Talos Energy (TALO) Update - Dec 18

[dan_s]

On December 10th, Talos announced details of a significant group of acquisitions for a total price of $650 million in stock (11 million shares) and $400 million of cash.

Read the press release: https://finance.yahoo.com/news/talos-en ... 00536.html

After reading the press release, go to Talos Energy's website and see this presentation: https://www.talosenergy.com/investors/e ... fault.aspx

I have updated my presentation for Talos and it will be available on the EPG Website this evening under the Sweet 16 tab. Just click on the Talos Energy logo to find it.

The series of acquisitions from several different entities is expected to close in the first quarter. Since the Effective Date of the deal is July 1, 2019 and Talos will be compensated to cash flow from operations from 7/1/2019 through closing, my forecast just assumes the deals all close on 1/1/2020.

Here is why my valuation of TALO is going up:
> The new assets are immediately accretive to cash flow from operations; adding over $150 million in FCF in 2020.
> It is also accretive to net asset value per share; adding 68 million Boe of 2P reserves with 83% PDP.
> Most of the acquired assets are held by production, so no significant drilling obligations.
> The package includes over 40 high quality drilling prospects generated by high-quality seismic. Castex has a highly respected exploration team.
> The deal reduces Talos' concentration risk, which is a big deal for offshore companies.

My stock valuation just goes up $1/share, but there is a lot more upside in this one if my preliminary 2020 forecast is confirmed.

I added TALO to the Sweet 16 because it has a "Company Maker" oil discovery offshore Mexico in shallow water. The stock is up over 50% YTD because investors see the potential. IMO it has at least 50% more upside from where the stock is trading today. You can find the updated profile for TALO on the EPG Website.