Core Viewpoint - Talos Energy's stock experienced a significant increase of 5.8% due to rising crude oil prices and positive analyst sentiment, driven by geopolitical tensions in the Middle East [2] Group 1: Stock Performance - Talos Energy shares closed at $15.48, with a notable volume of trading, indicating strong market interest [1] - The stock has gained 6.9% over the past four weeks, reflecting positive momentum [1] Group 2: Market Drivers - The surge in Talos Energy's stock is attributed to escalating geopolitical tensions in the Middle East, raising concerns about potential supply disruptions and consequently driving oil prices higher [2] - Positive revisions of price targets by analysts at Citigroup and Mizuho have bolstered investor confidence in Talos Energy [2] Group 3: Earnings Expectations - Talos Energy is projected to report a quarterly loss of $0.33 per share, marking a year-over-year decline of 650% [3] - Expected revenues for the upcoming quarter are $406.08 million, which is a decrease of 20.9% compared to the same quarter last year [3] Group 4: Analyst Sentiment - The consensus EPS estimate for Talos Energy has been revised 3.2% higher in the last 30 days, indicating a positive trend in earnings estimate revisions [4] - A positive trend in earnings estimate revisions is typically associated with stock price appreciation, suggesting potential for further strength in Talos Energy's stock [4] Group 5: Industry Context - Talos Energy operates within the Zacks Oil and Gas - Exploration and Production - United States industry, which includes other companies like HighPeak Energy, also holding a Zacks Rank of 3 (Hold) [5] - HighPeak Energy's consensus EPS estimate has remained unchanged at -$0.03, reflecting a year-over-year change of -109.7% [6]

Core Insights - Oil prices are hovering near $100 per barrel due to geopolitical tensions in the Middle East, particularly the conflict involving Iran, which has severely impacted oil flows through the Strait of Hormuz, reducing them by 97% from normal levels [1][2] Group 1: Oil Price Trends - West Texas Intermediate (WTI) crude recently settled around $95 per barrel, while Brent crude approached $100, with intraday highs nearing $105 [1] - The surge in oil prices is attributed to supply constraints and fears of broader energy infrastructure attacks [1] Group 2: Investment Opportunities in Mid-Cap Energy Stocks - **Talos Energy**: - Market Cap: $2.29 billion - Current Price: $13.53, with a year-to-date gain of approximately 23% - Fair Value Estimate: $18.75, indicating a 38.6% upside potential - Expected EPS growth for 2026 is 43.5%, with a free cash flow yield of 19.8% [1] - **Patterson-UTI Energy**: - Market Cap: $3.74 billion - Current Price: $9.85, reflecting a year-to-date return of about 61% - Fair Value Estimate: $12.06, suggesting a 22.5% upside - The company benefits from increased exploration activity due to elevated oil prices [1] - **Northern Oil & Gas**: - Market Cap: $2.69 billion - Current Price: $27.61, with a year-to-date return of 28.6% - Fair Value Estimate: $31.13, indicating a 12.7% upside - The company operates a non-operator model, generating stable revenues from oil-weighted assets [1] Group 3: Market Sentiment and Analyst Ratings - Talos and Patterson-UTI are highlighted as offering the deepest discounts to fair value despite recent rallies, while Northern Oil & Gas is noted for its blend of growth and yield [1] - Analyst ratings suggest a positive outlook for these mid-cap energy stocks amid the current market volatility driven by geopolitical risks [1]

Core Viewpoint - Talos Energy Inc. has experienced a significant decline in share price and reported disappointing financial results for Q4 2025, raising concerns about its performance in the energy sector [1][3]. Financial Performance - Talos Energy reported an adjusted loss per share of $0.44 for Q4 2025, missing estimates by $0.11 [3] - Revenue for Q4 2025 declined over 19% year-over-year to $392.2 million, falling short of consensus estimates by $37 million [3] - The company reported a net loss of $202.6 million in Q4, influenced by a non-cash impairment of $170 million [3] - For the full year 2025, Talos recorded a net loss of $494.3 million [3] Cost Management - Despite financial challenges, Talos maintained strong cost management, with operating costs averaging 30% lower than the offshore peer group average [4] - The company achieved approximately $72 million in free cash flow improvements, significantly exceeding its initial target of $25 million [4] Market Position - Talos Energy is recognized as a leading energy company focused on offshore oil and gas exploration and production in the U.S. Gulf Coast, Gulf of America, and offshore Mexico [2] - The company was recently included in a list of the 12 Best Crude Oil Stocks to Buy as tensions rise [4]

