Talos Energy, Inc. · NYSE:TALO
Talos Energy — Q4 2023 Earnings Presentation
29 slides from Talos Energy's earnings presentation, Feb 29, 2024
Slide 1: 4Q 2023 Earnings Conference Call & Webcast
4Q 2023 Earnings Conference Call & Webcast February 29, 2024 1
Slide 2: Cautionary Statements
Cautionary Statements Cautionary Statements In addition, we use the terms such as “estimated resource” in this presentation, which are not measures of "reserves" prepared in The information in this presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities
Slide 3: Solid Delivery in 2023, Looking Ahead to 2024
Solid Delivery in 2023, Looking Ahead to 2024 RECENT DEVELOPMENTS 2024 OBJECTIVES Financial results largely in-line or better than ~35-40% Y/Y production increase with lower guidance Y/Y capital expenditures Venice, Lime Rock online ahead of schedule, Targeting significant free cash flow, debt pay a
Slide 4: 4Q 2023 Financial Highlights
4Q 2023 Financial Highlights 67.7 MBOE/D 76% / 83% Average Daily Production Oil / Liquids “Talos had a solid $249 MM $42/BOE fourth quarter, and Adj. EBITDA(1) Upstream Adj. EBITDA/BOE(1) the pending closing of QuarterNorth has $174 MM $27 MM positioned Talos for a Adjusted FCF(1)(3) Upstream CAPEX
Slide 5: Venice and Lime Rock Wells Online Ahead of Schedule
Venice and Lime Rock Wells Online Ahead of Schedule Combined Key Stats Revitalizing Production at Ram Powell First Oil Late Dec 2023 40,000 Est. Resource (Gross MMBOE) 20 – 30 Venice and 35,000 Initial Production Rate (Gross ~18.5 (~45% oil, MBOE/D) ~55% liquids) Lime Rock Working Interest 60% Venic
Slide 6: QuarterNorth Acquisition Increases Operational Scale
$1.29 BN QuarterNorth Acquisition Increases Operational Scale High Quality Assets With Low Base Decline Key QuarterNorth Statistics • High free cash flow generation with low reinvestment needs • Adds material scale while improving asset diversity across basin ~30 ~75% >95% MBOE/D Oil-Weighted Operat
Slide 7: Talos Is Well-Positioned To Drive Material Value Creation
Talos Is Well-Positioned To Drive Material Value Creation Proved Reserves Proved PV-10 9% 21% 9% Gulf of Mexico Shelf 8% 216 $5.1 MMBOE BN 71% 83% Oil NGL Gas PDP PDNP PUD Strategic Positioning Talos Acreage Talos Seismic Talos Facility QuarterNorth Acreage QuarterNorth Facility 5th Largest 4th Larg
Slide 8: 2024 Upstream Investments
2024 Upstream Investments Capitalized G&A and Other Highlights 5-10% • Expected reduction in Y/Y CAPEX from Talos Plugging and standalone 2023 Abandonment US Drilling and 10-15% Completions • Upstream CAPEX: $565 - $595 MM 50-55% • P&A, Decommissioning: $90 - $100 MM • Attractive reinvestment rate o
Slide 9: 2024 Capital Program Balances Risk With Material Resource Exposure
2024 Capital Program Balances Risk With Material Resource Exposure 2023 2024 2025 Prospect Category Host Facility 4Q 1Q 2Q 3Q 4Q 1Q 2Q Lime Rock Exploitation Ram Powell Venice Exploitation Ram Powell Lobster Waterflood Development Lobster Drilling Expected First Injection Stimulation Green Canyon /
Slide 10: Recent Offerings Extended Maturities and Reduced Rates
Recent Offerings Extended Maturities and Reduced Rates Scheduled Debt Maturities ($MM) • Recently completed $1.25 BN High Yield Notes Offering $228 11.750% Extended near-term Bonds maturity 3+ years • Expected to finance a portion of the $639 12.000% $625 9.000% $625 9.375% QuarterNorth acquisition
Slide 11: 2024 Production Guidance Considerations
2024 Production Guidance Considerations 2024E Average Daily Production (MBOE/D) • Combined asset base generated ~99 MBOE/D in 4Q 2023 and ~106 MBOE/D in January 2024 105.0 – 110.0 • Talos’s 2024 guidance takes into account (8.3) – (8.0) expected production impacts, including maintenance, third-party
Slide 12: 2024 Operational and Financial Guidance
2024 Operational and Financial Guidance • 2024 focus on solid execution, free cash flow generation and debt paydown • Reduced operating and G&A per unit costs • Upstream investments less than Talos standalone 2023 spending levels • Reinvestment rate of less than 45-50% (excluding P&A) and targeting
Slide 13: Capital Allocation Focused on Maximizing Free Cash Flow
Capital Allocation Focused on Maximizing Free Cash Flow Cash Flow Priorities Targeting debt reduction of ~$400 MM Investments in balanced capital program with a mix of development and exploration Further position for business development and strategic M&A Note: Combined Talos and QuarterNorth assumi
