Talos Energy (TALO) Q2 Results - Aug 7

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Key Highlights:

Production of 52.4 thousand barrels of oil equivalent per day ("MBoe/d"), of which 69% was oil and 76% was liquids. Production for the quarter was impacted by 14.4 MBoe/d of production deferrals associated with voluntary shut-ins, accelerated maintenance, Tropical Storm Cristobal and other miscellaneous items. < Compares to my forecast of 56,500 Boe per day for Q2, which was before the impact of Cristobal.

Net Loss of $140.6 million in the quarter, or $2.14 loss per diluted share, and Adjusted Net Loss in the quarter of $29.4 million , or $0.45 adjusted loss per diluted share. < The Adjusted Net Loss compares to my forecast of $32.9 million. Year-to-date, Net Income of $17.1 million , or $0.28 per diluted share, and year-to-date Adjusted Net Loss of $13.8 million , or $0.22 per diluted share.

Adjusted EBITDA of $97.5 million for the second quarter and Adjusted EBITDA of $245.2 million for the first half of the year. < Beat my Q2 EBITDA forecast of $79.7 million.

Capital expenditures, inclusive of plugging and abandonment costs, of $129.1 million during the quarter. Year-to-date capital expenditures were $202.3 million .

As of June 30, 2020 , proved reserves for the Company totaled 189.5 MMBoe with a PV-10 of $2.8 billion . Additionally, probable reserves were 79.7 MMBoe with a PV-10 of $1.3 billion . Figures are presented pro forma for the recently closed acquisition.

Eliminated $39.2 million , or approximately 10% of the outstanding balance, of the Company's 11.00% Second Lien Notes.

On August 5, 2020 , closed the acquisition of additional working interests in 16 selected producing properties from affiliates of Castex 2005.

As of June 30, 2020 , maintained a leverage position of 1.4x Net Debt to Credit Facility LTM Adjusted EBITDA.

Over $400.0 million of liquidity from $107.9 million in cash and availability under the Company's $985.0 million borrowing base.

President and Chief Executive Officer Timothy S. Duncan commented: "Although the second quarter presented unprecedented challenges for our industry, we took several actions in the quarter that have made us a stronger company for the remainder of this year and beyond, including opportunistically lowering our debt, significantly reducing our costs, adding to our working interest in several producing assets we currently own and deepening our inventory of high impact prospects.

"We successfully completed our Tornado IV project, which will provide additional production from the main producing interval in the near term before we turn the well into a water injection well in early 2021. We are currently on location in our Kaleidoscope and Bulleit projects with first oil expected from both late in the third quarter, establishing a strong foundation for 2021.

"In Mexico, we are making progress on our Zama project by finalizing engineering design while continuing to work with Pemex on unitization as part of the formal instructions to reach an agreement in the next six months. Separately, Netherland, Sewell and Associates completed their review of our Xaxamani discovery in Block 31, providing a "best estimate" of the gross resources in the contract area at over 100.0 MMBoe. Xaxamani is our second major discovery in offshore Mexico and highlights our capabilities to drive exploration success in basins beyond the U.S. Gulf of Mexico ."

Duncan continued: "We lowered our capital program in 2020 compared to 2019 and, even with the integration of new assets, we currently expect to complete the year well inside our capital, cash operating and general and administrative expense guidance. Our teams are working tirelessly during a stressful time to keep us on track in realizing these savings. Looking ahead, we expect to exit the year with a production rate between 71.0 73.0 MBoe/d, remain free cash flow positive for the year and sustain one of the most competitive credit profiles amongst our peers. We remain focused on continuing to drive down our lifting cost structure while bolstering our deep project inventory and executing on ample business development opportunities to become a more diversified and resilient company."