Momentum investing is all about the idea of following a stock's recent trend, which can be in either direction. In the "long context," investors will essentially be "buying high, but hoping to sell even higher." And for investors following this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.Whil ...

Financial Data and Key Metrics Changes - Talos Energy reported production of over 95,000 barrels of oil equivalent per day, exceeding guidance, with approximately 70% being oil [6][11] - The company generated $103 million in free cash flow during the quarter, significantly exceeding consensus estimates, and approximately $400 million year to date [7][8] - Operating expenses were reduced by almost 10% from just under $17 per barrel in 2024 to $15.27 per barrel in Q3 2025 [9][10] - The company maintained a leverage ratio of 0.7 times and held $333 million in cash at the end of Q3 [16] Business Line Data and Key Metrics Changes - The Tarantula facility achieved production from the Katmai field averaging over 36,000 barrels of oil equivalent per day due to successful de-bottlenecking efforts [7] - The Sunspear workover was completed ahead of schedule, returning the well to production in late September [7] Market Data and Key Metrics Changes - The company’s advantaged cost structure has resulted in top decile EBITDA margins in the E&P sector for the year [10] - Talos expects full-year oil and oil equivalent production to be approximately 3% higher than prior guidance, with a production mix averaging 72% oil in Q4 [11] Company Strategy and Development Direction - Talos's strategy focuses on three pillars: improving business operations, growing production and profitability, and building a long-lived scaled portfolio [5][12] - The company is committed to driving sustainable growth and value creation through exploration, as demonstrated by the successful discovery at Daenerys [14] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of maintaining a strong balance sheet and financial flexibility amid commodity price volatility [16][20] - The company plans to commence drilling activities at several projects with break-evens in the $30-$40 per barrel range [11] Other Important Information - Talos has entered a unique agreement with surety providers to manage collateral requirements amid a tightening surety market [18] - The company has hedged approximately 24,000 barrels of oil per day for Q4 with a floor price of $71 per barrel [19] Q&A Session Summary Question: Expansion options for Tarantula throughput - Management indicated that the strong performance is the start of efforts to grow throughput, with plans for a larger de-bottlenecking study in 2026 [23][24] Question: Cost and timing of the second well at Daenerys - The appraisal well is targeted for Q2 2026, with multiple objective sections to assess reservoir properties [30] Question: Near-term opportunities for the $100 million savings plan - Management sees opportunities across all operations, focusing on capital expenditure and operational efficiency [33][34] Question: Drivers of Talos's lower cost structure - The company emphasizes a culture of ownership and proactive maintenance to maintain a competitive cost structure [37][39] Question: M&A environment and production performance - Management remains disciplined regarding M&A opportunities, focusing on those that complement existing capabilities [58][60] - The absence of storms contributed significantly to production performance, alongside operational excellence [61]

Financial Performance - Talos reported strong operational results leading to solid financial outcomes in 3Q 2025[19] - The company's average daily production was 952 MBOE/D, with 70% oil and 76% liquids[21] - Adjusted EBITDA was approximately $301 million, translating to $34/BOE[21] - Adjusted Free Cash Flow was about $103 million[21] Capital Allocation and Shareholder Returns - Talos returned approximately $48 million to shareholders through share repurchases[22] - Approximately 8% of outstanding stock was repurchased for around $148 million[27] - The company has a leverage ratio of 07x and liquidity of approximately $1 billion[22, 23] Operational Improvements and Outlook - Talos exceeded its FY 2025 target for cash flow enhancements, realizing ~$40 million from ~65 initiatives[15, 29] - The company is targeting $100 million in cash flow improvements by 2026[15, 29] - The company improved its full-year 2025 production guidance to 343 - 355 MMBOE, or 940 - 970 MBOE/D average daily production[42] - Upstream Capital Expenditures are expected to be $480 - $520 million[42]

