Talos Energy Announces Fourth Quarter and Full Year 2024 Operational and Financial Results

• Production of 98.7 thousand barrels of oil equivalent per day ("MBoe/d") (70% oil, 79% liquids).
• Net Loss of $64.5 million, or $0.36 Net Loss per diluted share, and Adjusted Net Income* of $15.2 million, or $0.08 Adjusted Net Income per diluted share*.
• Adjusted EBITDA* of $361.8 million.
• Upstream capital expenditures of $133.2 million, excluding plugging and abandonment and settled decommissioning obligations.
• Net cash provided by operating activities of $349.3 million.
• Adjusted Free Cash Flow* of $164.0 million.
• Paid off the balance of Talos's credit facility, bringing leverage to 0.8x (Net Debt / Pro Forma LTM Adjusted EBITDA)*.
• Successfully drilled Katmai West #2 well a month faster than expected and under budget.

Full Year 2024 Highlights

• Production of 92.6 MBoe/d (71% oil, 80% liquids).
• Net Loss of $76.4 million, or $0.44 Net Loss per diluted share, and Adjusted Net Loss* of $26.2 million, or $0.15 Adjusted Net Loss per diluted share*, excluding Talos's Carbon Capture & Sequestration ("CCS") business.
• Adjusted EBITDA* of $1,297.7 million, excluding CCS.
• Upstream capital expenditures of $489.5 million, excluding plugging and abandonment and settled decommissioning obligations.
• Net cash provided by operating activities of $962.6 million.
• Adjusted Free Cash Flow* of $511.2 million, excluding CCS.
• Year-end 2024 proved reserves of 194.2 million barrels of oil equivalent ("MMBoe") with a PV-10 value* of $4.2 billion.

Talos Interim Chief Executive Officer, Co-President and General Counsel William Moss stated, "Talos had a strong fourth quarter and a solid finish to 2024, with our operations performing well and achieving key objectives for the year. We look forward to Paul Goodfellow joining Talos as our President, Chief Executive Officer and member of the Board in the next few days. The Talos Board is confident that Paul's extensive expertise in oil and natural gas, especially in deepwater operations, combined with his strategic judgment and proven track record, will play a vital role in advancing Talos. Under Paul's leadership, we expect to remain focused on leveraging our strengths in deepwater exploration and production to deliver value for all shareholders."

RECENT DEVELOPMENTS AND OPERATIONS UPDATE

Production Updates:

Katmai West: In December 2024, Katmai West #2 well was drilled under budget and a month faster than expected, encountering over 400 feet of gross hydrocarbon pay with excellent rock properties. First production is expected later in the second quarter 2025. The strong performance from Katmai West #1 well, and the successful appraisal from Katmai West #2 well, have nearly doubled the proved estimated ultimate recovery ("EUR" )¹ of Katmai West field to approximately 50 MMBoe gross, which further affirms Talos's  estimated gross resource potential of approximately 100 MMBoe. The greater Katmai area is estimated to contain up to a total resource potential of 200 MMBoe. Talos, as operator, holds a 50% working interest ("W.I."), with entities managed by Ridgewood Energy Corporation holding the other 50% in Katmai West field.

Sunspear Completion: Talos recently commenced completion operations on Sunspear with the West Vela deepwater drillship and expects first production late in the second quarter 2025. Talos projects production to be approximately 8-10 MBoe/d gross. Sunspear will be tied back to the Talos operated Prince platform. Talos holds a 48.0% W.I., an entity managed by Ridgewood Energy Corporation holds a 47.5% W.I., and an undisclosed partner holds a 4.5% W.I.

Exploitation and Exploration Updates:

Daenerys: Talos anticipates focusing on drilling operations on the Daenerys well in the second quarter 2025. Talos holds a 30% W.I.

Monument Discovery Farm-in: Talos recently agreed to increase its interest in the Monument discovery to a 29.76% W.I., up from 21.4% W.I. Monument is a large Wilcox oil discovery in Walker Ridge blocks 271, 272, 315, and 316. It will be developed as a subsea tie-back to the Shenandoah production facility in Walker Ridge. First production is expected between 20–30 MBoe/d gross by late 2026 under restricted flow due to facility rate constraints. There is an additional 25–35 MMBoe drilling location adjacent to the discovery that could extend the resource. Other partners include Beacon as operator with a 41.67% W.I. and Navitas Petroleum with a 28.57% W.I.

