Talos Energy Announces First Quarter 2025 Operational and Financial Results

2025-05-05

NYSE - New York Stock Exchange · Oil · Natural Gas · Cobalt · Nickel · Copper · Manganese · Switzerland

PR Newswire

HOUSTON , May 5, 2025 /PRNewswire/ -- Talos Energy Inc. ("Talos" or the "Company") (NYSE: TALO) today announced its operational and financial results for the three months ended March 31, 2025 . Talos also provided second quarter 2025 guidance for production and reiterated its operational and financial guidance for the full year 2025.

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First Quarter and Recent Key Highlights

Production of 100.9 thousand barrels of oil equivalent per day ("MBoe/d") (68% oil, 78% liquids). Finished well completion operations on Sunspear discovery, with first production expected late second quarter 2025. Initiated completion operations on Katmai West #2 well, with first production expected late second quarter 2025. Drilling operations to commence on Daenerys prospect late second quarter 2025, following the completion of the Katmai West #2 well. Net Loss of $9.9 million , or $0.05 Net Loss per diluted share, and Adjusted Net Income* of $10.5 million , or $0.06 Adjusted Net Income per diluted share*. Adjusted EBITDA* of $363.0 million . Capital expenditures of $117.6 million , excluding plugging and abandonment and settled decommissioning obligations. Net cash provided by operating activities of $268.2 million . Adjusted Free Cash Flow* of $194.5 million . Expect to allocate up to 50% of annual Free Cash Flow to share repurchases. Repurchased approximately 2.3 million shares for $22.0 million and Talos's Board of Directors increased its stock repurchase authorization to $200 million . Maintained a strong balance sheet with $203.0 million of cash with an undrawn credit facility, a Net Debt to Last Twelve Months ("LTM") Adjusted EBITDA * of 0.8x, and liquidity of $960.2 million at March 31, 2025 . Hedge positions cover approximately 42% of the balance of 2025 expected oil production at the midpoint of guidance, with a weighted average floor price over $72 per barrel, and mark-to-market hedge book value of $120.0 million , as of April 30, 2025 .

Talos President and Chief Executive Officer Paul Goodfellow stated, "I'm excited to be a part of Talos and pleased to report our fifth consecutive quarter of record production, achieving approximately 101 MBoe/d in the first quarter 2025. This milestone was accompanied by strong Adjusted EBITDA and Adjusted Free Cash Flow, highlighting our disciplined focus on execution. Operationally, we achieved strong results, finishing well completion operations on our Sunspear discovery. Furthermore, completion operations are underway at Katmai West #2, following successful drilling results announced in early January 2025 . We remain on track for both projects to begin production in late second quarter 2025.

"At the end of the first quarter 2025, we maintained a significant cash balance, even while actively repurchasing shares, and have an undrawn credit facility. This positions Talos to manage the ongoing fluctuations in commodity prices. Our 2025 guidance, robust EBITDA margins, and strong hedge positions allow us to be free cash flow positive for the full year, even at oil prices of approximately $40 per barrel on a go-forward basis. Furthermore, we have the flexibility to adjust our 2025 capital budget, enabling us to adapt to changing market conditions and still maintain positive free cash flow."

| Footnotes: *Please see "Supplemental Non-GAAP Information" for details and reconciliations of GAAP to non-GAAP financial measures. |

RECENT DEVELOPMENTS AND OPERATIONS UPDATE

_Share Repurchase Program: _In March 2025 , Talos opportunistically repurchased approximately 2.3 million shares for $22.0 million , representing an average price of $9.61 per share. In addition, our Board of Directors authorized an increase of approximately $42.5 million to our previously approved limit, so Talos now has approximately $178.0 million remaining under the authorized program as of March 31, 2025 . Under Talos's share repurchase program, management expects to allocate up to 50% of its annual free cash flow to share repurchases. Purchases under the share repurchase program may be made from time to time in privately negotiated transactions or open market transactions under Rule 10b -18 of the Securities Exchange Act of 1934, as amended. These purchases will depend on market conditions, legal requirements, and other relevant factors.

