Talos Energy, Inc. · NYSE:TALO
Talos Energy — Barclays CEO Energy-Power Conference 2022
36 slides from Talos Energy's conference presentation, Sep 7, 2022
Slide 1: Investor Presentation
September 2022 Investor Presentation
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: Building the Energy Company of the Future
Building the Energy Company of the Future GROWTH ADVANCEMENT A COMPLETE IN UPSTREAM OF CCS ENERGY SOLUTION Providing responsible Executing large-scale A responsible energy conventional energy decarbonization solutions company positioned resources for today and to reduce industrial to improve lives t
Slide 4: Expansive Operational and Geological Footprint
Expansive Operational and Geological Footprint 2022 Drilling River Bend Focus Area Emerging CCS CCS Site Bayou Bend Opportunities CCS Site Pompano Ram Powell Freeport LNG Amberjack CCS Site GC18 Talos Acreage High Phoenix HP1 Talos Seismic Productivity Fairway Emerging CCS Coastal Bend Project Oppor
Slide 5: Strategic Accomplishments of Last Months
Strategic Accomplishments of Last 18 Months ACHIEVED RECORD PRODUCTION IN MULTIPLE QUARTERS REDUCED NET DEBT BY ~$350MM AND REDUCED LEVERAGE FROM 2.7X TO 1.0X ACHIEVED COMPANY RECORD >$700MM IN LIQUIDITY HIGH-IMPACT EXPLORATION SUCCESS AT PUMA WEST SUCCESSFULLY LAUNCHED CARBON CAPTURE & SEQUESTRATIO
Slide 6: 2Q 2022 Highlights
2Q 2022 Highlights Highest EBITDA, highest liquidity and lowest leverage in company history Key Statistics Operational & Financial Highlights >65 MBoe/D Expanded Bayou Bend CCS JV with Chevron transaction Production Repaid ~$150 million in debt (including ~40% of RBL) >$250MM ~$4.20/share of n
Slide 7: Compelling Investment Opportunity
Compelling Investment Opportunity Talos trades at a significant discount to peers despite consistently solid performance Relative Valuation Key Takeaways (All U.S. E&Ps with 2022E EBITDA $500M to $5,000MM) 8.0x LTM FCF Yield: 19% after hedges, 46% before E&P CCS Focus hedges 7.0x Talos 6.0x Reco
Slide 8: Positive Impacts from the Inflation Reduction Act
Positive Impacts from the Inflation Reduction Act Offshore Lease Sale Implications VK 988 Ram Powell Reinstates winning bids from Lease Sale 257 MC 68 Pompano Talos was one of most active bidders (high bidder on 10 blocks totaling 57k gross acres) MC 69 Requires holding previously cancelled Gu
Slide 9: Catalysts Driving Future Value Creation
Catalysts Driving Future Value Creation Development & Access to major catalysts Exploration Pipeline is a unique differentiator for Talos and provides the basis for exceptional Unprecedented long-term value creation M&A Opportunity Low Carbon Initiatives 9
Slide 10: A Leading Environmental & Emissions Story
A Leading Environmental & Emissions Story GOM Deepwater is an emissions-leading basin; Talos is advancing its long-term GHG goals GHG Intensity by Global Resource Type Talos Scope 1 GHG Intensity Targets (MT CO2 Equivalent/MBoe) (Gross Operated Production, MT CO2 Equivalent/MBoe) 25.0 80 30% Base Re
Slide 11: The Gulf of Mexico – A Significant National Resource
The Gulf of Mexico – A Significant National Resource One of the largest, most diverse and most prolific basins on Earth Top U.S. Basins by Daily Oil Production Large-Scale Operations from Majors, Independents, Privates 4,500 500 4,000 450 2021 Gross Operated Production (MBoe/d) Current Oil Productio
Slide 12: Talos Strategic Approach
Talos Strategic Approach High- 3 Regional Impact Talos utilizes seismic technology Seismic Exploration Database and M&A to build value through drilling opportunities across 2 the full asset lifecycle. Step-Out Value- Full Lifecycle Exploitation Focused M&A Investment Approach 1 Asset In-Field Manage