Core Insights - Talos Energy Inc. has embarked on a transformation journey starting in 2025, characterized by a revamped strategy, operational excellence, and strong financial performance despite a challenging commodity price environment [1] - The company generated significant free cash flow, leading to share repurchases and a commitment to return up to 50% of annual free cash flow to shareholders [19] Financial Performance - In 2025, Talos Energy invested approximately $500 million in exploration and development capital, producing an average of 95,000 barrels of oil equivalent per day, resulting in about $1.2 billion in adjusted EBITDA and $418 million in adjusted free cash flow [18] - The company reduced its outstanding share count by about 7% throughout 2025, demonstrating a focus on enhancing per-share value [19] - Talos Energy ended 2025 with low leverage of 0.7 times and approximately $1 billion in total liquidity, including a year-over-year increase in cash [21] Operational Highlights - Talos Energy achieved approximately $72 million in free cash flow improvements in 2025, significantly exceeding the initial target of $25 million through over 80 initiatives [5] - The company’s operating costs for 2025 were on average 30% lower than the offshore peer group average, contributing to top decile EBITDA margins in the E&P sector [7] - Production from the Katmai field is expected to remain flat through 2027, with the company focusing on the Katmai North prospect for potential exploration upside [10] Strategic Initiatives - The company’s strategy is built on three core pillars: improving business operations, growing production and profitability, and building a long-lived scale portfolio [5] - Talos Energy was named the apparent high bidder on 11 new leases, with eight awarded to date, totaling approximately $15 million, which enhances its resource potential significantly [11] - The Daenerys exploration prospect is expected to add significantly to the resource base, with appraisal activities set to begin in 2026 [11] Future Outlook - For 2026, Talos Energy expects production to average between 85,000 to 90,000 barrels of oil equivalent per day, with an anticipated increase in oil as a percentage of total production to approximately 73% [27] - The company plans to allocate $500 to $550 million in capital expenditures for 2026, focusing on low-breakeven, high-margin oil projects [24] - Talos Energy aims to maintain a disciplined capital allocation framework while pursuing opportunities for organic growth and potential inorganic growth outside the Gulf of America [43]

Financial Data and Key Metrics Changes - In 2025, Talos Energy produced an average of 95,000 barrels of oil equivalent per day, generating approximately $1.2 billion in adjusted EBITDA and $418 million of adjusted free cash flow despite declining oil prices [17][19] - The company reduced its outstanding share count by about 7% throughout 2025, returning approximately 44% of adjusted free cash flow to shareholders through share repurchases [18] - Talos ended the year with low leverage of 0.7 times and approximately $1 billion in total liquidity, with no near-term debt maturities [19] Business Line Data and Key Metrics Changes - The company achieved first production at Sunspear and Katmai West 2, with Katmai West 1 ranking among the top 10 producing wells in the Gulf of Mexico [8][9] - Operating costs for 2025 were on average 30% lower than the offshore peer group average, contributing to top decile EBITDA margins in the E&P sector [8][9] Market Data and Key Metrics Changes - Talos was named the apparent high bidder on 11 new leases, with 8 awarded to date, totaling approximately $15 million in the Big Beautiful Lease Sale [11] - The company significantly expanded its resource potential, adding 8 prospects with more than 300 million barrels of gross, unrisked resource potential [11][12] Company Strategy and Development Direction - Talos's strategy is anchored on three core pillars: improving business operations, growing production and profitability, and building a long-lived scale portfolio [6][10] - The company plans to focus on low break-even, high-margin oil projects, with approximately 60% of the total capital expenditures allocated to Talos-operated projects [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in building on the momentum created in 2025, with expectations for production to average between 85,000-90,000 barrels of oil equivalent per day in 2026 [24][25] - The company anticipates a higher oil cut in 2026, expected to be around 73%, which will support peer-leading margins [25][60] Other Important Information - Talos plans to allocate $100 million-$130 million of capital towards plugging and abandonment (P&A) activities, similar to 2025 levels [24] - The company is investing in state-of-the-art seismic technology and proprietary reprocessing to enhance its exploration capabilities [12][68] Q&A Session Summary Question: Can you speak about the key next operational steps for the Monument project? - Management confirmed that Beacon will mobilize the rig in early March to drill both wells back-to-back, expecting completion by the end of the year [30] Question: Can you provide more details on the safety valve issues at Genovesa? - Management explained that the issue was a piston failure, with plans to run an insert safety valve off an intervention vessel, aiming to have the well back online in the early part of the second half of the year [31][33] Question: What are the next steps at Daenerys? - Management indicated that the appraisal well is expected to be spud in late Q2 2026, with results anticipated by late Q3 or early Q4 [38][39] Question: How does the company view growth opportunities moving forward? - Management emphasized a focus on organic growth while remaining open to inorganic opportunities that fit within their disciplined capital allocation framework [41][44] Question: Can you discuss the Tarantula facility's recent throughput increase? - Management noted that the facility's capacity was increased to approximately 38,000 barrels per day through debottlenecking efforts, but further optimization gains are not expected [48][49] Question: What is the timeline for the new leases acquired in the Big Beautiful Lease Sale? - Management stated that from lease award, it typically takes about a year to prepare for drilling, with a total process from ideation to drilling readiness being less than two years [54][55]

Financial Data and Key Metrics Changes - In 2025, the company produced an average of 95,000 barrels of oil equivalent per day, generating approximately $1.2 billion in adjusted EBITDA and $418 million of adjusted free cash flow despite declining oil prices [17][19] - The company ended the year with low leverage of 0.7 times and approximately $1 billion in total liquidity, including a year-over-year increase in cash on hand [19][21] - Proved reserves were reported at 175 million barrels of oil equivalent, with a PV-10 value of approximately $3.2 billion [21][22] Business Line Data and Key Metrics Changes - The company achieved first production at Sunspear and Katmai West 2, with Katmai West 1 ranking among the top 10 producing wells in the Gulf of America [8][9] - Operating costs for 2025 were on average 30% lower than the offshore peer group average, contributing to top decile EBITDA margins [8][19] - The company realized approximately $72 million in free cash flow improvements through over 80 initiatives, exceeding the initial target of $25 million [7][8] Market Data and Key Metrics Changes - The company was named the apparent high bidder on 11 new leases, with 8 awarded to date, totaling approximately $15 million in the Big Beautiful Lease Sale [11][12] - The company expanded its resource potential by adding 8 prospects with over 300 million barrels of gross, unrisked resource potential, approximately double its current proved reserve base [11][12] Company Strategy and Development Direction - The company’s strategy is anchored on three core pillars: improving business operations, growing production and profitability, and building a long-lived scale portfolio [6][10] - The company plans to focus on low break-even, high-margin oil projects, with approximately 60% of the 2026 capital expenditures allocated to Talos-operated projects [24][25] - The company aims to become a leading pure-play offshore E&P company while maintaining a disciplined capital allocation framework [6][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in building on the momentum created in 2025, despite navigating a weakening commodity price environment [5][16] - The company expects production to average between 85,000-90,000 barrels of oil equivalent per day in 2026, with an increase in oil as a percentage of total production to approximately 73% [24][25] - Management highlighted the importance of maintaining a strong balance sheet to navigate commodity cycles and support strategic growth [19][20] Other Important Information - The company plans to allocate $100 million-$130 million of capital towards plugging and abandonment (P&A) activities, similar to 2025 levels [24] - The company is investing in state-of-the-art seismic technology and proprietary reprocessing to improve success rates and de-risk prospects [12][68] Q&A Session Summary Question: Can you speak about the key next operational steps for the Monument project? - The company expects Beacon to mobilize the rig in early March, drilling both wells back-to-back and completing them by the end of the year [30] Question: Can you provide more details on the safety valve issues at Genovesa? - The company identified a piston failure in the safety valve, with plans to run an insert safety valve off an intervention vessel, expecting to return the well to