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]

Core Insights - The focus of U.S. oil production is shifting from shale oil to offshore projects in the Gulf of Mexico due to technological advancements, maturity of shale reserves, and supportive federal policies [2][3] Industry Trends - The U.S. Energy Information Administration (EIA) predicts that oil production in the Gulf of Mexico will increase from 1.8 million barrels per day to 2.4 million barrels per day by 2027 [2] - The Bureau of Ocean Energy Management (BOEM) supports this forecast, attributing growth to streamlined approval processes, advancements in offshore drilling technology, and renewed investment interest [2] - BP announced a $5 billion investment in the Tiber-Guadalupe project, which is expected to produce approximately 350 million barrels of oil and increase BP's daily production in the U.S. by 80,000 barrels [2] Company Developments - Talos Energy discovered oil and gas resources in the Gulf of Mexico, marking the most significant exploration success since Shell's Whale field discovery in 2017, with peak daily production expected to reach 65,000 barrels [3] - BP aims to increase its daily oil production in the Gulf to 400,000 barrels by 2030 [2] Economic Considerations - Offshore projects, despite higher initial costs, may have a lower breakeven point compared to shale oil, with estimates suggesting breakeven could drop to $20 per barrel for offshore projects versus $48 per barrel for shale [4] - The EIA forecasts Gulf of Mexico oil production to reach 1.89 million barrels per day this year, with a modest increase to 1.96 million barrels per day by 2026 [4] Policy Implications - Analysts believe that if favorable federal policies continue, the growth in offshore oil production could offset declines in onshore production [5] - The previous administration's focus on domestic energy production through regulatory relaxation has boosted offshore drilling activities, but potential changes in governance could impact future developments [5]

Group 1 - Talos Energy Inc. plans to release its third quarter 2025 results on November 5, 2025, after the U.S. financial market closes [1] - A conference call will be held on November 6, 2025, at 10:00 AM Eastern Time to discuss the results [1] - The conference call can be accessed via a webcast link on the company's website or by dialing specific phone numbers for North American and international listeners [2] Group 2 - Talos Energy is an independent energy company focused on maximizing long-term value through its Exploration & Production business in the U.S. Gulf of America and offshore Mexico [3] - The company emphasizes technical expertise, safe operations, environmental responsibility, and community impact in its business model [3]

Core Insights - Talos Energy Inc. announced successful drilling results at the Daenerys exploration prospect in the U.S. Gulf of America [1] - The discovery well reached a total vertical depth of 33,228 feet and encountered oil pay in multiple high-quality, sub-salt Miocene sands [2] - The well was completed approximately 12 days ahead of schedule and $16 million under budget, with plans for an appraisal well underway [2][4] Company Overview - Talos Energy is an independent energy company focused on maximizing long-term value through its Exploration & Production business in the U.S. Gulf of America and offshore Mexico [5] - The company leverages technical and operational expertise to acquire, explore, and produce assets while maintaining a focus on safety, efficiency, and environmental responsibility [5] Ownership Structure - Talos holds a 27% working interest in the Daenerys project, with Shell Offshore Inc. at 22.5%, Red Willow at 22.5%, Houston Energy, L.P. at 10%, Cathexis at 9%, and HEQ II Daenerys, LLC at 9% [3]

Core Viewpoint - Talos Energy Inc. has announced significant additions to its executive leadership team to enhance its offshore leadership position, including the appointment of a new CFO and other key executives [1][6]. Executive Appointments - Zachary B. Dailey has been appointed as Executive Vice President and Chief Financial Officer, effective August 18, 2025, bringing over 17 years of oil and gas experience, previously serving at Marathon Oil [1][2]. - William R. Langin has been appointed as Executive Vice President – Exploration and Development, effective September 29, 2025, with over 20 years of experience in the oil and gas sector, most recently at Hess Corporation [1][4]. - Megan Dick has been promoted to Executive Vice President and Chief Human Resources Officer, having 23 years of experience in human resources, including over 17 years in the oil and gas industry [1][5]. Leadership Transition - Gregory M. Babcock will step down as interim CFO but will continue in his role as Vice President and Chief Accounting Officer, highlighting a smooth transition in leadership [3]. Company Overview - Talos Energy is an independent energy company focused on maximizing long-term value through its Exploration & Production business in the U.S. Gulf of Mexico and offshore Mexico, emphasizing technical expertise and operational efficiency [7].