Core Insights - Talos Energy reported $450.05 million in revenue for Q3 2025, an 11.6% year-over-year decline, with an EPS of -$0.19 compared to -$0.14 a year ago, indicating a significant drop in profitability [1] - The revenue exceeded the Zacks Consensus Estimate of $428.23 million by 5.1%, while the EPS surprise was 45.71% above the consensus estimate of -$0.35 [1] Financial Performance - Talos Energy's stock has returned -5.2% over the past month, contrasting with the Zacks S&P 500 composite's +1% change, and currently holds a Zacks Rank 3 (Hold) [3] - Total average net daily production was 95.2 million barrels of oil equivalent per day, surpassing the analyst estimate of 91.05 million barrels [4] - Average net daily production volumes for NGL, Oil, and Natural Gas were 5.8 million barrels, 66.6 million barrels, and 137 million cubic feet per day, respectively, with all figures exceeding analyst estimates [4] Revenue Breakdown - Oil revenue was reported at $400.21 million, exceeding the average estimate of $381.27 million, but reflecting a 14.4% year-over-year decline [4] - NGL revenue was $8.54 million, significantly lower than the average estimate of $11.99 million, marking a 45.8% year-over-year decline [4] - Natural gas revenue reached $41.31 million, surpassing the average estimate of $35.24 million, and showing a substantial year-over-year increase of 59.3% [4]

Production and Exploration - Talos produced 95.2 MBoe/d in Q3 2025, with 70% being oil and 76% liquids[17] - Full-year 2025 guidance was revised to an average daily production range of 94.0 to 97.0 MBoe/d, with 69% oil and 78% liquids[27] - Talos announced a successful exploration discovery at Daenerys and plans to drill an appraisal well in Q2 2026[4] - The company expects first production from the Monument discovery to be between 20–30 MBoe/d gross by late 2026[10] - Total production for FY 2025 is expected to range from 34.3 MMBoe to 35.5 MMBoe, with average daily production estimated between 94.0 MBoe/d and 97.0 MBoe/d[29] Financial Performance - The company generated $103.4 million in adjusted free cash flow and repurchased 5 million shares for approximately $48 million[6] - Talos achieved over $40 million in free cash flow enhancements, exceeding its $25 million Optimal Performance Plan target for 2025[4] - The company recorded a net loss of $95.9 million, or $0.55 per diluted share, including $60.2 million in non-cash impairment charges[16] - Total revenues for Q3 2025 were $450.1 million, a decrease of 11.6% compared to $509.3 million in Q3 2024[44] - Oil revenues decreased to $400.2 million in Q3 2025 from $467.6 million in Q3 2024, reflecting a decline of 14.4%[44] - Net loss attributable to Talos Energy Inc. for the nine months ended September 30, 2025, was $291.7 million, compared to a loss of $11.9 million in the same period of 2024[44] - Cash flows from operating activities for the nine months ended September 30, 2025, were $734.0 million, compared to $613.3 million in 2024, an increase of 19.7%[46] - Adjusted Net Income attributable to Talos Energy Inc. was $(32,997) thousand, resulting in an Adjusted Earnings per Share of $(0.19) for the same period[65] Expenses and Liabilities - Operating expenses increased to $536.2 million in Q3 2025, up from $485.7 million in Q3 2024, representing an increase of 10.4%[44] - Cash operating expenses are projected to be between $545 million and $575 million, with G&A expenses estimated at $120 million to $130 million[29] - Total liabilities decreased to $3.3 billion as of September 30, 2025, from $3.4 billion at the end of 2024, a reduction of 3.3%[42] - Adjusted General and Administrative Expenses for Q3 2025 were $36.0 million, down from $41.5 million in Q3 2024, a decrease of 13.5%[49] Cash and Debt Management - Talos maintained a strong balance sheet with $332.7 million in cash and a net debt to LTM adjusted EBITDA ratio of 0.7x[25] - Cash, cash equivalents, and restricted cash at the end of Q3 2025 totaled $408.4 million, compared to $150.9 million at the end of Q3 2024, an increase of 170.5%[46] - Total Debt amounts to $1,250,000, with Net Debt calculated at $917,309 after accounting for cash and cash equivalents of $332,691[71] - The Net Debt to LTM Adjusted EBITDA ratio stands at 0.7x, which would increase to 0.8x if Finance Lease payments were included[71] Capital Expenditures - Capital expenditures for Q3 2025 totaled $104.6 million, excluding plugging and abandonment costs[21] - Capital expenditures (Capex) for FY 2025 are expected to be between $480 million and $520 million[29] Market and Pricing - The company has fixed swaps for crude oil with an average price of $71.01 per barrel for October to December 2025, and $66.03 per barrel for January to March 2026[33] - Natural gas fixed swaps are set at an average price of $3.53 per MMBtu for October to December 2025, and $4.13 per MMBtu for January to March 2026[33] - The company emphasizes the importance of market demand and prices for oil and gas in estimating future production volumes[38] Impairments and Estimates - The company reported an impairment of oil and natural gas properties amounting to $284.1 million for the nine months ended September 30, 2025[44] - Reserve estimates are subject to significant uncertainty and may differ from actual recoverable quantities due to various factors[39] Conference Call and Reporting - The company will host a conference call on November 6, 2025, to discuss its third-quarter earnings[34] - Adjusted EBITDA attributable to Talos Energy Inc. for the same period was $301,240 thousand, a slight increase from $294,247 thousand in the prior quarter[54] - Total production for the three months ended September 30, 2025, was 8,757 Boe, up from 8,494 Boe in the previous quarter[54]