Other Business Developments

Chief Executive Officer Transition: Paul Goodfellow will become Talos's President and Chief Executive Officer and a member of the Talos Board of Directors, effective March 1, 2025. Mr. Goodfellow has over 30 years of domestic and international experience in the oil and natural gas industry, having led Shell's global deepwater business and overseeing Shell's internal audit function.

Sale of Mexico Interest: In December 2024, Talos entered into an agreement to sell an additional 30.1% interest in Talos Mexico to a subsidiary of Grupo Carso, S.A.B. de C.V. ("Carso") for $49.7 million in cash, with an additional $33.1 million due upon  first oil production from the Zama Field, for an aggregate price of $82.7 million (the "Pending Transaction"). Upon consummation of the sale, Talos Mexico will be owned 20.0% by Talos Energy and 80.0% by Carso. Talos Mexico holds a 17.4% interest in the Zama Field. The Pending Transaction is expected to close during 2025 upon satisfaction of customary closing conditions and the receipt of all regulatory approvals. Upon achievement of commercial production from the Zama Field, Talos anticipates receiving $82.9 million in cash contingent considerations, comprised of approximately $33.0 million relating to the Pending Transaction and $49.9 million from the sale of a 49.9% equity interest in Talos Mexico to Carso which occurred in September 2023.

FOURTH QUARTER  AND FULL YEAR 2024 RESULTS

Key Financial Highlights:

Production

Production for the fourth quarter and full year 2024 was 98.7 MBoe/d ( 70% oil,  79% liquids) and 92.6 MBoe/d (71% oil, 80% liquids), respectively.

Lease Operating & General and Administrative Expenses

Total lease operating expenses for the fourth quarter and full year 2024, inclusive of workover, maintenance and insurance costs, were $110.2 million, or $12.14 per Boe, and $566.0 million, or $16.70 per Boe, respectively.

Adjusted General and Administrative expenses for the fourth quarter and full year 2024, adjusted to exclude CCS expenses, one-time transaction-related costs, and non-cash equity-based compensation, were $34.9 million, or $3.84 per Boe, and $130.7 million, or $3.86 per Boe, respectively.

Upstream Capital Expenditures

Upstream capital expenditures for the fourth quarter and full year 2024, excluding plugging and abandonment and settled decommissioning obligations, totaled $133.2 million and $489.5 million, respectively.

Plugging & Abandonment Expenditures

Upstream capital expenditures for plugging and abandonment and settled decommissioning obligations for the fourth quarter and full year 2024 totaled $23.1 million, and $114.2 million, respectively.

Liquidity and Leverage

At December 31, 2024, Talos had a borrowing base of $925.0 million under its Bank Credit Facility, subject to a total availability cap of $800.0 million with approximately $42.4 million in outstanding letters of credit. Cash was $108.2 million, providing Talos approximately $865.8 million of liquidity. On December 31, 2024, Talos had $1,250.0 million in total debt. Net Debt^* was $1,141.8 million, Net Debt to Pro Forma Last Twelve Months ("LTM") Adjusted EBITDA^* was 0.8x.

YEAR-END 2024 RESERVES

As of December 31, 2024, Talos had proved reserves of 194.2 MMBoe, comprised of 74% oil and 81% liquids. The Standardized Measure of Talos's standalone reserves was approximately $3.6 billion and the PV-10 of Talos proved reserves^(1)(2)(3) was approximately $4.2 billion. In addition to proved reserves, Talos's probable reserves as of December 31, 2024 were 125.3 MMBoe with a corresponding PV-10^(2)(3)(4) of approximately $3.0 billion. The proved and probable reserves are prepared by Netherland, Sewell & Associates, Inc. ("NSAI"). All figures are fully burdened by and net of all plugging and abandonment costs associated with the properties included in the reserves report. The following tables summarize proved reserves at December 31, 2024 based on SEC pricing of $76.32 per barrel of oil and $2.13 per MMBtu of natural gas, before differentials.

Proved Reserves

The following table presents Talos's estimated proved reserves and PV-10 values as of December 31, 2024.

