Talos Energy (TALO) Update - Aug 16

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The new tax credit for Carbon Capture & Sequestration might be a big positive for Talos Energy (TALO)

Read this first:
Oil industry gears up to tap U.S. climate bill for carbon capture projects. Reuters.
Tax credits in the $430 billion U.S. climate and tax bill set to be signed into law this week will kickstart carbon sequestration projects, say oil and gas proponents, offsetting startup costs for some of the anti-pollution initiatives. Carbon capture and storage hubs that take gases from chemical, power and gas producers and oil refineries have become the energy industry's preferred way to combat climate warming. But large-scale development has snagged over costs and lack of guaranteed revenue. The Biden administration's Inflation Reduction Act, which was approved by lawmakers last week, provides a tax credit of up to $85 per ton for burying carbon dioxide produced by industrial activity, and up to $180 per ton for pulling carbon dioxide (CO2) from the air.

Then read this:

Talos Energy Provides Update on Additional Positive Impacts from the Inflation Reduction Act
August 9, 2022
HOUSTON, Aug. 9, 2022 /PRNewswire/ -- Talos Energy Inc. ("Talos" or the "Company") (NYSE: TALO) today provided some expected benefits to the Company if the Inflation Reduction Act of 2022 passes into law in its current form. The bill was approved by the Senate on Sunday, August 7, and is expected to be voted by the House of Representatives on Friday, August 12. If approved by the House, it is expected that President Biden will sign the Act into law.

The inclusion of several favorable provisions in the Act will benefit both Talos's Upstream business and its Carbon Capture and Sequestration business, as described below.

Offshore Oil & Gas Lease Sales:

Reinstates Lease Sale 257 held in November 2021, and high bidders must be awarded their leases: Talos was one of the most active bidders in Lease Sale 257 and was the high bidder on 10 blocks totaling over 57,000 gross acres.
Requires holding previously cancelled Gulf of Mexico Lease Sales 259 and 261 within an established timeline. Lease Sale 259 must occur by March 31, 2023, and Lease Sale 261 by September 30, 2023.
Future offshore wind lease sales tied to holding additional oil and gas lease sales: In order to issue an offshore wind lease, an oil and gas lease sale of at least 60 million acres, which is approximately the area-wide Gulf of Mexico size, must have been held in the prior year. This linkage will be in place for 10 years.
Deepwater royalty rates capped at current rates for 10 years. Talos's existing 1.3 million gross acres under lease are also unaffected.
Carbon Capture and Sequestration:

Increases the federal 45Q tax credit for permanent sequestration of carbon dioxide to $85/ton subject to prevailing wage and apprenticeship requirements.
Adds a direct pay component for the first five years of a project, after which it reverts to a federal income tax credit.
Extends eligibility to projects that commence construction before January 1, 2033.
President and Chief Executive Officer Timothy S. Duncan commented: "We have always believed maintaining offshore leasing in the Gulf of Mexico is good energy policy that provides energy security, energy production and energy jobs in one of the lowest carbon-intensive oil producing basins in the world. The acreage we were the high bidders on in Lease Sale 257 have identified drilling opportunities that will be actionable in our longer-term drilling calendar. Additionally, consistent leasing is an important part of our strategy of responsible energy development. We are also excited about the 45Q tax credit expansion and its potential impact on our growing CCS business. We believe we have put together one of the most attractive portfolios available for permanent carbon sequestration in close proximity to several industrial hubs where these credits will allow decarbonization to become a priority. There is no doubt the legislation is an important step for offshore energy security and CCS development along the United States Gulf Coast."

ABOUT TALOS ENERGY

Talos Energy (NYSE: TALO) is a technically driven independent exploration and production company focused on safely and efficiently maximizing long-term value through its operations, currently in the United States and offshore Mexico, both upstream through oil and gas exploration and production and downstream through the development of future carbon capture and storage opportunities. As one of the Gulf of Mexico's largest public independent producers, we leverage decades of technical and offshore operational expertise towards the acquisition, exploration and development of assets in key geological trends that are present in many offshore basins around the world. With a focus on environmental stewardship, we are also utilizing our expertise to explore opportunities to reduce industrial emissions through our carbon capture and storage initiatives along the U.S. Gulf Coast and Gulf of Mexico. For more information, visit www.talosenergy.com .

INVESTOR RELATIONS CONTACT

Sergio Maiworm
+1.713.328.3008
investor@talosenergy.com