Talos Energy, Inc. · NYSE:TALO

Talos Energy — Merger or Acquisition (December 2019)

17 slides from Talos Energy's merger presentation, Dec 11, 2019

  1. Slide 1: Transformative Acquisition of Gulf of Mexico Portfolio

    Transformative Acquisition of Gulf of Mexico Portfolio December 2019

  2. 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

  3. Slide 3: Overview of Acquired Assets

    Overview of Acquired Assets 19 MBoe/d 68 MMBoe (2P) ~65% Oil, ~72% Liquids (3Q 2019) 83% Proved Developed (of 1P) Material, Oil-Weighted Production Deep Reserves Base ~$150 mln 40+ Prospects on Free Cash Flow (2019E) >700,000 gross acres Substantial Cash Flow Profile Multi-Year Inventory for Growth

  4. Slide 4: Acquired Asset Details

    Acquired Asset Details High-quality portfolio of oil-weighted assets with significant production, increased diversity and material upside  All producing assets of ILX I and ILX II  All prospects, primary term acreage of ILX I and ILX III  Certain prospects, primary term acreage of ILX II  Subsid

  5. Slide 5: Transaction Overview

    Transaction Overview  $640 million Purchase Price  July 1, 2019 effective date  Expected closing in 1Q 2020  $250 million in new TALO shares issued to sellers at close Consideration  Cash from existing sources of liquidity  RBL upsized and fully committed to $1,150 million  ~$600 million of p

  6. Slide 6: Strategic Rationale

    Strategic Rationale Increases production and cash flow while diversifying across asset lifecycle and adding growth optionality Scale  >30% increase in daily production volumes and Proved Developed reserves Increased Size and  Top tier pro forma EBITDA margins and netbacks Greater Efficiency  More

  7. Slide 7: Key Investment Criteria for E&P Sector

    Key Investment Criteria for E&P Sector Further improves Talos investment case by enhancing key metrics U.S. Listed E&P Companies with Market Cap > $1 Bln 24 3Q 2019 Production > 50% Oil 16 Positive 2020E Free Cash Flow and Yield 14 Net Debt / LTM EBITDA of ≤ 1.5x 7 Positive 2019 - 2020E Production G

  8. Slide 8: Basin-Leading Independent with Competitive Scale

    Basin-Leading Independent with Competitive Scale Assets provide step-change growth while remaining focused in well-understood operating areas Pro Forma Talos: 100  Talos Standalone 80 Talos Pro Forma ― 72 MBoe/d daily production 72 60 ― ~260 MMBoe 2P reserves 53  ~185 MMBoe 1P reserves 40  ~75% P

  9. Slide 9: Material, Sustainable Cash Flow Profile

    Material, Sustainable Cash Flow Profile Cash flow profile provides Talos with broad optionality in go-forward value creation  Strong free cash flow profile from Acquired Assets: 20% Talos Standalone ― ~$210 million 2019E Adj. EBITDA 15% Talos Pro Forma 15% ― ~$60 million 2019E Capex Top 20% of all

  10. Slide 10: Reinforces High Margins While Adding Scale

    Reinforces High Margins While Adding Scale Further leverages Talos’s competitive cost structure for high margin production with minimal overhead  Top 20% of all XOP E&Ps ranked by pro forma $35 $33 $31 Adjusted EBITDA per Boe $30 Talos Standalone Talos Pro Forma $25  Consolidates high margin produ

  11. Slide 11: Deep Inventory for Future Growth

    Deep Inventory for Future Growth Bolsters organic growth funnel with sizable inventory in well understood geology  40+ exploration prospects providing several years of drillable inventory  35 MMBoe discovery at Coronado (gross, 40% WI, 2C NSAI estimate) Pompano Ram Powell  ~480,000 gross primary

  12. Slide 12: Financing & PF Capitalization

    Financing & PF Capitalization  $250 million of TALO shares (11.0 million shares based Consideration on 30-day VWAP through December 5, 2019) Details  Cash from existing sources of liquidity  Existing RBL increased to $950 million on current Talos Borrowing assets as part of regular fall redetermi

  13. Slide 13: Valuation & Transaction Metrics

    Valuation & Transaction Metrics  Immediately accretive on all key metrics  Significant discount to NAV of Acquired Assets, based Valuation on Talos estimates  Compelling valuation compared to precedents  EV / 2019E Adj. EBITDA: 3.0x Key Metrics  EV / Daily Production: $33,684  EV / 2P Reserves

  14. Slide 14: Transaction Summary

    Transaction Summary  Sizeable, cash flowing asset portfolio  Attractive fundamental and relative valuation  Enhanced optionality and diversity  Accretive to Talos shareholders  Large inventory of material prospects  Exceptional pro forma financial profile 14

  15. Slide 15: Appendix

    Appendix

  16. Slide 16: Non-GAAP Reconciliations

    Non-GAAP Reconciliations TALOS ENERGY Three Months Ended ACQUIRED ASSETS Three Months Ended Reconciliation of Net Income (loss) to Adj. EBITDA and Adj. EBITDA to Free Cash Flow September 30, 2019 Reconciliation of Adj. EBITDA and Free Cash Flow September 30, 2019 Net Income (loss) $73 Revenue $74 In

  17. Slide 17: 17

    17

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