Talos Energy (TALO) Update - June 7

Talos Energy (TALO) Update - June 7

Postby dan_s » Mon Jun 07, 2021 8:59 am

As of this morning we have 48 registered for today's webinar that is being hosted by Talos Energy.

TALO opened at $16 this morning, up ~95% YTD. My valuation of the stock (based on $65 WTI for all future periods) is $22/share. Higher oil price and the announcement below will increase my valuation.

HOUSTON, June 3, 2021 /PRNewswire/ -- Talos Energy Inc. ("Talos" or the "Company") (NYSE: TALO) today provided an update regarding successful drilling operations on the Company's Tornado 3 sidetrack well ("Tornado Attic" well), which successfully discovered pay in-line with pre-drill expectations. Talos holds a 65.0% working interest in the Tornado field and is the operator with Kosmos Energy also holding a 35% working interest.

The Tornado Attic well was designed to optimize recovery and was drilled approximately 4,500 feet from the Tornado water flood injection well and 1,550 feet away from the closest existing producer well. Drilling operations were conducted from the Seadrill West Neptune rig and encountered approximately 85 gross (63 net) feet of true vertical thickness pay in the B6 Upper Zone with rock properties and reservoir consistent with internal modeling and pre-drill expectations. The Company will immediately move to the completion phase. As a result of the existing infrastructure in place and accelerated completion timeline, production is expected by the third quarter of 2021, ahead of initial expectations. Talos expects the Attic Well to produce approximately 8-10 thousand barrels of oil equivalent per day ("MBoe/d") gross (approximately 80% oil) once online.

The Tornado field was discovered in 2016 and is located approximately three miles south of the Company's Phoenix complex, which was acquired in 2013 and utilizes the HP-I floating production facility. To date the Tornado field has produced approximately 34 million barrels of oil equivalent ("MMBoe") gross, approximately 80% of which is oil. In 2020, Talos initiated the intra-well waterflood project, drilling an injection well which sources water from a large aquifer above the producing B-6 Sand. Known as a "dump flood", the project is one of the first of its kind in a subsea, deepwater environment. The higher pressured aquifer naturally injects over 20,000 barrels of water a day into the lower pressured producing reservoir at the downdip boundary of the geological formation, creating reservoir energy to help maintain production and increase ultimate recovery throughout the Tornado field.

Talos President and Chief Executive Officer Timothy S. Duncan commented: "We are pleased to announce success with our latest Tornado well, which will optimize recovery from the field and builds on the success of the recent water flood project where our multi-disciplinary team has done a fantastic job. More broadly, this success highlights our diversity of project inventory, spanning a wide range of target sizes, risk profiles and turnaround times to first production by utilizing infrastructure in place. We look forward to bringing this well online ahead of schedule and to adding production from our prolific Tornado field, which has been a steady, material contributor to our Company's success since it was discovered over five years ago."

ABOUT TALOS ENERGY

Talos Energy (NYSE: TALO) is a technically driven independent exploration and production company focused on safely and efficiently maximizing cash flows and long-term value through its operations, currently in the United States Gulf of Mexico and offshore Mexico. As one of the U.S. Gulf of Mexico's largest public independent producers, we leverage decades of geology, geophysics and offshore operations expertise towards the acquisition, exploration, exploitation and development of assets in key geological trends that are present in many offshore basins around the world. Our activities in offshore Mexico provide high impact exploration opportunities in an oil rich emerging basin. For more information, visit www.talosenergy.com.
Dan Steffens
Energy Prospectus Group
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Re: Talos Energy (TALO) Update - June 7

Postby dan_s » Mon Jun 07, 2021 12:12 pm

If you have any questions you want me to ask Tim Duncan on today's webinar just post them here by 1:30 CT.

You can also type your questions into the chat box during the webinar.
Dan Steffens
Energy Prospectus Group
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Posts: 25582
Joined: Fri Apr 23, 2010 8:22 am

Re: Talos Energy (TALO) Update - June 7

Postby dan_s » Mon Jun 07, 2021 1:13 pm

Using an oil price of $65/bbl to value Talo's 12-31-2020 proved reserves (just P1) the PV10 value is $4,189 million. As of 3-31-2021 the company had net debt of $1,113 million and common stock outstanding of 81.7 million shares.

($4,189 - $1,113) / 81.7 = net asset value of $37.65 per share.

TALO is trading for $16.10 at the time of this post.

Our webinar today will be taped and the replay link will be sent to over 250 people, including our members in Europe and Asia who are eager to find undervalued stocks like this.
Dan Steffens
Energy Prospectus Group
dan_s
 
Posts: 25582
Joined: Fri Apr 23, 2010 8:22 am

upgrade from citi talo

Postby Fraser921 » Tue Jun 08, 2021 9:26 am

Citigroup Starts Talos Energy at Buy with $19 Price Target
BY MT Newswires
— 10:14 AM ET 06/08/2021

) has an average rating of outperform and price targets ranging from $13 to $21, according to analysts polled by Capital IQ.
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Re: Talos Energy (TALO) Update - June 7

Postby dan_s » Tue Jun 08, 2021 9:43 am

The replay link to yesterday's webinar has been posted to the EPG website and will be sent out via email to our global membership this morning.

Talos has ~60% of their Q2 oil production hedged at $44.89/bbl, so they will report a Q2 loss because of the mark-to-mark adjustment on their hedges. They will have much more unhedged oil in 2H 2021. Based on my forecast model, operating cash flow should be in the $440 to $460 million range this year, which compares to their 2021 capital program of $340 to $370 million. Based on an average WTI oil price of $65/bbl, Talos' operating cash flow should jump to approximately $700 million in 2022.

Zama and Puma West have huge potential for this company and they are not included in my valuation.
Dan Steffens
Energy Prospectus Group
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Posts: 25582
Joined: Fri Apr 23, 2010 8:22 am


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