Talos Energy has announced its operational and financial results for fiscal quarter ended September 30, 2023.

Third Quarter 2023 Highlights:          

• Production of 63.7 thousand barrels of oil equivalent per day ("MBoe/d") (76% oil, 83% liquids), inclusive of 2.4 MBoe/d of impacts from sustained loop currents requiring intermittent shut-ins of Talos's HP-1 floating production unit and associated infrastructure, as well as additional downtime.
• Revenue of $383.1 million, driven by realized prices (excluding hedges) of $80.75 per barrel for oil, $17.02 per barrel for natural gas liquids ("NGLs"), and $2.81 per thousand cubic feet ("Mcf") for natural gas.
• Net Loss of $2.1 million, or $0.02 Net Loss per diluted share, and Adjusted Net Income of $18.6 million, or $0.15 Adjusted Net Income per diluted share.
• Adjusted EBITDA of $248.8 million and Upstream Adjusted EBITDA of $255.2 million.
• Capital expenditures of $194.6 million, inclusive of plugging and abandonment and Carbon Capture & Sequestration ("CCS").
• Net cash provided by operating activities of $65.7 million.
• Adjusted Free Cash Flow of $8.5 million, excluding the $74.85 million cash received at closing of the partial sale in Talos Energy Mexico 7, S. de R.L. de C.V. ("Talos Mexico") to an affiliate of Grupo Carso.

Talos President and Chief Executive Officer Timothy S. Duncan commented: 
"During the third quarter, we were pleased with the advancements we made on several aspects of our business. Our operations team is working hard on our Lime Rock and Venice discoveries, which are expected to come online as scheduled in early 2024. We have recently signed an important exploration agreement with Repsol, where we are pooling resources with the goal of developing an inventory of impactful wells that could be tied to existing Talos infrastructure. Additionally, we closed the Talos Mexico transaction with Grupo Carso and are encouraged about growing our partnership and progressing Zama toward FID and first oil. Our CCS portfolio continues to receive strong endorsement from the industry, as we welcomed Equinor as a partner with a 25% interest in Bayou Bend following its purchase from Carbonvert. Lastly, at Harvest Bend, we have several EPA Class VI permit applications in process."

Duncan continued: "Weather-related disruptions in the Gulf of Mexico typically impact our production and drilling operations during the third quarter of the year. This quarter, we experienced production downtime related to sustained loop currents in the Green Canyon area which impacted the floating production unit in our Phoenix Field. However, our oil-weighted assets continued to deliver strong realizations, with a netback margin of close to $45 per barrel of oil equivalent. As that production is restored and new developments are added, we look forward to positive momentum as we close out the year."

RECENT DEVELOPMENTS AND OPERATIONS UPDATE

Drilling Joint Venture: In November 2023, Talos and an affiliate of Repsol entered into a 50/50 partnership to conduct a seismic reprocessing project covering approximately 400,000 gross acres, of which 96,500 acres are under lease by Talos, in the deepwater Green Canyon and Atwater Valley areas of the U.S. Gulf of Mexico. The joint venture aims to identify future subsea tie-back exploitation and exploration prospects in the area using Talos's Neptune facility as the host platform.

Mexico Divestiture: In September 2023, Talos announced the closing of the sale of a 49.9% equity interest in Talos Mexico to an affiliate of Grupo Carso. Talos received $74.85 million in cash at closing, with an additional $49.90 million due upon first production, for an aggregate price of $124.75 million. Talos Mexico, now owned 50.1% by Talos and 49.9% by Grupo Carso, holds a 17.4% unitized interest in the Zama project.

Exploration and Production Updates:

Lime Rock and Venice: Completion, construction, and subsea installation operations for Talos's Lime Rock and Venice discoveries remain on track. The Company anticipates first production by early 2024 from both wells, which will be tied-backed to the Talos-owned and operated Ram Powell facility. Talos owns a 60% working interest in both wells.

Non-Operated Updates: Drilling of the Marmalard well, operated by Murphy Oil Corporation, was recently completed, finding pay sands in both field targets, and will be moving to completion operations in an effort to achieve first production in early 2024. Talos holds an 11.4% working interest. The Odd Job subsea pump project, operated by Kosmos Energy, intended to sustain long-term production from the field, continues to progress and remains on track to be in service by mid-2024. Talos holds a 17.5% working interest.

Downtime Updates: During the third quarter 2023, sustained loop currents requiring intermittent shut-ins of Talos's HP-1 floating production unit and associated infrastructure impacted production by approximately 2.4 MBoe/d for the quarter, or 0.8 MBoe/d for the full year 2023. On Talos's operated Neptune facility, Talos continues to work on optimization efforts, including new chemical treatments and topside modifications, expected to be completed in the fourth quarter 2023. The Claiborne #1 well, operated by Beacon Offshore Energy LLC, was shut-in early in the third quarter 2023, impacting production by approximately 1.2 MBoe/d. The operator is planning a rig intervention for the fourth quarter 2023 to reinstate production in the first quarter of 2024. Talos holds a 25.25% working interest.

TLCS Updates:

Stratigraphic Wells: The Bayou Bend CCS partnership expects to spud the Talos-operated offshore stratigraphic well during the fourth quarter 2023. As previously announced, the partnership also expects to drill a Chevron-operated onshore stratigraphic well in the first half 2024. Talos Low Carbon Solutions ("TLCS") also intends to drill its first stratigraphic wells at its Harvest Bend CCS and Coastal Bend CCS projects in 2024. 

Class VI Permits: TLCS's first EPA Class VI permit application filed in August 2023 for its Harvest Bend CCS project received administrative completeness status in October 2023. This first step of the EPA's permitting process determines that the permit application contains all required information. The next step is technical review. In October 2023, TLCS filed its second Class VI permit application for two additional wells at its Harvest Bend CCS project. TLCS aims to file additional Class VI permit applications in 2024 for its Bayou Bend CCS, Harvest Bend CCS,  and Coastal Bend CCS projects.

OPERATIONAL & FINANCIAL GUIDANCE

For the full year 2023, Talos's average daily production per day is projected toward the low end of the current guidance of 66.0 - 71.0 MBoe/d given the fourth quarter 2023 production guidance update,

Cash operating expenses and general and administrative expenses are expected towards the low end of the current range of $410 - $430 million and $90 - $95 million, respectively.

Overall, capital expenditures, inclusive of plugging and abandonment, settled decommissioning obligations, and CCS Investments are projected to be in line with the current total guidance range. Specifically, Upstream capital expenditures are expected towards the low end of the current guided range of $650 - $675 million and CCS Investments are projected at or below the low end of the current range of $70 - $90 million. Plugging and abandonment and decommissioning spending for the full year 2023 is now estimated to be $120 - $130 million.

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