production in the early part of the second half of the year [31][33] Question: What are the next steps at Daenerys? - The company plans to spud the appraisal well late in the second quarter of 2026, with results expected by the end of the third quarter or start of the fourth quarter [38][39] Question: How does the company view growth opportunities? - Management indicated a focus on organic growth while remaining open to inorganic growth opportunities that fit within the disciplined capital allocation framework [41][44] Question: Can you discuss the service environment and potential rig access issues? - The company is planning many years ahead to ensure procurement strategies align with technical strategies, focusing on projects with the lowest break-even costs [74][75] Question: What is the company's view on legacy infrastructure? - The company sees increased interest in deepwater assets and believes that operating capabilities are crucial for managing legacy infrastructure effectively [76][79]

Financial Data and Key Metrics Changes - In 2025, Talos Energy produced an average of 95,000 barrels of oil equivalent per day, generating approximately $1.2 billion in adjusted EBITDA and $418 million of adjusted free cash flow despite declining oil prices [16][18] - The company ended the year with low leverage of 0.7 times and approximately $1 billion in total liquidity, including a year-over-year increase in cash on hand [18] - Talos returned approximately 44% of adjusted free cash flow to shareholders through share repurchases, reducing the outstanding share count by about 7% [17] Business Line Data and Key Metrics Changes - The company achieved first production at Sunspear and Katmai West 2, with Katmai West 1 ranking among the top 10 producing wells in the Gulf of Mexico [7][8] - Operating costs for 2025 were on average 30% lower than the offshore peer group average, contributing to top decile EBITDA margins in the E&P sector [7] Market Data and Key Metrics Changes - Talos was named the apparent high bidder on 11 new leases, with 8 awarded to date, totaling approximately $15 million in the Big Beautiful Lease Sale [10] - The company significantly expanded its resource potential, adding 8 prospects with more than 300 million barrels of gross, unrisked resource potential [10] Company Strategy and Development Direction - The company’s strategy is anchored on three core pillars: improving business operations, growing production and profitability, and building a long-lived scale portfolio [5][6] - Talos plans to focus on low break-even, high-margin oil projects, with approximately 60% of the 2026 capital expenditures allocated to Talos-operated projects [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in building on the momentum created in 2025, with expectations for production to average between 85,000-90,000 barrels of oil equivalent per day in 2026 [22][24] - The company anticipates that the appraisal well for the Daenerys discovery will be spud in late Q2 2026, with results expected in the second half of the year [14][39] Other Important Information - Talos continues to invest in state-of-the-art seismic technology and proprietary reprocessing, which has already yielded tangible results in lease sale successes [68] - The company is committed to maintaining a strong balance sheet while pursuing opportunities to optimize and strategically execute projects [23] Q&A Session Summary Question: Can you speak about the key next operational steps for the Monument project? - The company expects Beacon to mobilize the rig in early March, drilling both wells back-to-back and completing them by the end of the year [28] Question: Can you provide details on the remediation of the safety valve issues at Genovesa? - The company plans to run an insert safety valve off an intervention vessel, expecting to have the well back online in the early part of the second half of the year [31] Question: What are the next steps at Daenerys? - The appraisal well is expected to be drilled and evaluated by the end of Q3 or start of Q4 2026, with potential paths forward depending on the results [39] Question: How does the company view growth opportunities moving forward? - The company is focused on rigorous execution of its strategy while remaining open to both organic and inorganic growth opportunities, ensuring any deals fit within its capital framework [42][44] Question: What is the company's perspective on the service environment and access to rigs? - The company plans many years ahead and is focused on projects with the lowest break-even costs to ensure resilience in the market [75]

4Q 2025 Earnings Conference Call & Webcast February 25, 2026 www.talosenergy.com NYSE: TALO 1 Cautionary Statements Cautionary Statements The information in this presentation 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 presentation, regarding our strategy ...

