Talos Energy, Inc. · NYSE:TALO
Talos Energy — Bank of America Energy Credit Conference 2021
43 slides from Talos Energy's conference presentation, Jun 9, 2021
Slide 1: Bank of America Energy Credit Conference
June 2021 Bank of America Energy Credit Conference
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 Overview
TALOS ENERGY OVERVIEW TAL@S
Slide 4: Talos Energy at a Glance
Talos Energy at a Glance RAM POWELL POMPANO AMBERJACK GC-18 HP-1 DELTA HOUSE Solid Foundation Attractive Operating Profile Strong Credit Catalysts for Value Creation Premier pure-play offshore E&P >75% Liquids ~$550 MM of liquidity FID for world-class Zama project Strong management track r
Slide 5: Talos Investment Case Highlights
Talos Investment Case Highlights MANAGEMENT TRACK RECORD OF SUCCESS STRONG, OIL-LINKED MARGINS AND CONSISTENT FREE CASH FLOW GENERATION HEALTHY CREDIT PROFILE SOLID, DIVERSE INVENTORY OF ATTRACTIVE INVESTMENT OPPORTUNITIES CATALYSTS TO DRIVE TANGIBLE LONG-TERM VALUE CREATION LOGICAL OFFSHORE CONSOLI
Slide 6: Solid Fundamental Trends
Solid Fundamental Trends Since public listing, Talos has steadily improved fundamentals despite broader market challenges Proved Reserves (MMBoe) Avg. Daily Production (MBoe/d) Capital Expenditures ($MM) 200 188 70 63 - 67 $600 $546 163 60 152 55 $500 52 150 142 50 46 $391 $406 $400 $340 - $370 40 1
Slide 7: 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 $688 $4,189 Numerous re-completions in PDNP and low-risk PUD drilling opportunities $3,500 $579 Probables are primarily $3,000 performance-based (no ad
Slide 8: Acreage Footprint
Acreage Footprint Gross Acreage by Core Area Gross Acreage by Term 8% 36% Miss. Canyon 1,469 1,469 Held By Production Green Canyon 45% Does Not Expire 36% Acres Shelf & Gulf Coast Acres (‘000) 55% (‘000) Primary Term Mexico Exploration Acreage 20% Overview >1.4 MM gross acres under lease as of Dec
Slide 9: Regulatory Environment
Regulatory Environment Talos does not expect any material impact to its business from recent regulatory actions Recent Action Key Talos Facts Additional Notes Jan 20th Secretarial Order: Multiple permits granted since order Numerous industry permits granted since order Limited approval authori
Slide 10: U.S. Gulf of Mexico – The Responsible Source of Supply
U.S. Gulf of Mexico – The Responsible Source of Supply A logical global supply source by numerous ESG metrics Emissions Leadership: Lowest emissions intensity among global oil supply options (shale, heavy oil, etc.) Safety Leadership: Highly regulated with outstanding performance relative to oth
Slide 11: ESG Leadership & Safety Focus
ESG Leadership & Safety Focus >50% reduction in TRIR from 2018 ‒ One recordable incident by Talos offshore and shore based employees in 2020 ‒ Ten total recordable incidents across >3,600,000 offshore hours SAFETY ‒ Highly competitive incident rate across all economic sectors; below GOM averages F
Slide 12: Strategy & Catalysts
STRATEGY & CATALYSTS 12
Slide 13: Talos Core Competencies
Talos Core Competencies Technical Expertise Offshore Operations Experience Geology & Engineering-led firm that Experienced, proven operator in numerous consistently generates results offshore environments Decades of experience specific to conventional Track record of efficient and successful ope
Slide 14: Gulf of Mexico Repeatability
Technical & Commercial Differentiators The Gulf of Mexico has remained a prolific basin for decades, yet continues to offer new frontiers Continued Large Basin Favorable Geology: High porosity conventional reservoirs with with World low decline rates and long lives Prospect Generation Class Rock P
Slide 15: 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 M&A Entry Asset Management In-Field Drilling Exploitation Exploration Low entry-cost Invest in recompletions Execute low-ri