Core Insights - Talos Energy reported a quarterly loss of $0.19 per share, which was better than the Zacks Consensus Estimate of a loss of $0.35, representing an earnings surprise of +45.71% [1] - The company generated revenues of $450.05 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 5.10%, but down from $509.29 million year-over-year [2] - Talos Energy has surpassed consensus EPS estimates three times over the last four quarters and topped revenue estimates twice in the same period [2] Financial Performance - The company’s loss of $0.19 per share compares to a loss of $0.14 per share a year ago, indicating a deterioration in performance year-over-year [1] - Talos Energy shares have declined approximately 1.5% since the beginning of the year, contrasting with the S&P 500's gain of 15.1% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.37 on revenues of $436.92 million, and for the current fiscal year, it is -$0.93 on revenues of $1.83 billion [7] - The Zacks Rank for Talos Energy is currently 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [6] Industry Context - The Oil and Gas - Exploration and Production - United States industry is currently ranked in the bottom 16% of over 250 Zacks industries, indicating a challenging environment for companies in this sector [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Talos Energy's stock performance [5]

Share Repurchase and Capital Management - The company repurchased 5.0 million shares for $48.1 million, with $97.3 million remaining under the share repurchase program[124] - The company repurchased approximately 11.1 million shares for $102.7 million during the nine months ended September 30, 2025, with a total repurchase amount of $195.2 million since the program's inception[193] - The company expects to fund its remaining 2025 capital spending program of $480.0 million to $520.0 million and decommissioning obligations of $100.0 million to $120.0 million through cash flows and available credit[191] Financial Performance - Total revenues for Q3 2025 were $450.1 million, a decrease of 11.6% from $509.3 million in Q3 2024[161] - Oil revenues decreased by $67.4 million (14.4%) to $400.2 million in Q3 2025 compared to $467.6 million in Q3 2024[161] - Natural gas revenues increased by $15.4 million (59.3%) to $41.3 million in Q3 2025 from $25.9 million in Q3 2024[161] - Operating cash flows increased by $120.8 million to $734.0 million for the nine months ended September 30, 2025, compared to $613.3 million in the same period of 2024[195] Production and Operational Metrics - Total production volume for Q3 2025 was 8.8 million Boe, a slight decrease of 1.4% from 8.9 million Boe in Q3 2024[161] - Daily oil production averaged 66.6 MBblpd in Q3 2025, down from 68.0 MBblpd in Q3 2024[161] - Production volumes decreased by 1.3 MBoepd to 95.2 MBoepd for the three months ended September 30, 2025, primarily due to well performance and natural production declines[163] - For the nine months ended September 30, 2025, production volumes increased by 6.0 MBoepd to 96.5 MBoepd, driven by production from assets acquired in the QuarterNorth Acquisition[164] Expenses and Impairments - Lease operating expenses for the three months ended September 30, 2025 decreased by approximately $29.6 million, or 18%, to $133.7 million compared