Operational Risks - Approximately 19% of the company's production comes from properties it does not operate, limiting its control over operations and future developments [180]. - The company may experience production shut-ins due to adverse weather conditions, which could lead to increased costs and reduced future production [188]. - Deepwater exploration and development carry significantly higher operational and financial risks compared to shallower waters, requiring advanced technology and specialized rigs [193]. - The company faces significant cybersecurity threats that could disrupt operations and lead to financial losses, including unauthorized access to sensitive information and potential regulatory fines [178]. - A prolonged government shutdown could disrupt offshore operations and delay regulatory approvals, potentially increasing project timelines and costs, and decreasing production [226]. Financial Risks - The company relies on a limited number of customers, with Shell Trading (US) Company, Exxon Mobil Corporation, and Chevron Corporation representing 35%, 23%, and 12% of its oil, natural gas, and NGL revenues for the year ended December 31, 2025, respectively [199]. - The company may face challenges in obtaining financing on acceptable terms due to substantial capital requirements for operations and production replacement [241]. - A financial crisis or disruption in credit markets could limit access to funding and adversely impact business operations [238]. - The company may need to raise additional debt or equity or sell assets if cash flow or borrowing capacity declines, which could adversely affect business and financial condition [243]. - The company's debt level and related covenants may restrict operations and financial flexibility, requiring substantial cash flow for interest and principal payments [231]. Regulatory and Compliance Risks - Compliance with stringent environmental laws and regulations could increase costs and limit operations, with potential liabilities for pollution and other environmental impacts [183]. - Future regulatory changes could restrict or delay oil and natural gas exploration and production activities, potentially having a material adverse effect on the company's financial condition [184]. - The company is subject to evolving regulatory and environmental requirements in Mexico that could increase costs and compliance risks [205]. - The Hydrocarbons Sector Law adopted in March 2025 may impose new requirements that could increase operating costs for offshore operations in Mexico [93]. - The Clean Air Act (CAA) may result in stricter permitting requirements and increased costs for pollution control equipment due to evolving regulations [109]. Environmental Risks - Future legislation aimed at reducing greenhouse gas emissions may require new emissions-control equipment, increasing operational costs [215]. - Climate change litigation risks are increasing, with potential lawsuits alleging that oil and gas companies contribute to global warming and related damages [111]. - The Oil Pollution Act (OPA) imposes a damages liability cap of $167.8 million for oil spills, but this cap does not apply in cases of gross negligence or willful misconduct [99]. - The Endangered Species Act (ESA) may impose restrictions on operations in areas where endangered species are present, potentially affecting access to oil and gas development sites [104]. - The company faces risks from severe climatic events that could physically damage assets and disrupt exploration and production operations [114]. Operational Performance and Strategy - The company uses hedging transactions to manage price volatility for oil, natural gas, and NGLs, which may limit potential gains and expose it to financial risks [181]. - The company may not realize expected benefits from future acquisitions, which could adversely affect operating results [221]. - The company maintains insurance against some operating risks, but may not be fully covered for all potential liabilities, which could severely impact its financial position [189]. - The company recorded an impairment of $454.5 million for the year ended December 31, 2025, which could adversely affect business and financial condition [225]. - Seismic data interpretation does not guarantee the presence of commercially viable hydrocarbons, which could lead to unsuccessful drilling [209]. Human Capital and Corporate Governance - The company employs approximately 700 employees, with 54% (around 400) in offshore operations [133]. - The executive leadership team oversees human capital management with support from the Board of Directors [129]. - The company has implemented a "Stop Work Authority" program to empower employees to halt work for safety concerns [134]. - The annual incentive plan (AIP) ties employee bonuses to various performance metrics, including financial and safety goals [136]. - The company maintains a Human Rights Policy that applies to all employees, contractors, and suppliers [126]. Community Engagement and Corporate Responsibility - The company supports community engagement through corporate philanthropic efforts and provides an annual allowance for charitable donations [138]. - The company offers comprehensive benefits, including retirement savings contributions and health and wellness initiatives [137]. - The company is committed to non-discriminatory practices in employment as outlined in its Code of Business Conduct [125]. - The company maintains general liability insurance with a limit of $500 million per occurrence and $250 million for named windstorms [80]. - Intense industry competition may limit growth opportunities and increase costs, as larger competitors may outbid the company for leases and acquisitions [198].