Slide 13: Conventional Offshore Well Profiles
Conventional Offshore Well Profiles Outstanding conventional rock properties allow for lower decline rates and extraordinary production rates Illustrative Decline Profile Illustrative Relative Cumulative Cash Flow Profiles 100% 90% 3 Exploration % of Initial Production Rate 80% 70% 60% 50% 40% 30% 2
Slide 14: Sub-Salt Miocene: An Evolving Exploration Trend
Sub-Salt Miocene: An Evolving Exploration Trend Diverse geology and outstanding rock properties are spread over a huge geographic area Gulf of Mexico Key Highlights Geologic Ages Norphlet Seismic advancements are enhancing subsurface imaging, reducing risk and expanding the opportunity set Cretace
Slide 15: Current Drilling Inventory Locations
Current Drilling Inventory Locations Ram Powell Pompano Project Inventory Amberjack 30 Development 36 97 Projects Exploitation Exploration 2022 Pompano 31 Rig Program Coelacanth Delta House 2022 Open GC 18 Water Program Phoenix HP1 Talos Facility Other Key Facility Talos Seismic 2022 Puma West Appra
Slide 16: Zama Remains A Key Catalyst for Shareholder Value
Zama Remains A Key Catalyst for Shareholder Value World-class Exploration discovery with increasing line of sight to FID Mexico Accomplishments Unitization Updates First and only successful entrant in initial 2015 A Zama development plan is the main gating item bid round to FID 4 successful ex
Slide 17: M&A Track Record and Opportunity Set
M&A Track Record and Opportunity Set Talos has a solid history of successful acquisitions and is well-positioned to execute on future opportunities Talos Track Record Current M&A Landscape 12 acquisitions since inception >$100 billion in divestments targeted by Super Majors Proven ability to a
Slide 18: TLCS Vision
Talos Low Carbon Solutions TLCS Vision TLCS targets to be a recognized leader in domestic decarbonization focused on delivering responsible, reliable, and cost-effective solutions to create sustainable value for our stakeholders. CCS business has been organized under Talos Low Carbon Solutions (“T
Slide 19: Applying Expertise Towards CCS
Applying Expertise Towards CCS Complementary Skill Sets E&P CCS Conventional Reservoir Expertise, G&G Team Significant Gulf Coast / GOM Presence Vast Seismic Database Established Operator & Project Mgmt. Capabilities Strong HSE Track Record Business Development and Commercially Driven 19
Slide 20: Talos CCS Project Portfolio: Million MT CO2 Storage
Talos CCS Project Portfolio: 800 Million MT CO2 Storage Supporting 150 MTPA of regional emissions on ~80,000 acres 3 1 River Bend (30%) Gulf of 2 Bayou Bend Mexico (25%) Freeport LNG (50%) Coastal Bend (50%) 1. Bayou Bend 2. Freeport LNG 3. River Bend 4. Coastal Bend Industrial Region Beaumont / Por
Slide 21: Bayou Bend CCS
Bayou Bend CCS Beaumont Key Highlights Country’s first and only major offshore CCS Sabine Lake project, operated by Talos High volume of major emissions sources in Port Arthur close proximity to storage site lease ~30 MM MTPA per year of CCS-As-A-Service model: transportation, regional emissio
Slide 22: Illustrative CCS Commercial & Economic Considerations
Illustrative CCS Commercial & Economic Considerations Large-scale projects and contracted cash flows with high visibility Incentives Estimated Capture Cost by Industry ($/tonnes) Federal tax credits and direct pay provisions $100 New, Expanded 45Q Credit State Programs for Dedicated Storage $90
Slide 23: Bayou Bend CCS Transaction with Chevron
Bayou Bend CCS Transaction with Chevron Chevron brings significant expertise to the first and only major offshore CCS project Completed deal to add Chevron to Bayou Bend CCS joint venture Consideration of $50 million gross for 50% stake, including $30 million upfront cash and up to $20 million c
