonMobil, Seller: Whistler Energy Seller: Samson Offshore Seller: ExxonMobil An
Slide 14: Mexico Block 7 Core Area
Mexico Block 7 Core Area In addition to Zama, Talos has other high quality prospects that could be drilled in the coming years. Overview #2 Participating Interest: 35% #2ST Operator: Talos Energy #1 Acreage: 114,854 gross acres #3 Water Depth: 500-650 ft Zama Discovery Water Depth: 550 ft
Slide 15: Mexico – Preliminary Timeline to FID
Mexico – Preliminary Timeline to FID #2 #2ST 2019 2020 #1 #3 Zama Appraisal 2 2st 3 Development Plan & Opcom Approval FID Drilling Zama Unitization Unitization Discussion NSAI Development Plan Resource Evaluation Current Res Cat. 2C Evaluation Government Review Olmeca Exploration 1 2 Development Pla
Slide 16: Offshore Mexico – Zama Appraisal Progress
Offshore Mexico – Zama Appraisal Progress 1.4 Miles Offshore Mexico Offshore Mexico Block 7 Block 7 Zama-2 & 2ST1 Zama-1 Mexico Milestones & Zama Appraisal Highlights #2 #2ST #1 Zama appraisal currently underway with two of three appraisal penetrations completed thus far #3 Both appraisal wells
Slide 17: Block 7 – Current Appraisal Plan Results
Block 7 – Current Appraisal Plan Results Zama #2 Results Zama #2 ST1 Objectives Zama #3 Objectives Evaluate the northern area extent of Zama Identified the OWC within 72 ft (22m) of the Evaluate the southern area extent of Zama technical estimate Whole core (upper section) and anticipated OW
Slide 18: Zama Preliminary Appraisal Results – DST Summary
Zama Preliminary Appraisal Results – DST Summary Talos Energy Multiple Drill Stem Tests (DSTs) Offshore Mexico Block 7 Zama-1 DST2 (Zone 3) Radius of Investigation Productivity confirmed, increasing confidence in Zone 3 2,330 ft production and layer contribution using Zama-2ST1 advanced Prolog Tec
Slide 19: Zama – One of the Lowest Breakevens in the World
Zama – One of the Lowest Breakevens in the World The Zama discovery stacks up well against WoodMac’s new global sources of oil supply and is considered one of the most economic projects in the world US Lower 48 states and conventional pre-FID production and breakevens 140 Each point represents a pro
Slide 20: Zama Illustrative Estimated Cash Flows – First Year of Peak Production
Zama Illustrative Estimated Cash Flows – First Year of Peak Production Illustrative estimated cash flows assumes first full year of production. Due to cost recovery early in the life of the project, cash flow to E&P consortium is substantial. 150,000 BBL/D - $0.3bn - $0.7bn = $1.1bn Royalty: Favor
Slide 21: Mexico Block 2/31 Shallow Water Area
Mexico Block 2/31 Shallow Water Area Very attractive shallow water acreage set with Olmeca prospect de-risked by Pemex well Block 2/31 Overview Participating Interest: 25% Operator: Hokchi Energy, a subsidiary of Pan American Energy (PAE) Acreage: 112,979 gross acres Water Depth: 100-150 ft
Slide 22: Mexico Block 2/31 Olmeca Complex
Mexico Block 2/31 Olmeca Complex Exploration Background Xaxamani-1 well Drilled by Pemex in 2003 65 ft gas and 130 ft oil pay in two sands Resource area was included in the Block 31 exploration area Just offshore from the 1950’s era Rabon Grande Oil Field (same field pays) A A’ Deeper pote
Slide 23: 2019 Financial Guidance
2019 Financial Guidance 2019 Guidance 2019 Capital Expenditures Breakdown1 Oil (mmbbl) 14.5 – 15.2 Other, 16% U.S drilling & Natural Gas (bcf) 24.5 – 25.0 completions, 40% Production NGL (mmbbl) 0.9 – 1.0 Total (mmboe) 19.5 – 20.4 P&A, 14% Average Daily Production (mboe/d) 53 - 56 Lease Operating Ex
Slide 24: Key Activities in 2019
Key Activities in 2019 Talos Energy has been extremely active in the first half of 2019 across its portfolio, with a high degree of success on key projects Geography Type / Block Asset Status Timing Results Tornado 3 On Production 1Q Boris 3 On Production 1Q Deepwater Orlov Drilled 2Q Bulleit
Slide 25: Additional Upside
Talos Trading Below Proved Developed Producing PV-10 Talos trading below PV-10 of PDP reserves of $2.0 billion at $55/$2.75 Long-Term Portfolio Near-Term Catalysts Drilled in 3+ 4,500 4,000 2P PV-101,2 Discovered Resources Drilled in 2 – 3 Years Years TEV at ~$41/share US$ Millions 3,500 Zama (conse
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Slide 27: APPENDIX
ee APPENDIX 27 y
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations Reconciliation of net income (loss) to Adj. Three Months Ended EBITDA and of Adj. EBITDA to Adj. EBITDA excluding hedges ($ in millions) September 30, 2018 December 31, 2018 March 31, 2019 Net Income (loss) $13 $306 $(110) Interest Expense 25 24 25 Income Tax Expense - 3 (6)
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations Reconciliation of 2H18 Annualized Adj. EBITDA Reconciliation of Net Debt $ in millions December 31, 2018 $ in millions December 31, 2018 3Q18 Adj. EBITDA $157 Debt Principal $672 4Q18 Adj. EBITDA $159 Capital Leases 94 2H18 Adj. EBITDA $316 Gross Debt $766 x2 Cash (excl. res