Company Participants - The conference call included key participants such as Clay P. Jeansonne (VP of Investor Relations), Gregory M. Babcock (VP, Interim CFO & Chief Accounting Officer), and Paul R. A. Goodfellow (President, CEO & Director) [1][3] Conference Call Overview - The Talos Energy Second Quarter 2025 Earnings Conference Call was held on August 7, 2025, and was recorded for future reference [2] - The call was initiated by Clay Jeansonne, who welcomed participants and introduced the key executives present for the discussion [3] Earnings Presentation - A detailed look at the company's results and operations update was provided through a prepared earnings presentation available on Talos' website under the Investor Relations section [4]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $294 million for the second quarter, exceeding consensus estimates [11] - Adjusted free cash flow for the quarter was $99 million, with a netback margin of approximately $35 per barrel of oil equivalent [12] - Capital expenditures (CapEx) for the second quarter were $126 million, with an additional $29 million spent on plugging and abandonment activities [12] - The leverage ratio improved to 0.7 times, and cash balance increased by 75% from the first quarter to $357 million [13][31] Business Line Data and Key Metrics Changes - Second quarter production averaged 93,300 barrels of oil equivalent per day, with oil comprising 69% of total production [11] - The company aims to generate an additional $100 million in free cash flow annually starting in 2026, with $25 million expected in 2025 [7][14] Market Data and Key Metrics Changes - The company is focused on high-margin projects in the Gulf of America and is evaluating opportunities in other deepwater basins [8] - The current hedge portfolio has a mark-to-market value of $56 million as of June 30, providing cash flow stability [30] Company Strategy and Development Direction - The company has outlined a corporate strategy with three pillars: continuous improvement, growth through high-margin projects, and building a portfolio with scale and longevity [7][8] - The focus is on capital discipline, operational excellence, and free cash flow generation to enhance shareholder value [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the economic resilience of key projects, which are estimated to break even at an average oil price of $35 per barrel [27] - The company is optimistic about the increasing role of offshore and deepwater in meeting global energy needs [33] Other Important Information - The company repurchased 3.8 million shares for $33 million, totaling $100 million in repurchases under the program [13][32] - A non-cash impairment of $224 million was recorded due to historical non-productive capital expenditures [26] Q&A Session Summary Question: Free cash flow priorities with leverage at 0.7 times - Management emphasized a capital discipline framework, balancing investments in the business while maintaining a strong balance sheet and returning cash to shareholders [36][37] Question: Decision to maintain the West Vella rig - The West Vella rig was retained due to its outstanding performance and cost advantages, allowing for efficient execution of projects [40][42] Question: Update on Zama project and potential operatorship - The transaction related to Zama is expected to close by the end of the third quarter, with ongoing collaboration with Pemex to progress the project [46][48] Question: Acquisition targets and market state for deepwater offshore - Management is exploring various opportunities in the Gulf of America and internationally, with a positive outlook for deepwater investments [51][53] Question: Impact of new regulations on organic growth plans - New regulations are seen as positive, with plans to actively participate in upcoming lease sales in the Gulf of Mexico [57][58] Question: Near-term targets for the $100 million savings plan - Focus areas include capital efficiency, commercial opportunities, and supply chain optimization to achieve the savings target [72][74] Question: Cadence of incremental share repurchases - The company plans to continue share repurchases, targeting up to 50% of annual free cash flow, with a quarterly run rate of around $33 million [75][76] Question: Details on the shutdown of Sunspear and Marmalade Greenfield - The Sunspear well was shut in due to a safety valve failure, with repairs planned to be completed within 30 days [82][93]