Talos Energy, Inc. · NYSE:TALO
Talos Energy — Q1 2024 Earnings Presentation
32 slides from Talos Energy's earnings presentation, May 7, 2024
Slide 1: 1Q 2024 Earnings Conference Call & Webcast
1Q 2024 Earnings Conference Call & Webcast May 7, 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: Talos has a Differentiated Offshore Strategy
Talos has a Differentiated Offshore Strategy LA TEXAS • High Margin Oil Weighted Production FL Offshore Gulf of Mexico • High Quality And Stable Asset Base • Significant Growth Potential Gulf of Mexico • Infrastructure Focused • Short Cycle Offshore Drilling Inventory MEXICO • Strategic Acquiror Zam
Slide 4: Talos Continues to Execute Its Growth Strategy
1Q 2024 Solid Execution of Significant Milestones Talos Continues to Execute Its Growth Strategy DECEMBER 2023 JANUARY MARCH 4 MARCH 18 Venice and Lime Rock first Capital Markets Transactions Closed QuarterNorth Divested CCS business to production • Refinanced ~$865 MM of second lien acquisition Tot
Slide 5: Solid Delivery in 1Q 2024
Solid Delivery in 1Q 2024 1Q 2024 HIGHLIGHTS 2024 STRATEGIC PRIORITIES Record production at the high-end of the range Projecting ~35-40% Y/Y production increase coupled with strong financial performance with lower Y/Y capital expenditures Announced and closed QuarterNorth Targeting significant free
Slide 6: 1Q 2024 Financial Highlights
1Q 2024 Financial Highlights 79.6 MBOE/D 71% / 80% Average Daily Production Oil / Liquids “Talos repositioned the $268 MM $42/BOE company in the first quarter, closing several Adj. EBITDA(1) Adj. EBITDA/BOE(1)(4) important transactions while delivering $112 MM $78 MM operationally with record Adj. F
Slide 7: Integration Progressing With Projected Meaningful Synergies
Integration Progressing With Projected Meaningful Synergies Accelerated Planning Efforts for a Seamless (1) Integration Underway Projected Cost Savings ($MM/Year) • Operational economies of scale • Insurance • G&A • Increased synergies by $5 MM from TLCS sale • Already achieved run-rate synergies of
Slide 8: HP-1 Regulatory Required Planned Downtime
HP-1 Regulatory Required Planned Downtime • Dry dock of the HP-1 FPU deferred to 2Q 2024 from prior 1Q 2024 expectation • Expected to return to production late 2Q 2024 • Projected planned downtime ~55 days • 2Q 2024 production impact of 5.0-6.0 MBOE/D “Scheduled every two and a half years, the HP-1
Slide 9: Recent Lease Sale Results
Recent Lease Sale Results Louisiana Key Statistics MC 26 95K Gross Acres 17 VK 1001 EW 744 EW 959 GC 166 Blocks with MC 652 High Bid 12-15 AT 314 GC 111 AT 359 GC 247 Potential Drilling GC 695 WR 159, Talos Acreage Locations 160 GC 871 Talos Seismic Lease Sale Acreage Keathley Canyon Walker Ridge WR
Slide 10: 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 11: Venice and Lime Rock Wells Online Ahead of Schedule
Venice and Lime Rock Wells Tracking Steady Production Online Ahead of Schedule Combined Key Stats Ram Powell Gross Production First Oil Late Dec 2023 (BOEPD) 30,000 Est. Resource (Gross MMBOE) 20 – 30 Initial Production Rate (Gross ~18.5 (~45% oil, MBOE/D) ~55% liquids) 25,000 Working Interest 60% H
Slide 12: Greater Katmai Area
Greater Katmai Area Exploitation Well to Materially Increase Proved Reserves Key Data Points Illustrative Subsurface Map Greater Katmai Area Est. Resource 180 – 200 Potential (Gross MMBOE) Katmai West Katmai Spud Date 3Q 2024 West #2 Expected First Oil 1H 2025 Future Max. Est. Initial Rate (Gross We
Slide 13: Katmai West #2 Expected to Spud in 3Q 2024
Katmai West #2 Potential to Add Material Proved Reserves Expected to Spud in 3Q 2024 400’ Gross Pay Katmai West Structure Map salt ~100 MMBOE Tarantula Potential Talos: 100% WI Katmai West #2 Katmai West #1 Spud 3Q 2024 (50% WI) Producing (50% WI) Katmai West #2 Katmai West #1 Proved Lowest Producti
Slide 14: Advancing Total Debt Paydown Objectives
Advancing Total Debt Paydown Objectives • Refinanced ~$865 MM in 2026 bond and extended maturities and reduced bond interest rates ~275-300 bps • Paid down $225 MM of debt since closing QuarterNorth (QNE) • Increased debt reduction target from $400 MM to $550 MM; Achieved leverage ratio of 1.0x • Ex
Slide 15: Talos Offers a Compelling Value Opportunity
Talos Offers a Compelling Value Opportunity • One of the highest exposures to oil in the E&P sector • One of the highest EBITDA/BOE margins in the E&P sector – 1Q 2024: ~$42 per BOE(1) • One of the highest free cash flow yields in the E&P sector 2024E % Liquids 1Q 2024E EBITDA Margin 2024E EBITDA M
Slide 16: Focused on Maximizing Free Cash Flow
Focused on Maximizing Free Cash Flow STRATEGIC PRIORITIES 2024 Production guidance unchanged at 89 – 95 MBOE/D 2Q 2024 production guidance at 93.0 – 96.0 MBOE/D Increased debt reduction target from $400 MM to $550 MM Investments in balanced capital program with a mix of development and exploration F