Slide 16: 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 17: Key Operated Facilities
Key Operated Facilities Key assets have available capacity for future drilling and hosting third party production HP-1 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 Depth: ~2,2
Slide 18: 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 2 3 3 1 Substantial Regional Infrastructure 2 PHA Partners 3 Access for Future Exploration Mississippi Canyon assets
Slide 19: 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 High Impact Exploration Acquired GC-18 for <$15mm in 2018 Since acquiring asset in 201
Slide 20: Tornado Attic Well Results
Tornado Attic Well Results Project Highlights Drilling Results & Timeline Talos (operator) – 65% working interest Discovered ~63 net TVT pay In-Field Development well with existing Currently moving into completion phase infrastructure for quick hook-up Expect first production by 3Q21, ahea
Slide 21: High-Impact Exploration – Puma West
High-Impact Exploration – Puma West Project Overview High-impact test of sub-salt Miocene exploration targets Located on Talos-controlled acreage; farmed-in bp and Chevron in 2019 Amplitude-supported objectives in close proximity to bp’s Mad Dog field (<15 miles east) Key Details & Statistics
Slide 22: Catalysts – High-Impact Exploration
Catalysts – High-Impact Exploration High-impact exploration is the key differentiator offshore, providing the ability to make large discoveries with step-change results for the Company Overview of Exploration Relative Cash Exploration Every well offshore is unique, and major exploration targets st
Slide 23: Catalysts – High-Impact Exploration
Catalysts – High-Impact Exploration Talos possesses the capability, acreage and prospect leads to generate significant value through exploration Gulf of Mexico Geologic Ages Well-Positioned to Execute Norphlet Talos holds a strategic position in every major exploration trend in the basin: Cretaceous
Slide 24: High-Impact Exploration – Key Geological Plays
High-Impact Exploration – Key Geological Plays Miocene & Pliocene Key Points Mature play with opportunities infrastructure-led opportunities along the prolific Mississippi & Green Canyon fairway Venice Ram Powell Amplitude driven prospects that are receptive to high-end seismic processing, Pompa
Slide 25: High-Impact Exploration – Key Geological Plays
High-Impact Exploration – Key Geological Plays Subsalt Miocene Key Points Maturing play that requires extensive seismic processing to resolve and de-risk structural and stratigraphic uncertainties Ram Powell Amplitude support is becoming more understood with the latest seismic volumes and Pompan
Slide 26: High-Impact Exploration – Key Geological Plays
High-Impact Exploration – Key Geological Plays Wilcox Key Points Maturing play garnering attention from IOCs and Majors Requires extensive seismic processing to resolve and de-risk structural and stratigraphic uncertainties Large volumes in place with variable reservoir and fluid properties
Slide 27: High-Impact Exploration – Key Geological Plays
High-Impact Exploration – Key Geological Plays Norphlet & Cretaceous Key Points Aircraft Carrier Norphlet Emerging plays being explored by the majors Large volumes in place with variable reservoir and fluid properties Ram Powell Pompano Requires extensive seismic processing to resolve and de-r
Slide 28: Catalysts – Zama
Catalysts – Zama Sanctioning of the generational Zama project represents a huge milestone for Talos Program Overview Zama Development Concept Largest shallow water oil discovery in past ~20 years; named 2017 WoodMac Global Discovery of the Year Talos-led appraisal performed on time, under budget
Slide 29: Catalysts – Global M&A Opportunity
