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

2025-02-26

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PR Newswire

HOUSTON , Feb. 26, 2025 /PRNewswire/ -- Talos Energy Inc. ("Talos" or the "Company") (NYSE: TALO) today announced its operational and financial results for the three and twelve months ended December 31, 2024. Talos also announced its year-end 2024 reserves figures and 2025 operational and financial guidance.

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Fourth Quarter 2024 and Recent Highlights

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."

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

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 .

| 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. |

FOURTH QUARTER AND FULL YEAR 2024 RESULTS

Key Financial Highlights:

| ($ thousands, except per share and per Boe amounts) | Three Months Ended December 31, 2024 | | Twelve Months Ended December 31, 2024 | | | | | Total revenues | $ | 485,185 | | $ | 1,973,568 | | | Net Income (Loss) | $ | (64,508) | | $ | (76,393) | | | Net Income (Loss) per diluted share | $ | (0.36) | | $ | (0.44) | | | Adjusted Net Income (Loss) excluding CCS * | $ | 15,173 | | $ | (26,198) | | | Adjusted Net Income (Loss) excluding CCS per diluted share * | $ | 0.08 | | $ | (0.15) | | | Adjusted EBITDA excluding CCS * | $ | 361,814 | | $ | 1,297,705 | | | Adjusted EBITDA excluding CCS and hedges * | $ | 342,163 | | $ | 1,292,995 | | | Upstream Capital Expenditures | $ | 133,249 | | $ | 489,529 | |

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.

| | Three Months Ended December 31, 2024 | | Twelve Months Ended December 31, 2024 | | | | | Oil (MBbl/d) | | 69.0 | | | 65.8 | | | Natural Gas (MMcf/d) | | 124.8 | | | 112.2 | | | NGL (MBbl/d) | | 8.9 | | | 8.1 | | | Total average net daily (MBoe/d) | | 98.7 | | | 92.6 | |

| | Three Months Ended December 31, 2024 | | | | | | | | | | | | | | Production | | % Oil | | % Liquids | | % Operated | | | | | | | Deepwater | | 85.6 | | | 72 | % | | 82 | % | | 83 | % | | Shelf and Gulf Coast | | 13.1 | | | 54 | % | | 62 | % | | 74 | % | | Total average net daily (MBoe/d) | | 98.7 | | | 70 | % | | 79 | % | | 82 | % | | | | | | | | | | | | | | | | | Twelve Months Ended December 31, 2024 | | | | | | | | | | | | | | Production | | % Oil | | % Liquids | | % Operated | | | | | | | Deepwater | | 79.7 | | | 74 | % | | 83 | % | | 86 | % | | Shelf and Gulf Coast | | 12.9 | | | 50 | % | | 60 | % | | 70 | % | | Total average net daily (MBoe/d) | | 92.6 | | | 71 | % | | 80 | % | | 83 | % |

| | Three Months Ended December 31, 2024 | | Twelve Months Ended December 31, 2024 | | | | | Average realized prices (excluding hedges) | | | | | | | | Oil ($/Bbl) | $ | 69.03 | | $ | 75.01 | | | Natural Gas ($/Mcf) | $ | 2.60 | | $ | 2.57 | | | NGL ($/Bbl) | $ | 21.18 | | $ | 20.85 | | | Average realized price ($/Boe) | $ | 53.43 | | $ | 58.23 | | | | | | | | | | | Average NYMEX prices | | | | | | | | WTI ($/Bbl) | $ | 70.73 | | $ | 76.59 | | | Henry Hub ($/MMBtu) | $ | 2.44 | | $ | 2.19 | |

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.

| ($ thousands, except per Boe amounts) | Three Months Ended December 31, 2024 | | Twelve Months Ended December 31, 2024 | | | | | Lease Operating Expenses | $ | 110,206 | | $ | 566,041 | | | Lease Operating Expenses per Boe | $ | 12.14 | | $ | 16.70 | | | Adjusted General & Administrative Expenses excluding CCS * | $ | 34,854 | | $ | 130,695 | | | Adjusted General & Administrative Expenses excluding CCS per Boe * | $ | 3.84 | | $ | 3.86 | |

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.

| ($ thousands) | Three Months Ended December 31, 2024 | | Twelve Months Ended December 31, 2024 | | | | | U.S. drilling & completions | $ | 98,459 | | $ | 283,779 | | | Asset management (1) | | 13,188 | | | 109,222 | | | Seismic and G&G, land, capitalized G&A and other | | 18,241 | | | 91,059 | | | Total Upstream Capital Expenditures | | 129,888 | | | 484,060 | | | Investment in Mexico | | 3,361 | | | 5,469 | | | Total Upstream | $ | 133,249 | | $ | 489,529 | |

| _ | | | (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

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.

| | Three Months Ended December 31, 2024 | | Twelve Months Ended December 31, 2024 | | | | | Plugging & Abandonment and Decommissioning Obligations Settled (1) | $ | 23,069 | | $ | 114,236 | | | | | | | | | |

| _ | | | (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 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 .

