Talos Energy(US:TALO)2020-05-10 21:23Financial Data and Key Metrics Changes - In Q1 2020, Talos Energy reported production of 58,100 barrels of oil equivalent per day, with March production reaching 70,300 barrels equivalent per day [11][16] - Adjusted EBITDA for the quarter was $148 million, representing a margin of $28 per barrel of oil equivalent and an 81% operating revenue margin [17] - Free cash flow for the quarter totaled approximately $49 million, marking the third consecutive quarter of solid free cash flow [11][17] - The company ended the quarter with a liquidity position of $593 million, including $486 million available under the RBL credit facility and approximately $107 million in cash [17] Business Line Data and Key Metrics Changes - The acquisition completed on February 28, 2020, added significant production capacity, with acquired assets generating an average daily production of over 19,000 barrels equivalent per day [9] - Capital expenditures for the quarter totaled approximately $73 million, which included a $7.6 million seismic change of control expenditure [11] Market Data and Key Metrics Changes - The average realized price for oil was just under $45 per barrel, aligning with average WTI prices during the same period [16] - The company has hedged approximately 10.3 million barrels of oil for the remainder of 2020 at a weighted average price of $47.29 per barrel [21] Company Strategy and Development Direction - The company is focused on maintaining health and safety protocols amid the COVID-19 pandemic while ensuring operational continuity [6] - Talos has aggressively reduced its 2020 capital and operating costs by over $200 million, including a 40% reduction in capital expenditures compared to 2019 levels [19][20] - The company is advancing its Zama discovery toward a final investment decision (FID) and expects to complete a key regulatory step soon [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented challenges posed by the COVID-19 pandemic and the associated drop in global demand [5] - Despite the downturn, management believes Talos is well-positioned to weather the current commodity downturn due to low leverage, high liquidity, and a robust hedge book [7][10] - The company expects to remain cash flow positive for 2020, even at current commodity prices, due to its hedging strategy [20] Other Important Information - The company has initiated production shut-ins in several fields to accelerate maintenance and reduce production where necessary [11][12] - Talos is continuing to monitor the market environment and work with partners regarding potential shut-ins and production planning [12] Q&A Session Summary Question: Can you walk us through the timing of next events regarding Zama? - Management explained the process of filing for a shared reservoir and the parallel negotiations with Pemex, indicating that the FID may be pushed to the end of the year due to COVID-related delays [29][33] Question: What is assumed in guidance regarding bringing shut-in production online? - Management noted that while some shut-ins are for maintenance, the timing of bringing production back online will depend on market conditions and operational considerations [34][35] Question: How should the lower spend this year impact next year? - Management indicated that while they have reduced spending significantly, they will maintain essential capital expenditures to ensure liquidity and asset value [39][40]