Production Updates:

_Sunspear Completion: _During the first quarter 2025, Talos successfully finished well completion operations on Sunspear with the West Vela deepwater drillship and expects first production late 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% working interest ("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

_Katmai West: In April 2025 , _Talos initiated completion operations on Katmai West #2 using the West Vela after finishing completion work at Sunspear. At the beginning of 2025, Talos announced successful drilling results at Katmai West #2, encountering over 400 feet of gross hydrocarbon pay with excellent rock properties. First production is expected late second quarter 2025. The strong performance from the Katmai West #1 well and its successful appraisal have nearly doubled the anticipated proved estimated ultimate recovery ("EUR" ) 1 of the Katmai West field to approximately 50 MMBoe gross and affirmed 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% W.I., with entities managed by Ridgewood Energy Corporation holding the other 50% W.I.

Project Updates:

Daenerys : Talos anticipates drilling operations commencing on the Daenerys well late second quarter 2025, utilizing the West Vela. Daenerys is a high-impact subsalt project that will evaluate the regionally prolific Middle and Lower Miocene section and carries an estimated gross resource potential between 100–300 MMBoe. Talos holds a 30% W.I., with partners Red Willow holding a 35% W.I, Cathexis holding a 25% W.I., and HEQ Deepwater holding a 10% W.I.

Monument Discovery Farm-in : In March 2025 , Talos increased 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. Talos expects to develop it 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 drilling location adjacent to the discovery with an estimated 25–35 MMBoe 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.

| 1 EUR is calculated as the sum of proved reserves remaining as of a given date and cumulative production as of that date. EUR is not a measure of "reserves" prepared in accordance with SEC guidelines. Please see "Reserve Information" at the end of this release. |

FIRST QUARTER 2025 RESULTS

Key Financial Highlights:

| ($ thousands, except per share and per Boe amounts) | Three Months Ended March 31, 2025 | | | | Total revenues | $ | 513,059 | | | Net Income (Loss) | $ | (9,868) | | | Net Income (Loss) per diluted share | $ | (0.05) | | | Adjusted Net Income (Loss) * | $ | 10,466 | | | Adjusted Net Income (Loss) per diluted share * | $ | 0.06 | | | Adjusted EBITDA * | $ | 363,003 | | | Adjusted EBITDA excluding hedges * | $ | 357,836 | | | Capital Expenditures | $ | 117,574 | |

Production

Production for the first quarter 2025 was 100.9 MBoe/d ( 68% oil, 78% liquids).

| | Three Months Ended March 31, 2025 | | | | Oil (MBbl/d) | | 68.3 | | | Natural Gas (MMcf/d) | | 135.7 | | | NGL (MBbl/d) | | 10.0 | | | Total average net daily (MBoe/d) | | 100.9 | |

| | Three Months Ended March 31, 2025 | | | | | | | | | | | | | | Production | | % Oil | | % Liquids | | % Operated | | | | | | | Deepwater | | 89.0 | | | 70 | % | | 80 | % | | 82 | % | | Shelf and Gulf Coast | | 11.9 | | | 54 | % | | 61 | % | | 78 | % | | Total average net daily (MBoe/d) | | 100.9 | | | 68 | % | | 78 | % | | 81 | % |

| | Three Months Ended March 31, 2025 | | | | Average realized prices (excluding hedges) | | | | | Oil ($/Bbl) | $ | 71.73 | | | Natural Gas ($/Mcf) | $ | 4.32 | | | NGL ($/Bbl) | $ | 21.78 | | | Average realized price ($/Boe) | $ | 56.50 | | | | | | | | Average NYMEX prices | | | | | WTI ($/Bbl) | $ | 71.78 | | | Henry Hub ($/MMBtu) | $ | 4.14 | |

Lease Operating & General and Administrative Expenses

Total lease operating expenses for the first quarter 2025, including workover, maintenance and insurance costs, were $127.8 million , or $14.08 per Boe.