Probable Reserves

The following table presents Talos's estimated probable reserves and PV-10 value as of December 31, 2024.

Proved Reserves Sensitivities

The following table presents the PV-10 values of Talos's proved reserves as of December 31, 2024, at various crude oil prices and natural gas prices.

Probable Reserves Sensitivities

OPERATIONAL & FINANCIAL GUIDANCE UPDATES

Talos intends to prioritize free cash flow generation and the advancement of key drilling projects expected to drive future shareholder value creation in its 2025 operational and financial plan.

Production for the first quarter 2025 is estimated to be in the range from 99.0 to 101.0 MBoe/d, with 68% oil volumes.

Talos's production guidance takes into account known and anticipated factors influencing the productive capacity between 100 Mboe/d and 105.0 MBoe/d, including expected planned downtime for facility and downstream maintenance activities. Key maintenance includes work scheduled for such assets as Katmai, Pompano, and Brutus, in addition to third-party pipeline maintenance. Furthermore, the guidance also considers potential expected but unplanned downtime due to unforeseen risks and weather-related disruptions.

Production for the full year 2025 is expected to range from 90.0 to 95.0 MBoe/d, consisting of 69% oil and 79% liquids.

The following summarizes Talos's full-year 2025 operational and production guidance.

HEDGES

The following table reflects contracted volumes and weighted average prices the Company will receive under the terms of its derivative contracts as of February 20, 2025.

CONFERENCE CALL AND WEBCAST INFORMATION

Talos will host a conference call, which will be broadcast live over the internet, on Thursday, February 27, 2025 at 10:00 AM Eastern Time (9:00 AM Central Time). Listeners can access the conference call through a webcast link on the Company's website at: https://www.talosenergy.com/investor-relations/presentation-webcast/default.aspx#event-calendar. Alternatively, the conference call can be accessed by dialing (800) 836-8184 (North American toll-free) or (646) 357-8785 (international). Please dial in approximately 15 minutes before the teleconference is scheduled to begin and ask to be joined into the Talos Energy call. A replay of the call will be available one hour after the conclusion of the conference until March 6, 2025 and can be accessed by dialing (888) 660-6345 and using access code 46986#. For more information, please refer to the Fourth Quarter 2024 Earnings Presentation available under Presentations and Webcasts on the Investor Relations section of Talos's website.

ABOUT TALOS ENERGY

Talos Energy (NYSE: TALO) is a technically driven, innovative, independent energy company focused on maximizing long-term value through its Upstream Exploration & Production business in the United States Gulf of America and offshore Mexico. We leverage decades of technical and offshore operational expertise to acquire, explore, and produce assets in key geological trends while maintaining a focus on safe and efficient operations, environmental responsibility, and community impact. For more information, visit www.talosenergy.com.

