Talos Energy, Inc. · NYSE:TALO
Talos Energy — Stephens Investment Conference 2020
27 slides from Talos Energy's conference presentation, Nov 18, 2020
Slide 1: Stephens Investment Conference
Stephens Investment Conference November 18, 2020
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: Talos Energy at a Glance
Talos Energy at a Glance Attractive Operating Profile 71-73 MBoe/d December 2020E Exit Rate Talos Blocks ~70% Operated ~70% Liquids Mississippi Canyon ~70% Deepwater Consistently generate free cash flow with high margins and a leading cost profile Green Canyon Strong Credit Gulf of Mexico
Slide 4: 2020 Calendar Year Recent Updates
Business Updates Talos remains well-positioned for the future despite recent economic shutdown and commodity price volatility 2020 Calendar Year Recent Updates Aggressive cost-cutting efforts – operating and capital expenses Maintained safe and efficient operations despite highly active ― Expect
Slide 5: Long-Term Value & Strong Credit Profile
Long-Term Value & Strong Credit Profile Talos has an attractive profile with equity upside and solid asset coverage $4,500 Key Highlights $4,000 $1,344 $4,164 Numerous re-completions in PDNP and low-risk PUD drilling opportunities $3,500 Probables are primarily $3,000 performance-based (no addit
Slide 6: Capitalization & Credit Statistics
Capitalization & Credit Statistics Leverage Liquidity 1.8x >$350 Debt Capitalization ($MM) as of September 30, 2020 Reserve Based Lending Facility – Drawn $650 (Borrowing Base - $985 MM) Net Debt / Liquidity ($MM) 11.00% 2nd Lien Notes due 2022 348 LTM EBITDA Asset Coverage 7.50% Senior Notes due 20
Slide 7: Gulf of Mexico Basin Contributions
Gulf of Mexico Basin Contributions 2019 Jobs Impact of the Gulf of Mexico Oil and Gas Industry >2 MILLION BOE/D PRODUCTION >345K JOBS ACROSS NATIONWIDE SUPPLY CHAIN >$28 BILLION U.S. GDP IMPACT #2 CONTRIBUTOR TO THE U.S. TREASURY(1) 147,000 94,000 20,000 28,000 “ Jobs Supported Jobs Supported Jobs S
Slide 8: ESG Leadership & Safety Focus
ESG Leadership & Safety Focus >50% reduction in TRIR from 2018 ‒ Zero recordable incidents by Talos employees in 2019 ‒ Nine total recordable incidents across ~3,700,000 man hours worked in U.S. operations SAFETY ‒ Highly competitive incident rate across all economic sectors FOCUS Zero hydrocarb
Slide 9: Investing Across the Asset Lifecycle
Investing Across the Asset Lifecycle Success driven by ability to invest across the asset lifecycle and consistently improve opportunity set Advanced Seismic Reprocessing Asset Management In-Field Drilling Exploitation Exploration Invest in recompletions Execute low-risk drilling to Add new pr
Slide 10: Leveraging Seismic to Develop Portfolio of Opportunities
Leveraging Seismic to Develop Portfolio of Opportunities Extensive seismic footprint provides advantage in evaluating prospects to improve results and reduce risk Seismic database covers ~45MM acres (70k square miles) across the Gulf of Mexico Footprint covers 90%+ of Talos operations and explor
Slide 11: Active M&A and Business Development
Active M&A and Business Development Robust business development pipeline provides avenues for exploration and portfolio management Key Takeaways Low entry-cost M&A and subsequent business development provide a pathway to leverage core competencies on organic E&P activities as the primary value cre
Slide 12: Key Operated Facilities
Key Operated Facilities Key assets have available capacity for future drilling and hosting third party production Phoenix Complex Green Canyon 18 Pompano Ram Powell Amberjack Block: Green Canyon 236 Block: Green Canyon 18 Block: Viosca Knoll 989 Block: Viosca Knoll 912 Block: Mississippi Canyon 109
Slide 13: Full-Cycle Regional Case Study – Green Canyon
Full-Cycle Regional Case Study – Green Canyon Technical expertise unlocks resource opportunity; leveraging infrastructure provides strong full-cycle value creation 1 2 3 3 1 Green Canyon 18 2 Phoenix Complex 3 Geophysics & Business Development Acquired GC-18 for <$15mm in 2018 Since acquiring as
Slide 14: Full-Cycle Regional Case Study – Mississippi Canyon