Catalysts – Global M&A Opportunity Opportunity Set North Unprecedented consolidation opportunity driven by: Sea ― Record near-term divestment targets ― Long-dated private investments ― Push for scale and cost-efficiency ― Limited universe of capable, well-positioned consolidators Gulf of Talos i
Slide 30: Carbon Capture & Storage Joint Venture
CARBON CAPTURE & STORAGE JOINT VENTURE 30
Slide 31: Carbon Capture & Storage Joint Venture
Carbon Capture & Storage Joint Venture Commercial Highlights About Storegga Exclusive joint venture to originate and mature CCS Storegga is the lead developer of the Acorn Project in North opportunities along U.S. Gulf Coast East Scotland, providing essential infrastructure to help the UK and Eu
Slide 32: Market Opportunity Along The Gulf Coast
Market Opportunity Along The Gulf Coast Industrial emitters are concentrated along the Gulf Coast, adjacent to huge storage capacity and infrastructure America’s Industrial Epicenter Critical power gen., industrial and petrochemical corridor Large, dense emitter footprint Array of emitter size
Slide 33: Talos Skill Set Fills Critical Value Chain Role
Talos Skill Set Fills Critical Value Chain Role Conventional reservoir expertise and offshore operational capability make Talos a logical GOM CCS player Offshore CCS Value Chain Talos Operator Highlights Storegga Expertise Talos Expertise Vast experience in the Gulf Coast and offshore 1 Capture &
Slide 34: Financial Overview
FINANCIAL OVERVIEW TALO@S 34
Slide 35: Talos Financial Principles
Talos Financial Principles Conservative balance sheet combined with calculated risk-taking, 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 capita
Slide 36: 2021 Operational & Financial Guidance
2021 Operational & Financial Guidance Production 2020A 2021E As of March 10, 2021 Modest growth from normalized 2020 results (~2%) Includes 1H impacts of Praline tie-in and platform rig construction at Oil (MMBbl) 13.7 15.7 – 16.6 Pompano as well as increased weather-related risking Cash Expense
Slide 37: Solid Capital Structure
Solid Capital Structure Talos maintains high liquidity, low leverage and refinanced a key maturity out to 2026 Overview of Recent Actions Key Credit Statistics Resolved April 2022 maturity with recent capital markets activities ― ~$350 MM maturity overhang risk eliminated ~$550 MM Increased liqu
Slide 38: 38
38
Slide 39: 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
Slide 40: Sensitivity of PV-10 At Various Oil Prices
Sensitivity of PV-10 At Various Oil Prices $/Bbl WTI SEC $50.00 $55.00 $60.00 $65.00 PDP $1,556 $2,124 $2,393 $2,656 $2,922 PDNP $198 $356 $430 $504 $579 Total Proved Developed $1,754 $2,480 $2,823 $3,160 $3,501 Proved Undeveloped $244 $421 $509 $600 $688 Total Proved (1P) $1,998 $2,901 $3,332 $3,76
Slide 41: Hedge Position As of June 8, 2021
Hedge Position As of June 8, 2021 Instrument Avg. Daily Volume Weighted Avg. Price ($) WTI Oil Hedges (Bbls/d) April - December 2021 Swaps 25,098 $45.33 April - December 2021 Collars 1,000 $30.00 x $40.00 January - December 2022 Swaps 18,849 $48.41 January - June 2023 Swaps 3,000 $54.07 LLS Oil Hedg
Slide 42: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three months ended Three months ended Three months ended Three months ended Reconciliation of net income (loss) to Adjusted EBITDA: ($MM) March 31, 2021 December 31, 2020 September 30, 2020 June 30, 2020 Net income (loss) ($121) ($431) ($52) ($141) Interest expense $34 $23 $
Slide 43: Non-GAAP Reconciliations
Non-GAAP Reconciliations Reconciliation of Net Debt ($MM): As of March 31, 2021 Bank Credit Facility - matures May 2022 $465 12.00% Second-Priority Senior Secured Notes - due January 2026 $650 7.50% Senior Notes - due May 2022 $6 Finance lease $57 Total Debt $1,178 Less: Cash and cash equivalent ($6
Talos Energy — Bank of America Energy Credit Conference 2021 on 6ix