Slide 17: Talos Is a Differentiated Company Focused on Upstream Growth
Talos Is a Differentiated Company Focused on Upstream Growth Strategic Acquiror High Quality One of Highest EBITDA Over $2.3 BN in acquisitions and Stable Asset Base Margins in E&P Space adding scale Decline of ~20% requires modest Significant exposure to oil ~71% EnVen ~$1.1 BN cash flow to maintai
Slide 18: Appendix
Appendix 18
Slide 19: 2024 Upstream Investments
2024 Upstream Investments Capitalized G&A • Expected reduction in Y/Y CAPEX from Talos standalone 2023 and Other 5-10% • Upstream CAPEX: $570 - $600 MM Plugging and Abandonment 10-15% US Drilling and Completions • P&A, Decommissioning: $90 - $100 MM 50-55% • Attractive reinvestment rate on a recent
Slide 20: 2024 Operational and Financial Guidance Unchanged
2024 Operational and Financial Guidance Unchanged • 2024 focus is on solid execution, free cash flow generation and debt paydown • Reduced operating and G&A per unit costs • Upstream investments less than Talos standalone 2023 spending levels • Reinvestment rate of less than 45-50% (excluding P&A) a
Slide 21: Pro Forma YE 2023 SEC Proved Reserves
Pro Forma YE 2023 SEC Proved Reserves* Talos SEC Reserves PF SEC Reserves PF SEC PV-10(1) (MMBOE) (MMBOE) ($MM) PDP 97 129 $4,214 PDNP 35 43 438 PUD 21 44 442 Total Proved (Net of P&A) 153 216 $5,094 Total Probable (Net of P&A) 87 148 $3,878 Product Mix Category Mix Proved PV-10 9% 21% 21% 9% 8% 216
Slide 22: High Quality and Growing Asset Base
High Quality and Growing Asset Base Project Inventory 29 115 52 Projects 34 Gulf of Mexico Development Exploitation Exploration Shelf 2013-2024E Avg. Daily Production(MBOE/D) 89-95 64 60 66 52 55 46 26 24 29 18 22 Talos Acreage Talos Seismic Talos Facility Notes: Combined Talos and QuarterNorth. 22
Slide 23: $1.29 BN QuarterNorth Acquisition Increases Operational Scale
$1.29 BN QuarterNorth Acquisition Increases Operational Scale High Quality Assets With Low Base Decline Key QuarterNorth Statistics • High free cash flow generation with low reinvestment needs • Adds material scale while improving asset diversity across basin ~30 ~75% >95% MBOE/D Oil-Weighted Operat
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands, except per BOE amounts) March 31, 2024 Reconciliation of Adjusted EBITDA to Revised Adjusted EBITDA: Adjusted EBITDA $257,676 CCS Costs: Equity method investment loss $7,970 General and administrative expense $1,965 Other operating expense $(
Slide 25: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands) March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 Reconciliation of Net Income (Loss) to Adjusted EBITDA: Net Income (loss) $(112,439) $85,898 $(2,103) $13,677 Interest expense $50,845 $44,295 $45,637 $45,632 Income tax expens
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands) March 31, 2024 Reconciliation of General & Administrative Expenses to Adjusted General & Administrative Expenses excluding CCS: Total General and administrative expense $69,841 CCS Segment $(1,965) Transaction and other (income) expenses(1) $
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands, except per BOE amounts) March 31, 2024 Calculation of Revised Adjusted EBITDA excluding CCS and workover expense margin: Adjusted EBITDA excluding CCS $267,548 Add: Workover expense $36,600 Revised Adjusted EBITDA excluding CCS and workover e
Slide 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands) March 31, 2024 Reconciliation of Adjusted EBITDA to Adjusted Free Cash Flow excluding CCS (before changes in working capital): Adjusted EBITDA $257,676 Upstream capital expenditures $(112,435) Plugging & abandonment $(27,907) Decommissioning
Slide 29: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended ($ thousands) March 31, 2024 Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow excluding CCS (before changes in working capital): Net cash provided by operating activities(1) $96,426 (Increase) decrease in operating ass
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended March 31, 2024 ($ thousands, except per share amounts) Basic per Share Diluted per Share Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) excluding CCS: Net Income (loss) $(112,439) $(0.71) $(0.71) Transaction and other (income) expenses(1
Slide 31: Non-GAAP Reconciliations
Non-GAAP Reconciliations ($ thousands) March 31, 2024 Reconciliation of Net Debt: 9.000% Second-Priority Senior Secured Notes – due February 2029 $625,000 9.375% Second-Priority Senior Secured Notes – due February 2031 $625,000 Bank Credit Facility – matures March 2027 $325,000 Total Debt $1,575,000
Slide 32: www.talosenergy.com NYSE: TALO
www.talosenergy.com NYSE: TALO 32