Adjusted General and Administrative expenses for the first quarter 2025, adjusted to exclude one-time transaction-related costs, and non-cash equity-based compensation, were $30.3 million , or $3.34 per Boe.

| ($ thousands, except per Boe amounts) | Three Months Ended March 31, 2025 | | | | Lease Operating Expenses | $ | 127,805 | | | Lease Operating Expenses per Boe | $ | 14.08 | | | Adjusted General & Administrative Expenses * | $ | 30,310 | | | Adjusted General & Administrative Expenses per Boe * | $ | 3.34 | |

Capital Expenditures

Capital expenditures for the first quarter 2025, excluding plugging and abandonment and settled decommissioning obligations, totaled $117.6 million . Certain capital expenditures originally planned for the first quarter 2025 have shifted to the second quarter 2025. Talos continues to maintain its full-year 2025 capital expenditure guidance and remains focused on capital discipline and efficient project execution.

| ($ thousands) | Three Months Ended March 31, 2025 | | | | U.S. drilling & completions | $ | 89,228 | | | Asset management (1) | | 9,537 | | | Seismic and G&G, land, capitalized G&A and other | | 18,809 | | | Total Capital Expenditures | | 117,574 | |

| | | | | | | | | | | | | | | (1) | Asset management consists of capital expenditures for development-related activities primarily associated with recompletions and improvements to our facilities and infrastructure. | | | | | | | | | | | |

Plugging & Abandonment Expenditures

Capital expenditures for plugging and abandonment and settled decommissioning obligations for the first quarter 2025 totaled $10.0 million .

| | Three Months Ended March 31, 2025 | | | | Plugging & Abandonment and Decommissioning Obligations Settled (1) | $ | 10,030 | | | | | | |

| | | | | | | | | | | | | | | (1) | Settlement of decommissioning obligations as a result of working interest partners or counterparties of divestiture transactions that were unable to perform the required abandonment obligations due to bankruptcy or insolvency. | | | | | | | | | | | |

Liquidity and Leverage

At March 31, 2025, 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 $42.8 million in outstanding letters of credit. Letters of credit that are outstanding reduce the available revolving credit commitments. Cash was $203.0 million , providing Talos approximately $960.2 million of liquidity. On March 31, 2025, Talos had $1,250.0 million in total debt. Net Debt was $1,047.1 million , Net Debt to Last Twelve Months ("LTM") Adjusted EBITDA was 0.8x.

OPERATIONAL & FINANCIAL GUIDANCE UPDATES

For the second quarter 2025, Talos expects average daily production to be in the range of 92.0 to 96.0 MBoe/d, with 67% oil volumes.

Talos reiterates its full year 2025 operational and financial guidance and expects average daily production 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.

| | | FY 2025 | | | | | | | ($ Millions, unless highlighted): | | Low | | High | | | | | Production | Oil (MMBbl) | | 22.7 | | | 24.0 | | | | Natural Gas (Bcf) | | 41.9 | | | 44.3 | | | | NGL (MMBbl) | | 3.1 | | | 3.3 | | | | Total Production (MMBoe) | | 32.8 | | | 34.7 | | | | Avg Daily Production (MBoe/d) | | 90.0 | | | 95.0 | | | Cash Expenses | Cash Operating Expenses and Workovers (1)(2)(4) * | $ | 580 | | $ | 610 | | | | G&A (2)(3) * | $ | 120 | | $ | 130 | | | Capex | Capital Expenditures (5) | $ | 500 | | $ | 540 | | | P&A Expenditures | P&A, Decommissioning | $ | 100 | | $ | 120 | | | Interest | Interest Expense (6) | $ | 155 | | $ | 165 | |

| | | | | | | | | | | | | | | (1) | Includes Lease Operating Expenses and Maintenance. | | | | | | | | | | | | | (2) | Includes insurance costs. | | | | | | | | | | | | | (3) | Excludes non-cash equity-based compensation and transaction and other expenses. | | | | | | | | | | | | | (4) | Includes reimbursements under production handling agreements. | | | | | | | | | | | | | (5) | Excludes acquisitions. | | | | | | | | | | | | | (6) | Includes cash interest expense on debt and finance lease, surety charges and amortization of deferred financing costs and original issue discounts. | | | | | | | | | | | | | *Due to the forward-looking nature a reconciliation of Cash Operating Expenses and Workovers and G&A to the most directly comparable GAAP measure could not be reconciled without unreasonable efforts. | | | | | | | | | | | | |

