• Record Production: 98,700 barrels of oil equivalent per day in Q4 2024, with 70% oil and 79% liquids including NGLs.
• EBITDA: $362 million for Q4 2024, with an EBITDA netback margin of approximately $40 per barrel of oil equivalent.
• Free Cash Flow: $164 million in Q4 2024; $511 million for the full year 2024.
• CapEx: $133 million in Q4 2024, with an additional $23 million for plugging and abandonment activities.
• Year-End Cash Position: $108 million.
• Net Debt to EBITDA Ratio: 0.8 times at year-end 2024.
• Total Debt Reduction: $550 million in 2024, including $125 million in Q4.
• Proved Reserves: 194 million barrels of oil equivalent, approximately 74% oil.
• PV-10 of Proved Reserves: Approximately $4.2 billion.
• 2P Value: Approximately $7.2 billion, including $3 billion in probable reserves.
• 2025 Production Guidance: 90,000 to 95,000 barrels of oil equivalent per day, with 69% oil and 79% liquids.
• 2025 CapEx Guidance: $500 million to $540 million.
• 2025 P&A and Decommissioning Activities: $100 million to $120 million.
• 2025 Cash Operating Expenses: $580 million to $610 million.
• 2025 G&A Expenses: $120 million to $130 million.

• Warning! GuruFocus has detected 5 Warning Signs with TALO.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Talos Energy Inc (NYSE:TALO) achieved record production of 98,700 barrels of oil equivalent per day in Q4 2024, with 70% being oil.
• The company reported record EBITDA of $362 million for the fourth quarter, equating to an EBITDA netback margin of about $40 per barrel of oil equivalent.
• Talos Energy Inc (NYSE:TALO) successfully reduced its leverage ratio to 0.8 times net debt to EBITDA and ended the year with a healthy cash position of $108 million.
• The company fully repaid its credit facility during 2024, reducing total debt by $550 million, which equates to over $3 per share of value accretion for shareholders.
• Operational efficiency was demonstrated with the successful drilling of the Katmai West number two well, completed 35% under budget and over a month ahead of schedule.

Negative Points

• The 2025 production guidance is cautious, with expectations of 90,000 to 95,000 barrels of oil equivalent per day, reflecting planned maintenance and weather-related downtime.
• There is uncertainty regarding the impact of leadership changes, with a new CEO, Paul Goodfellow, set to join, which may affect strategic direction.
• The company faces potential challenges in maintaining production levels due to planned downtime and maintenance projects scheduled for 2025.
• Despite strong financial performance, Talos Energy Inc (NYSE:TALO) has experienced stock price performance issues, possibly due to management transitions.
• The company is still working on selling down its interest in Helm's Deep to 50% before drilling, indicating potential delays in project execution.

Q & A Highlights

Q: How does the Katmai field compare to initial expectations, and is there potential upside to the 200 million barrel estimate? A: Sergio Maiworm, CFO, stated that the Katmai field is better than initially expected when acquired. There is potential upside beyond the 200 million barrels, as they are currently investigating other aspects of the field.

Q: How should we think about the shape of production throughout 2025 and the potential exit rate? A: Sergio Maiworm explained that production is expected to be between 99,000 and 101,000 barrels per day in Q1. Planned maintenance and weather-related downtimes will impact production in Q2 and Q3, with fewer planned downtimes in Q4.

Q: Has there been a philosophical shift in capital spending for 2025, and could this lead to production declines in 2026? A: Sergio Maiworm noted that the 2025 capital program benefits from high drilling efficiency, allowing for cost savings. The current investment level is deemed appropriate for generating free cash flow, and it's too early to predict 2026 production impacts.

Q: Given the healthy balance sheet, is there potential to accelerate the buyback program in 2025? A: Sergio Maiworm mentioned that capital returns for shareholders are always considered. With the new CEO, Paul Goodfellow, strategic planning will include capital allocation priorities, and updates will be communicated once finalized.

Q: What is the status of the Daenerys drilling plan, and when can results be expected? A: Sergio Maiworm confirmed that Daenerys drilling is set to start in Q2 2025, with results expected by late Q3 or early Q4. The well is anticipated to take 100 to 120 days to drill.

Q: Can you provide an update on the Helm's Deep interest sell-down and potential drilling plans? A: Sergio Maiworm stated that discussions are ongoing to reduce their interest in Helm's Deep to 50% before drilling. Helm's Deep is under consideration for drilling in 2025 or 2026, depending on commercial discussions.

Q: How does the company view the A&D environment, and will there be a focus on organic growth or acquisitions? A: Sergio Maiworm indicated that while refining their strategy, the focus will be on organic growth and operational excellence. However, bolt-on acquisitions and larger opportunities will be considered if they align with strategic goals.

Q: What is the path to proving more resources at Katmai, and what activities are needed to reach 100 million barrels or more? A: Sergio Maiworm explained that proving more resources involves drilling additional wells and the natural transfer of probable reserves to PDP over time. The company evaluates drilling opportunities to accelerate reserve bookings.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.