Production and Reserves - Talos produced 64.9 thousand barrels of oil per day (MBo/d) and 89.2 thousand barrels of oil equivalent per day (MBoe/d) in Q4 2025, with full-year production of 65.9 MBo/d and 94.6 MBoe/d[5]. - Talos achieved a year-end 2025 proved reserves of 174.7 million barrels of oil equivalent (MMBoe) with a present value (PV-10) of $3.2 billion[5]. - Talos's probable reserves as of December 31, 2025, were 102.5 MMBoe, with a PV-10 value of approximately $2.3 billion[38]. - Production guidance for 2026 is expected to range from 62 to 66 MBo/d and 85 to 90 MBoe/d[40]. - For Q1 2026, production is estimated to be between 60 to 64 MBo/d and 84 to 88 MBoe/d[41]. Financial Performance - The company reported a net loss of $202.6 million, or $1.19 per diluted share, for Q4 2025, and a full-year net loss of $494.3 million, or $2.82 per diluted share, which included $170.4 million of non-cash impairment charges[5][22]. - Talos generated Adjusted EBITDA of $240.1 million in Q4 2025 and $1,198.6 million for the full year, with Adjusted Free Cash Flow of $21.3 million in Q4 and $417.7 million for the full year[5][22]. - Total revenues for Q4 2025 were $392.2 million, a decrease of 19.2% compared to $485.2 million in Q4 2024[60]. - Net loss attributable to Talos Energy Inc. for the year ended December 31, 2025, was $494.3 million, compared to a loss of $76.4 million in 2024[60]. - Operating expenses increased to $636.2 million in Q4 2025, up 38.9% from $458.0 million in Q4 2024[60]. Capital Expenditures and Investments - The company invested $150.4 million in capital expenditures in Q4 2025 and $498.6 million for the full year, excluding plugging and abandonment costs[5][22]. - Capital expenditures guidance for 2026 is projected to be between $500 million and $550 million, with P&A expenditures expected to range from $100 million to $130 million[40]. - Approximately 40% of total capital expenditures in 2026 will be non-operated, primarily driven by the Beacon-operated Monument project[40]. Shareholder Returns - The company repurchased approximately 1.5 million shares for $16.4 million in Q4 2025, and returned $119.1 million to shareholders through share repurchases in 2025, representing about 29% of annual free cash flow[5][16]. - Talos's capital allocation framework expects to allocate up to 50% of annual free cash flow to share repurchases, with a remaining authorization of approximately $81 million as of December 31, 2025[5][17]. Impairments and Charges - The company recorded a non-cash impairment charge of $170.4 million in Q4 2025 due to lower average oil prices, which does not impact cash flows[5][20]. - The impairment of oil and natural gas properties for Q4 2025 was $170,392 thousand, contributing to the overall net loss[82]. - The company reported an impairment of oil and natural gas properties of $454.5 million for the year ended December 31, 2025[62]. Debt and Liquidity - Total debt as of December 31, 2025, was $1,250.0 million, with net debt at $887.2 million, resulting in a net debt to pro forma LTM adjusted EBITDA ratio of 0.7x[32]. - Cash on hand as of December 31, 2025, was $362.8 million, providing total liquidity of $965.4 million[32]. - Long-term debt remained stable at approximately $1.23 billion in both 2025 and 2024, showing no significant change[58]. Assets and Equity - Total current assets rose to $841.3 million in 2025, compared to $659.4 million in 2024, reflecting an increase of 27.6%[58]. - Talos Energy's stockholders' equity decreased to $2.17 billion in 2025 from $2.76 billion in 2024, a decline of 21.4%[58]. - The company’s total assets decreased to $5.55 billion in 2025 from $6.19 billion in 2024, a decline of 10.4%[58]. Other Financial Metrics - Adjusted General & Administrative Expenses for the year ended December 31, 2025, were $134.0 million, compared to $155.4 million in 2024, reflecting a decrease of 13.8%[65]. - The company had a net cash increase of $224.6 million for the year ended December 31, 2025, compared to an increase of $78.4 million in 2024[62]. - Depreciation, depletion, and amortization expenses for the year ended December 31, 2025, were $1.2 billion, up from $1.1 billion in 2024[62].