Slide 14: Appendix
Appendix 14
Slide 15: Pro Forma YE 2023 SEC Proved Reserves
Pro Forma YE 2023 SEC Proved Reserves* Product Mix Talos SEC PF SEC PF SEC Reserves Reserves PV-10(1) 21% (MMBOE) (MMBOE) ($MM) Oil 216 PDP 97 129 $4,214 8% NGL MMBOE Gas 71% PDNP 35 43 438 PUD 21 44 442 Category Mix Total Proved (Net of P&A) 153 216 $5,094 21% 216 Proved Developed MMBOE Proved Unde
Slide 16: Recent Lease Sale Results
Recent Lease Sale Results Louisiana Key Statistics 75K VK 1001 MC 26 Gross Acres 13 EW 959 GC 166 AT 314 Blocks with GC 111 High Bid AT 359 GC 247 GC 695 GC 871 Talos Acreage Talos Seismic Keathley Canyon Walker Ridge WR 422, 423, 466 Lease Sale Acreage 16
Slide 17: 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 of • 40% - 42.5% WI CVX Mexico deepwater Green Canyon area • 15% - 20% WI Talos Talos’s part
Slide 18: 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 19: Sunspear Discovery
Sunspear Discovery PL-4 Sand Amplitude Map Key Data Points Discovery Date 2Q 2023 Expected First Oil 2Q 2025 Est. Initial Rate (Gross MBOE/D) 8 – 10 ~360 ACRES Reservoir Depth (Feet TVDSS) 22,000 ft Working Interest 48% Host Facility Prince GC 78 SS2 149’ net oil Locator Map Section Line Strategic E
Slide 20: Katmai West #2
Katmai West #2 Exploitation Well to Materially Increase Proved Reserves Illustrative Subsurface Map Key Data Points Spud Date 2Q/3Q 2024 Katmai West Future Expected First Oil 2Q 2025 Well Future Est. Initial Rate (Gross MBOE/D) 10 – 12 Well Reservoir Depth (Feet TVDSS) 27,000 ft Katmai Working Inter
Slide 21: Helm's Deep
Helm’s Deep Sub-Salt Amplitude Exploitation Opportunity LP Sand Map Key Data Points A Spud Date 2H 2024 Expected First Oil Pending Exploration Est. Resource (Gross MMBOE)(1) 17 – 27 Est. Initial Rate (Gross MBOE/D) 9 – 11 Reservoir Depth (Feet TVDSS) 18,000 ft Target Working Interest 50% 50% Talo50%
Slide 22: Daenerys
Daenerys High-Impact Subsalt Miocene Exploration Opportunity Key Data Points M15 Structure Map Spud Date 2H 2024 A Type Log #1 OCS-G-24194 Expected First Oil Pending Exploration Est. Resource (Gross MMBOE)(1) 100 – 300 M15 Est. Initial Rate (Gross MBOE/D) 10 – 15 Reservoir Depth (Feet TVDSS) ~26,000
Slide 23: EW Prospect
EW 953 Prospect Low Risk Exploitation Opportunity to Talos Infrastructure Key Data Points Prospect Map EW 953 ST 320 A2 Type Log Spud Date 2H 2024 Prospect 172’ Net Pay Polygon Expected First Oil Pending Exploration Est. Resource (Gross MMBOE) ~18.0 Est. Initial Rate (Gross MBOE/D) 8 – 11 Reservoir
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Twelve Months ($ Thousands) December 31, 2023 December 31, 2023 Reconciliation of Net Income (Loss) to Adjusted EBITDA: Net Income (loss) $85,898 $187,332 Interest expense $44,295 $173,145 Income tax expense (benefit) $(5,081) $(60,597) Depreciation, depletion a
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Twelve Months ($ Thousands, except per BOE amounts) December 31, 2023 December 31, 2023 Reconciliation of Adjusted EBITDA to Upstream Adjusted EBITDA: Adjusted EBITDA $249,115 $950,718 CCS and Corporate Unallocated Costs:: Equity method investment loss $5,894 $3
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended Twelve Months Ended ($ Thousands) December 31, 2023 December 31, 2023 Reconciliation of Adjusted EBITDA to Adjusted Free Cash Flow (before changes in working capital): Adjusted EBITDA $249,115 $950,718 Less: Upstream capital expenditures $(148,109) $(596,4
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ Thousands) December 31, 2023 Reconciliation of Net Debt: 12.00% Second-Priority Senior Secured Notes – due January 2026 $638,541 11.75% Senior Secured Second Lien Notes – due April 2026 $227,500 Bank Credit Facility – matures March 2027 $200,000 Total Debt $1,066,041 Less
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ Thousands) December 31, 2023 Reconciliation of PV-10 to Standardized Measure (Talos Standalone) Standardized Measure(1)(2) $3,043,488 Present value of future income taxes discounted at 10% 455,330 PV-10 (Non-GAAP) $3,498,818 (1) All estimated future costs to settle asset
Slide 29: www.talosenergy.com NYSE: TALO
www.talosenergy.com NYSE: TALO 29