Slide 24: Beyond Net Zero
Beyond Net Zero PERMANENTLY Executing Decarbonization for Industrial Partners SEQUESTERED CO2 (MMTPA) At full scale, Talos CCS will permanently sequester >50x the annual emissions of its 20.0+ Upstream operations Talos CCS plans to contribute to broad industrial decarbonization well beyond its o
Slide 25: Financial Highlights
Financial Highlights Key Takeaways Key Statistics Shareholder value creation through responsible deployment of capital >$1.5 Billion Free Cash Flow 2021-2025(1) Infrastructure-led model generates highly competitive EBITDA netbacks >$700 Million Liquidity 10 years of successful growth with no f
Slide 26: Current Capitalization & Balance Sheet Trends
Current Capitalization & Balance Sheet Trends Prioritizing financial health, stability and successful long-term value creation - ILX and Venari Acquisitions Capitalization Summary ($MM) Liquidity ($MM) Pandemic Tranche 6/30/22 Maturity $800 $702 $673 RBL Facility ($1,100 BB, $806.3 Commitments) $200
Slide 27: Exceptional Value Creation
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 28: 28
28
Slide 29: Appendix
APPENDIX TALOS 29
Slide 30: Reserve Summary – Year-End 2021
Reserve Summary – Year-End 2021 SEC Regional $80.00/$3.50 $66.55/$3.60 Mix 26% 33% Green Canyon YE 21 SEC Reserves PV-10 PV-10 162 Mississippi Canyon Total by Category (MMBoe) ($MM) ($MM) MMBoe Shelf & Gulf Coast 42% PDP 96 $3,073 $3,798 Product PDNP 41 599 794 Mix 9% 24% Oil 162 MMBoe PUD 25 254 35
Slide 31: Talos's Substantial Acreage Position
Talos’s Substantial Acreage Position Large, diverse acreage position provides low-risk, short-cycle projects and material exploration opportunities Regional Mix 6% Miss. Canyon 39% 32% 1,238 Green Canyon Acres Diverse Shelf & Gulf (‘000) Shelf & Gulf Coast Coast Footprint Mexico 24% Primary Term Exp
Slide 32: Maturing Two CCS Project Types
Maturing Two CCS Project Types Regional Hub Point Source Source Clustered Industrial Base Single facility / Plant Operator / Turnkey Operator / Talos Role / Offering Project Mgr. Project Mgr. Third Parties Midstream Provider Talos and / or Partners Land / Site Large, regional lease Already secured;
Slide 33: Advancing Short and Medium-Cycle Project Types
Advancing Short and Medium-Cycle Project Types Illustrative schedule for CCS projects Year 1 Year 2 Year 3 Year 4 Year 5 Project Quarter Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Point Source Project FEED Work Stratigraphic Well Test Class VI Permitting Project FID Construction & We
Slide 34: Illustrative CCS Commercial & Economic Considerations
Illustrative CCS Commercial & Economic Considerations Key Economic Factors Illustrative Annual Cash Flows Critical Model Variables: Long-term, tolling fee- ― Tolling fee per tonne based cash flow stream ― Total Volume ― Capital Expenditures Financing: Modelling projects on an unlevered basis; fi
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands, except per Boe) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 Reconciliation of net income (loss) to Adjusted EBITDA: Net Income (loss) $ 195,141 $ (66,441) $ 81,012 $ (16,691) Interest expense 30,776 31,490 33,102 32,390
Slide 36: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ thousands, except per share amounts) June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 Reconciliation of Adjusted EBITDA to Free Cash Flow (before changes in working capital) Adjusted EBITDA $ 250,777 $ 208,213 $ 190,378 $ 131,427 Less: Capital Expenditure
Talos Energy — Barclays CEO Energy-Power Conference 2022 on 6ix