Talos Energy(US:TALO)2024-11-12 21:44Commodity Prices - During the period from January 1, 2024, to September 30, 2024, NYMEX WTI crude oil prices ranged from a high of $87.69 per Bbl to a low of $66.73 per Bbl, while NYMEX Henry Hub natural gas prices ranged from a high of $13.20 per MMBtu to a low of $1.25 per MMBtu[90]. - The EIA expects NYMEX WTI spot prices to average $71.97 per barrel in Q4 2024 and $73.13 per barrel in 2025, with Henry Hub prices projected to rise to around $2.80 per MMBtu in Q4 2024 and $3.10 per MMBtu in 2025[90]. - As of September 30, 2024, the ceiling test computation was based on SEC pricing of $80.66 per Bbl of oil, $2.32 per Mcf of natural gas, and $19.06 per Bbl of NGLs, with a potential impairment of $293.0 million if commodity prices were 10% lower[91]. Financial Performance - Total revenues for the three months ended September 30, 2024, were $509.3 million, an increase of 33.0% compared to $383.1 million for the same period in 2023[95]. - Total revenues for the nine months ended September 30, 2024, were $1.49 billion, compared to $1.07 billion for the same period in 2023, reflecting a 38.9% increase[95]. - The company recorded $126.3 million in income from price risk management activities for the three months ended September 30, 2024, compared to an expense of $98.8 million in the same period in 2023[104]. Production Metrics - Oil production volumes increased by 40.6% to 6,258 MBbls in Q3 2024 from 4,451 MBbls in Q3 2023[95]. - Daily production volumes reached 96.5 MBoepd, up 32.8 MBoepd from 63.7 MBoepd in the prior year[97]. - The company experienced a total production volume increase of 24.7 MBoepd for the nine months ended September 30, 2024, compared to the same period in 2023[97]. - The increase in production was significantly attributed to the assets acquired in the QuarterNorth Acquisition, contributing 20.6 MBoepd[97]. Expenses - Lease operating expenses rose by approximately $59.8 million, or 58%, primarily due to the QuarterNorth Acquisition[98]. - Depreciation, depletion, and amortization expenses increased by approximately $110.9 million, or 68%, due to higher production volumes[99]. - General and administrative expenses for the three months ended September 30, 2024 increased by approximately $17.0 million, or 68%, primarily due to increased contractor and payroll expenses related to the QuarterNorth Acquisition[101]. - For the nine months ended September 30, 2024, general and administrative expenses increased by approximately $38.7 million, or 32%, mainly due to transaction costs and severance costs associated with the QuarterNorth Acquisition totaling $45.2 million[101]. Capital Expenditures and Financing - Total capital expenditures for the nine months ended September 30, 2024 amounted to $464.97 million, with $354.17 million allocated to upstream activities[109]. - The company repurchased approximately 4.0 million shares for $45.1 million during the nine months ended September 30, 2024, with $157.5 million remaining under the authorized share repurchase program[109]. - Cash flow from financing activities changed by $449.4 million in the nine months ended September 30, 2024, with the issuance of New Senior Notes generating $1,220.1 million after costs, funding $897.1 million for the redemption of existing notes and partially funding the QuarterNorth Acquisition[111]. Regulatory and Operational Risks - The BOEM's final rule on financial assurance requires lessees to meet new criteria based on credit ratings or the ratio of proved oil and gas reserves to decommissioning liabilities, which could materially impact operations if compliance is not met[91]. - A U.S. District Court ruling vacated the 2020 Biological Opinion related to the OCS oil and gas program, requiring new consultations that could delay permits and approvals for Gulf of Mexico operations[92]. - The company has interests in Deepwater fields in the U.S. Gulf of Mexico, which carry increased operational risks and potential liabilities exceeding insured amounts[92]. Liquidity and Cash Flow - As of September 30, 2024, the company's available liquidity was $842.9 million, consisting of cash and available capacity under the Bank Credit Facility[108]. - Operating activities generated $613.26 million in cash for the nine months ended September 30, 2024, compared to $342.81 million in the same period in 2023[110]. - Net cash provided by operating activities increased by $270.4 million in the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to increased revenues, offset by a $245.7 million increase in lease operating expenses[111].