Talos Energy, Inc. · NYSE:TALO
Talos Energy — EnerCom Oil & Gas Conference 2019
26 slides from Talos Energy's conference presentation, Aug 13, 2019
Slide 1: EnerCom Oil & Gas Conference
EnerCom Oil & Gas Conference August 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. Talos Key Assets Amberjack PRODUCTION 59.0 MBoe/d 149 M
Slide 4: Talos Energy – 2Q 2019 Highlights
Talos Energy – 2Q 2019 Highlights Talos results for the 2Q 2019 were the best in the Company’s history in terms of Production, Adjusted EBITDA and Adjusted EBITDA Margin excluding hedges, even exceeding 2013/2014 margins driven by WTI > $100/Bbl PRODUCTION 59.0 MBoe/d 5.4 MMBoe 75% 2Q 2019 Average D
Slide 5: Delivering Results Despite Market Sentiment
Delivering Results Despite Market Sentiment In contrast to sector performance and investor skepticism, Talos has delivered strong results and consistent free cash flow, and is continuing to build a well-positioned business Production (MBoe/d) Adj. EBITDA ($mm) Adj. EBITDA Margin per Boe ($/Boe) 70 +
Slide 6: US Gulf of Mexico Assets – Free Cash Flow Machine
US Gulf of Mexico Assets – Free Cash Flow Machine 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 Ra
Slide 7: 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 8: 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 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 - 2Q 2019 Production 23.9 mboe/d net, 20.7 mboe/d net, 14.4 mboe/d net, - ~81% oil ~77% oil ~61% oil Key Assets Phoenix Pompano Ewing Bank 305/306 Zama Tornado Ram Powe
Slide 10: Green Canyon 18 – Strategy in Motion
Green Canyon 18 – Strategy in Motion 2Q 2019 oil GC 18 Facility Bulleit Prospect discoveries 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 produ
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 Block 7 contains the globally recognized Zama Discovery and numerous other high quality prospects Overview #2 #2ST Participating Interest: 35% #1 Operator: Talos Energy #3 Acreage: 114,854 gross acres Water Depth: 500-650 ft Zama Discovery Water Depth: 550 ft App
Slide 15: Block 7 – Zama Appraisal Plan Results
Block 7 – Zama Appraisal Plan Results Zama #2 Zama #2 ST1 Zama #3 Pressure Samples 1,676 ft gross TVD sand 873 ft gross TVD pay 1,000 ft gross TVD sand 581 ft gross TVD pay 68-73% net to gross 748 ft gross TVD pay 185 68-73% net to gross 714 ft whole core, 98% recovery Similar sect
Slide 16: 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 17: 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 18: 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 19: Mexico – Preliminary Timeline to FID
Mexico – Preliminary Timeline to FID #2 2019 2020 #2ST #1 #3 Zama Appraisal 2 2ST 3 Development Plan & Opcom Approval FID Drilling Zama Unitization Unitization Discussion Resource Evaluation and Current Res Cat. 2C NSAI Development Plan Evaluation Government Review Development Plan Approval Olmeca E
Slide 20: 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 21: Additional Upside
Talos Trading Below Proved Developed Producing PV-10 Talos currently trades 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 2P PV-101,2 Discovered Resources Years 4,000 Drilled in 2 – 3 TEV at ~$40/share Years US$ Millions 3,500 Za
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Slide 23: APPENDIX
ee APPENDIX
Slide 24: 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 = $1.1bn Royalty: Favor
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations Reconciliation of net income (loss) to Three Months Ended Adj. EBITDA and of Adj. EBITDA to Adj. EBITDA excluding hedges ($ in millions) September 30, 2018 December 31, 2018 March 31, 2019 June 30, 2019 Net Income (loss) $13 $306 $(110) $95 Interest Expense 25 24 25 25 Incom
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Reconciliation of Net Debt Reconciliation of Net Debt / 2Q 2019 LTM Adj. EBITDA $ in millions As of June 30, 2019 $ in millions As of June 30, 2019 Debt Principal $712 Net Debt $710 Capital Leases 87 2Q 2019 LQA Adjusted EBITDA $616 Gross Debt 799 Net Debt / 2Q 2019 LTM Adj.