Full-Cycle Regional Case Study – Mississippi Canyon Technical expertise unlocks resource opportunity; leveraging infrastructure provides strong full-cycle value creation 1 1 3 3 2 1 3 2 3 1 Substantial Regional Infrastructure 2 PHA Partners 3 Access for Future Exploration Mississippi Canyon assets
Slide 15: Substantial Acreage Position
Substantial Acreage Position Large and diverse acreage position provides broad future exploration opportunity set Key Takeaways Significant acreage position across known Gulf of Mexico geologies, including Pliocene, Miocene, Subsalt Miocene, Wilcox, etc. Although Talos holds over 800k primary te
Slide 16: Inventory Overview – Portfolio Summary
Inventory Overview – Portfolio Summary Low risk portfolio to sustain and diversify production plus high impact targets for future growth The Company maintains and continues to grow a deep, diverse inventory portfolio providing sustainable growth Talos’s project inventory consists of over 130 pro
Slide 17: Inventory Details
Inventory Details Portfolio depth and diversity provides long activity runway in any environment Talos has optionality in project selection to respond to any commodity price and regulatory environment Permitting on leased lands is prescriptive and handled in district and regional offices A bro
Slide 18: 2020 Activity Overview
2020 Activity Overview Mississippi Canyon Green Canyon Claiborne #3 successfully drilled, Tornado water flood initiated with on production strong initial results Stonefly PHA first oil Coelacanth Ram Powell Bulleit first oil achieved GC 18 HP-1 Ram Powell repairs expected Kaleidoscope ex
Slide 19: Tornado Waterflood Results
Tornado Waterflood Results Project Highlights New Tornado 4 Well Existing Tornado 1 Well First dumpflood injector in Deepwater No surface equipment required for injection activity Zero sourced water – all water already exists in natural aquifer above hydrocarbon zone B-4 Subsurface Aquifer B
Slide 20: Zama – Appraisal Program Overview
Zama – Appraisal Program Overview Zama-2ST Zama-1 Zama-3 Pressure Samples Clearly delineated 185 reservoir and identified oil/water contacts for Zones 3- 47 5 and Zones 6-7 Pre-Appraisal Post-Appraisal Well test produced at ~7,900 boe/d, increasing confidence on field deliverability Logs 28 Ob
Slide 21: Zama – Forward Looking Timeline
Zama – Forward Looking Timeline Three-well appraisal program complete Unitization discussion with Pemex ongoing Consortium preparing to FID in 2H 2021 Expect Zama resources to convert into Proved, Probable reserves upon FID 2019 2020 2021 2022 2023 2024 Appraisal Drilling 2 2ST 3 Development
Slide 22: Talos Financial Principles
Talos Financial Principles Conservative balance sheet combined with calculated risk-taking and an active hedging program Leverage Liquidity Maturity Profile Risk Management Balance debt load to cash flow Maintain ample liquidity Access market windows for Grow high-quality, diverse and total
Slide 23: 2020 Capital Expenditures & Other Cost Reductions
2020 Capital Expenditures & Other Cost Reductions 2020 Cost Reduction Initiatives 2021+ Capital Planning Talos revised its 2020 capital program downward by ~35% from Talos maintains optionality to toggle capital investment and risk 2019 pro-forma capital expenditures and ~27% from initial 2020 p
Slide 24: Flexibility in Capital Allocation
Flexibility in Capital Allocation Appropriate prioritization of capital spending ensures long-term success of the business Drilling & Completions Asset Management, Plugging & Abandonment Seismic, Land and G&G spending provides the foundation for future Talos does not expect material P&A accelera
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Slide 26: Hedge Position – November 17, 2020
Hedge Position – November 17, 2020 Talos maintains a strong hedge position providing valuable cash flow assurance in current environment Instrument Volume Avg. Price ($) WTI Oil Hedges (Bbls/d) October - December 2020 Swaps 31,315 $43.29 October - December 2020 Collars 5,000 $50.00 x $57.09 Total
Slide 27: Inventory Overview – Generic Project Categorization
Inventory Overview – Generic Project Categorization In-Field Drilling Exploitation Exploration & Development Description Low risk, incremental recovery Field or play extensions Emerging trends Impact Potential Resource Size (MMBoe) 1.0 - 5.0 5.0 - 15.0 15.0+ (Gross, Per Well) Potential Production Ra