| | SEC Reserves as of December 31, 2024 | | | | | | | | | | | | | | | | | MBoe | | % of Total Proved | | % Oil | | Standardized Measure (in thousands) | | PV -10 (1)(2)(3) (in thousands) | | | | | | | | Proved Developed Producing | | 108,973 | | | 56 | % | | 76 | % | | | $ | 2,875,948 | | | | Proved Developed Non-Producing | | 41,429 | | | 21 | % | | 62 | % | | | | 715,006 | | | | Total Proved Developed | | 150,402 | | | 77 | % | | 72 | % | | | | 3,590,954 | | | | Proved Undeveloped | | 43,840 | | | 23 | % | | 79 | % | | | | 609,770 | | | | Total Proved | | 194,242 | | | 100 | % | | 74 | % | $ | 3,546,204 | | $ | 4,200,724 | | | | | | | | | | | | | | | | | | |

Probable Reserves

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

| | | Reserves as of December 31, 2024 | | | | | | | | | MBoe | | PV -10 (2)(3)(4) (in thousands) | | | | | Total Probable | | 125,349 | | $ | 3,011,741 | | | | | | | | | | | |

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.

| | Year-End 2024 Reserves Sensitivity (PV-10) (1)(2)(5) ($000) | | | | | | | | | | | | | | | | | $65.00/Bbl &

$3.00/MMBtu | | $70.00/Bbl & $3.00/MMBtu | | SEC (3) | | $80.00/Bbl & $3.50/MMBtu | | $85.00/Bbl & $3.50/MMBtu | | | | | | | | Proved Developed Producing | $ | 2,242,411 | | $ | 2,576,158 | | $ | 2,875,948 | | $ | 3,200,295 | | $ | 3,489,138 | | | Proved Developed Non-Producing | | 555,628 | | | 636,779 | | | 715,006 | | | 820,699 | | | 903,344 | | | Total Proved Developed | | 2,798,039 | | | 3,212,937 | | | 3,590,954 | | | 4,020,994 | | | 4,392,481 | | | Proved Undeveloped | | 400,834 | | | 477,701 | | | 609,770 | | | 705,896 | | | 816,690 | | | Total Proved | $ | 3,198,873 | | $ | 3,690,637 | | $ | 4,200,724 | | $ | 4,726,890 | | $ | 5,209,171 | |

Probable Reserves Sensitivities

| | Year-End 2024 Reserves Sensitivity (PV-10) (2)(4) ($000) | | | | | | | | | | | | | | | | | $65.00/Bbl &

$3.00/MMBtu | | $70.00/Bbl & $3.00/MMBtu | | SEC (3) | | $80.00/Bbl & $3.50/MMBtu | | $85.00/Bbl & $3.50/MMBtu | | | | | | | | Total Probable | $ | 2,723,327 | | $ | 2,975,984 | | $ | 3,011,736 | | $ | 3,476,200 | | $ | 3,721,443 | | | | | | | | | | | | | | | | | | |

| _ | | | (1) | PV-10 is a non-GAAP financial measure and differs from the standardized measure of discounted future net cash flows, which is the most directly comparable GAAP financial measure. See "Supplemental Non-GAAP Information" below for additional detail and a reconciliation of PV-10 of our proved reserves to the corresponding standardized measure of discounted future net cash flows at December 31, 2024. | | (2) | PV-10 is presented inclusive of the plugging and abandonment obligations and before hedges. | | (3) | SEC pricing of $76.32 per barrel of oil and $2.13 per MMBtu of natural gas, before differentials. | | (4) | Investors should be cautioned that estimates of PV-10 of probable reserves, as well as underlying volumetric estimates, are inherently more uncertain of being recovered and realized than comparable measures for proved reserves. Further, because estimates of probable reserve volumes have not been adjusted for risk due to this uncertainty of recovery, their summation may be of limited use. | | (5) | PV-10 for proved reserves cannot be reconciled to Standardized Measure for prices other than SEC pricing because GAAP does not prescribe any corresponding measure based on other pricing, and accordingly it is not practicable to prepare any such reconciliation. |

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.

| | | 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 February 20, 2025 .

| | Instrument Type | Avg. Daily Volume | | W.A. Swap | | W.A. Floor | | W.A. Ceiling | | | | | | | Crude – WTI | | (Bbls) | | (Per Bbl) | | (Per Bbl) | | (Per Bbl) | | | | | | | January - March 2025 | Fixed Swaps | | 36,917 | | $ | 72.81 | | --- | | --- | | | | | | Collar | | 3,000 | | --- | | $ | 65.00 | | $ | 84.35 | | | | April - June 2025 | Fixed Swaps | | 38,000 | | $ | 73.45 | | --- | | --- | | | | | July - September 2025 | Fixed Swaps | | 20,685 | | $ | 71.81 | | --- | | --- | | | | | October - December 2025 | Fixed Swaps | | 18,326 | | $ | 72.33 | | --- | | --- | | | | | January - March 2026 | Fixed Swaps | | 11,000 | | $ | 66.45 | | --- | | --- | | | | | April - June 2026 | Fixed Swaps | | 10,000 | | $ | 65.47 | | --- | | --- | | | | | | | | | | | | | | | | | | | | Natural Gas – HH NYMEX | | (MMBtu) | | (Per MMBtu) | | (Per MMBtu) | | (Per MMBtu) | | | | | | | January - March 2025 | Fixed Swaps | | 75,000 | | $ | 3.61 | | --- | | --- | | | | | 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 | | 20,000 | | $ | 3.65 | | --- | | --- | | | | | 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 | | --- | | --- | | | | | | | | | | | | | | | | | | |