INVESTOR RELATIONS CONTACT

Clay Jeansonne
investor@talosenergy.com 

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

The information in this communication includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements, other than statements of historical fact included in this communication regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this communication, the words "will," "could," "believe," "anticipate," "intend," "estimate," "expect," "project," "forecast," "may," "objective," "plan" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Forward-looking statements are based on management's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. These forward-looking statements are based on our current beliefs, based on currently available information, as to the outcome and timing of future events. Forward-looking statements may include statements about: business strategy; estimated ultimate recovery (EUR) and reserves; drilling prospects, inventories, projects and programs; our ability to replace the reserves that we produce through drilling and property acquisitions; financial strategy, liquidity and capital required for our development program and other capital expenditures; realized oil and natural gas prices; risks related to future mergers and acquisitions and/or to realize the expected benefits of any such transaction timing and amount of future production of oil, natural gas and NGLs; our hedging strategy and results; future drilling plans; availability of pipeline connections on economic terms; competition, government regulations, including financial assurance requirements, and legislative and political developments; our ability to obtain permits and governmental approvals, including the potential impact of the revised biological opinion by the National Marine Fisheries Service; pending legal, governmental or environmental matters; our marketing of oil, natural gas and NGLs; our integration of acquisitions and the anticipated performance of the combined company; future leasehold or business acquisitions on desired terms; costs of developing properties; general economic conditions, including the impact of sustained inflation and associated changes in monetary policy; political and economic conditions and events in foreign oil, natural gas and NGL producing countries and acts of terrorism or sabotage; credit markets; volatility in the political, legal and regulatory environments in connection with the U.S. Presidential transition and Mexican presidential transition; estimates of future income taxes; our estimates and forecasts of the timing, number, profitability and other results of wells we expect to drill and other exploration activities; our strategy with respect to our Zama asset; uncertainty regarding our future operating results and our future revenues and expenses; impact of new accounting pronouncements on earnings in future periods; recent and pending managerial changes; and plans, objectives, expectations and intentions contained in this communication that are not historical.  These forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, commodity price volatility; global demand for oil and natural gas; the ability or willingness of OPEC and other state-controlled oil companies to set and maintain oil production levels and the impact of any such actions; the lack of a resolution to the war in Ukraine and increasing hostilities in the Middle East, and their impact on commodity markets; the impact of any pandemic, and governmental measures related thereto; lack of transportation and storage capacity as a result of oversupply, government and regulations; lack of availability of drilling and production equipment and services; adverse weather events, including tropical storms, hurricanes, winter storms and loop currents; cybersecurity threats; elevated inflation and the impact of central bank policy in response thereto; environmental risks; failure to find, acquire or gain access to other discoveries and prospects or to successfully develop and produce from our current discoveries and prospects; geologic risk; drilling and other operating risks; well control risk; regulatory changes, including the impact of financial assurance requirements; changes in U.S. labor and trade policies, including the imposition of tariffs and the resulting consequences; the uncertainty inherent in estimating reserves and in projecting future rates of production; cash flow and access to capital; the timing of development expenditures; potential adverse reactions or competitive responses to our acquisitions and other transactions; the possibility that the anticipated benefits of our acquisitions are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of acquired assets and operations; recent and pending management changes, including the appointment of a new Chief Executive Officer and the other risks discussed in "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC subsequent to the issuance of this communication.  Should one or more of the risks or uncertainties described herein occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this communication.

PRODUCTION ESTIMATES 

Estimates of our future production volumes are based on assumptions of capital expenditure levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. The production, transportation, marketing and storage of oil and gas are subject to disruption due to transportation, processing and storage availability, mechanical failure, human error, adverse weather conditions such as hurricanes, global political and macroeconomic events and numerous other factors. Our estimates are based on certain other assumptions, such as well performance and estimated resource potential and ultimate recovery, which may vary significantly from those assumed. Therefore, we can give no assurance that our future production volumes will be as estimated.

RESERVE INFORMATION

Reserve engineering is a process of estimating underground accumulations of oil, natural gas and NGLs that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify upward or downward revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil, natural gas and NGLs that are ultimately recovered. In addition, we use "estimated gross resource potential," "gross reserves,"  and "estimated ultimate recovery" (or EUR) in this release which are not measures of "reserves" prepared in accordance with SEC guidelines or permitted to be included in SEC filings. These types of resource estimates do not represent, and are not intended to represent, any category of reserves based on SEC definitions, are inherently more uncertain than estimates of proved reserves or other reserves prepared in accordance with SEC guidelines. These types of estimates are subject to a substantially greater risk of actually being realized.

USE OF NON-GAAP FINANCIAL MEASURES 

This release includes the use of certain measures that have not been calculated in accordance with U.S. generally acceptable accounting principles (GAAP) such as, but not limited to, EBITDA, Adjusted EBITDA, LTM Adjusted EBITDA, Pro Forma LTM Adjusted EBITDA, Net Debt, Net Debt to LTM Adjusted EBITDA, Net Debt to Pro Forma LTM Adjusted EBITDA, Adjusted Free Cash Flow and Leverage, Adjusted EBITDA excluding hedges, Adjusted EBITDA excluding CCS, Adjusted EBITDA excluding CCS and hedges, Adjusted EBITDA Free Cash Flow excluding CCS, Adjusted Net Income (Loss) excluding CCS, Adjusted Net Income (Loss) per diluted share, General & Administrative Expenses excluding CCS, Cash Operating Expenses and Workovers, G&A and PV-10. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Reconciliations for non-GAAP measure to GAAP measures are included at the end of this release.