HEDGES

The following table reflects contracted volumes and weighted average prices the Company will receive under the terms of its derivative contracts as of April 30, 2025 .

| | Instrument Type | Avg. Daily Volume | | W.A. Swap | | W.A. Floor | | W.A. Ceiling | | | | | | Crude – WTI | | (Bbls) | | (Per Bbl) | | (Per Bbl) | | (Per Bbl) | | | | | | April - June 2025 | Fixed Swaps | | 38,000 | | $ | 73.45 | | --- | | --- | | | | July - September 2025 | Fixed Swaps | | 20,685 | | $ | 71.81 | | --- | | --- | | | | October - December 2025 | Fixed Swaps | | 19,652 | | $ | 71.84 | | --- | | --- | | | | January - March 2026 | Fixed Swaps | | 14,000 | | $ | 66.26 | | --- | | --- | | | | | Collar | | 9,000 | | --- | | $ | 60.00 | | $ | 68.50 | | | April - June 2026 | Fixed Swaps | | 10,000 | | $ | 65.47 | | --- | | --- | | | | | Collar | | 9,000 | | --- | | $ | 60.00 | | $ | 68.50 | | | July - September 2026 | Collar | | 9,000 | | --- | | $ | 60.00 | | $ | 68.50 | | | October - December 2026 | Collar | | 9,000 | | --- | | $ | 60.00 | | $ | 68.50 | | | | | | | | | | | | | | | | | Natural Gas – HH NYMEX | | (MMBtu) | | (Per MMBtu) | | (Per MMBtu) | | (Per MMBtu) | | | | | | April - June 2025 | Fixed Swaps | | 65,000 | | $ | 3.38 | | --- | | --- | | | | July - September 2025 | Fixed Swaps | | 50,000 | | $ | 3.47 | | --- | | --- | | | | October - December 2025 | Fixed Swaps | | 40,000 | | $ | 3.53 | | --- | | --- | | | | January - March 2026 | Fixed Swaps | | 35,000 | | $ | 4.19 | | --- | | --- | | | | April - June 2026 | Fixed Swaps | | 20,000 | | $ | 3.65 | | --- | | --- | | | | July - September 2026 | Fixed Swaps | | 20,000 | | $ | 3.65 | | --- | | --- | | | | October - December 2026 | Fixed Swaps | | 20,000 | | $ | 3.65 | | --- | | --- | | |

CONFERENCE CALL AND WEBCAST INFORMATION

Talos will host a conference call, which will be broadcast live over the internet, on Tuesday, May 6, 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 May 13, 2025 and can be accessed by dialing (888) 660-6345 and using access code 14247#. For more information, please refer to the First Quarter 2025 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 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, borrowing base under our bank credit facility, availability of financing sources, liquidity and capital required for our development program, acquisitions and other capital expenditures; realized oil and natural gas prices; changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements, including such changes that may be implemented by the Trump Administration, and the impact of such policies on us, our customers and suppliers, and the global economic environment; volatility in the political, legal and regulatory environments in connection with the U.S. and Mexican presidential administrations; 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 timely issuance and potential impact of the anticipated revised Gulf of America biological opinion by the National Marine Fisheries Services; pending legal, governmental or environmental matters; our marketing of oil, natural gas and NGLs; our integration of acquisitions and the anticipated post-acquisition performance of the company; future leasehold or business acquisitions on desired terms; costs of developing properties; general economic conditions, including the impact of continued 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; 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 investment in the Zama asset; uncertainty regarding our future operating results and our future revenues and expenses; impact of new accounting pronouncements on earnings in future periods; 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 ongoing hostilities in Israel and 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; political risks, including a global trade war; 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. trade policy, including the imposition of increased tariffs and 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; 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. 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.