to the same period in 2024[165] - Lease operating expenses for the nine months ended September 30, 2025 decreased by approximately $57.3 million, or 13%, to $398.5 million compared to the same period in 2024[166] - Depreciation, depletion, and amortization (DD&A) expense for the three months ended September 30, 2025 decreased by approximately $11.6 million, or 4%, to $262.6 million[167] - DD&A expense for the nine months ended September 30, 2025 increased by approximately $64.1 million, or 9%, to $813.1 million due to increased production volumes[168] - The company recorded a $60.2 million impairment of oil and natural gas properties for the three months ended September 30, 2025[171] Liquidity and Debt - As of September 30, 2025, the company's available liquidity was $989.4 million, consisting of cash and capacity under the Bank Credit Facility[188] - The company has a borrowing base of $700.0 million under its Bank Credit Facility, which is subject to regular redeterminations based on reserve estimates[188] - Interest expense for the three months ended September 30, 2025 decreased to $40.8 million from $46.3 million in the same period in 2024[172] Regulatory and Market Environment - The One Big Beautiful Bill Act mandates at least two offshore lease sales annually for the next 15 years, covering a minimum of 80 million acres[155] - A prolonged government shutdown could delay future federal lease sales and impact the company's operations[159] - The company anticipates volatility in oil, natural gas, and NGL prices, which could significantly impact revenues and profitability[137] - The company is navigating inflationary pressures that could increase capital expenditures and operating costs[139] Acquisitions and Investments - The company completed the Amberjack Acquisition, acquiring an additional 75.2% and 50.0% working interest in Mississippi Canyon blocks 108 and 110, respectively[131] - Cash used in investing activities decreased by $763.3 million, primarily due to $936.2 million paid for acquisitions related to the QuarterNorth Acquisition[196] Surety and Bonding Obligations - The company had surety bonds totaling approximately $1.5 billion primarily related to plugging and abandonment activities as of September 30, 2025[128] - The company anticipates a significant reduction in bonding requirements under the revised financial assurance rule[146] - The company has contractual obligations including a minimum spend of $90.0 million per year on plugging and abandonment activities starting January 1, 2026[201] - As of September 30, 2025, the company had outstanding performance bonds totaling $1.5 billion related to plugging and abandonment of wells in the U.S. Gulf of America[202] - The company also had outstanding letters of credit under its Bank Credit Facility totaling $43.3 million, which reduces available revolving credit commitments[202] Accounting and Reporting - There have been no changes to the company's critical accounting estimates from those disclosed in the 2024 Annual Report[203] - Information on recently adopted accounting standards impacting consolidated financial statements is referenced in the 2024 Annual Report[203] - The company has not experienced material changes in its exposures to certain market risks as disclosed in the 2024 Annual Report[204]

Core Insights - Talos Energy Inc. reported strong operational and financial results for Q3 2025, highlighting production outperformance and effective capital management [3][5][15] - The company generated over $100 million in adjusted free cash flow, enabling significant share repurchases and reinforcing its commitment to returning capital to shareholders [3][10] - Talos announced a successful exploration discovery at the Daenerys prospect and plans to drill an appraisal well in Q2 2026 [3][8] Operational Highlights - Talos achieved a production rate of 95.2 MBoe/d during Q3 2025, with 70% being oil and 76% liquids [5][16] - The Tarantula facility reached a sustained output of over 36 Mboe/d due to debottlenecking efforts [4] - The company maintained strong facility uptime and benefited from the absence of storm activity, contributing to production exceeding expectations [4][5] Financial Performance - Total revenues for Q3 2025 were $450.1 million, with a net loss of $95.9 million, primarily due to a non-cash impairment charge of $60.2 million [15][12] - Adjusted EBITDA for the quarter was $301.2 million, reflecting strong operational performance [15] - Capital expenditures for Q3 2025 totaled $104.6 million, with a focus on drilling and completions [20][21] Shareholder Returns - Talos repurchased approximately 5 million shares for $48.1 million in Q3 2025, part of a broader strategy to return over $100 million to shareholders in 2025 [3][10] - The company has a remaining share repurchase authorization of approximately $97 million as of September 30, 2025 [10] Guidance Updates - Talos revised its full-year 2025 guidance, expecting average daily production to range from 94.0 to 97.0 MBoe/d, with a focus on higher production and lower operating expenses [26][28] - The company anticipates oil production to constitute approximately 72% of total oil-equivalent production in Q4 2025 [26] Exploration and Development - The Daenerys exploration prospect confirmed the presence of oil, with plans for further appraisal drilling in 2026 [8] - Talos is also developing the Monument discovery, expecting first production between 20–30 MBoe/d gross by late 2026 [9] Financial Position - As of September 30, 2025, Talos had $332.7 million in cash and a net debt to last twelve months adjusted EBITDA ratio of 0.7x, indicating a strong balance sheet [24] - The company has a borrowing base of $700 million under its Bank Credit Facility, providing significant liquidity [24]

Core Viewpoint - Talos Energy (TALO) is expected to report a year-over-year decline in earnings due to lower revenues, with a consensus outlook indicating a quarterly loss of $0.35 per share and revenues of $428.23 million, down 15.9% from the previous year [1][3]. Earnings Expectations - The upcoming earnings report is anticipated to be released on November 5, and the stock may rise if actual results exceed expectations, while a miss could lead to a decline [2]. - The consensus EPS estimate has been revised 17.4% lower in the last 30 days, reflecting a bearish sentiment among analysts regarding the company's earnings prospects [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for Talos Energy is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -18.57%, which complicates predictions of an earnings beat [12]. - A positive Earnings ESP is generally a strong predictor of an earnings beat, especially when combined with a favorable Zacks Rank, but Talos Energy currently holds a Zacks Rank of 3, making it difficult to predict a positive outcome [10][12]. Historical Performance - In the last reported quarter, Talos Energy was expected to post a loss of $0.27 per share and delivered exactly that, resulting in no surprise [13]. - Over the past four quarters, the company has beaten consensus EPS estimates twice, indicating some potential for positive performance [14]. Conclusion - Talos Energy does not appear to be a compelling candidate for an earnings beat based on current estimates and trends, but investors should consider other factors before making decisions regarding the stock [17].

Core Insights - Talos Energy is currently navigating the downturn in the oil cycle, characterized by declining prices and fluctuating demand in Asia, leading to a generally pessimistic market outlook [1] Company Analysis - Despite the challenging market conditions, Talos Energy has managed to maintain its operations and show resilience [1] Investment Strategy - The investment strategy employed focuses on uncovering high-upside opportunities in overlooked sectors, particularly in small-cap, energy, and commodities [1] - The approach is rooted in the CAN SLIM framework, emphasizing fundamental momentum indicators such as EPS, ROE, and revenue, along with price-volume confirmation and macroeconomic filters [1] - Econometric tools like GARCH and Granger causality are utilized to assess risk, volatility, and the influence of macro data on market cycles [1] - The strategy does not rely on a single signal but aims to build conviction through a combination of technicals, fundamentals, and catalysts [1]