talos down hard

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Fraser921
Posts: 2953
Joined: Mon Mar 22, 2021 11:48 am

talos down hard

Post by Fraser921 »

down 16 % wow
Fraser921
Posts: 2953
Joined: Mon Mar 22, 2021 11:48 am

Re: talos down hard

Post by Fraser921 »

Now -18.5 %, area where lawyers start to think about suing for investors that had higher expectations

Some analysts will be downgrading the stock in next few days, just watch.
Fraser921
Posts: 2953
Joined: Mon Mar 22, 2021 11:48 am

Re: talos down hard

Post by Fraser921 »

comments from social media:

well that call sucked! 1. Looks like the EnVen acquisition was like buying a used car, what was sold is not what you thought. 2. CCS is way in the future with huge costs for acid gas pipe and compression, not to mention the difficulty of affecting process performance if the back pressure is not controlled to cm of water (that's a hard engineering task to do 24/7

What makes it all the worse is we now have to listen to TALO management tell us how great it all was.

Dismal results:
Q2 2022 production: 65.4 MBoe/d
Q2 2022 63.6 MBoe/d "Production figures are inclusive of the EnVen assets from the closing date of February 13, 2023 through the end of the quarter"
They paid $1.1B for Enven. From their press release when they bought Enven "The deal adds 24K boe/day of production"
It added a 50% dilution (1.275M outstanding shares compared with 825M), a debt increase and lower production.
In addition, they announce:
- a $100.0 million share repurchase program in March 2023 +
- "the Company is exploring a capital raise in the near term to finance the accelerated growth of its Talos Low Carbon Solutions ("TLCS") platform"

How are they willing to raise the capital? Through an equity? They buyback shares for ~$14 and then they will issue new shares for how much? ~$10?
Clowns

I'd be really surprised and bummed if they sell TALO shares to fund the CCS venture, that would not make any sense with the ongoing share BB. You'd be surprised at how many (big) companies are keen to get a share of the emerging CCS business
Fraser921
Posts: 2953
Joined: Mon Mar 22, 2021 11:48 am

Re: talos down hard

Post by Fraser921 »

That Enven acquisition is going to be a disaster (financially). This is the risk when you pay for something in stock and not cash. they think diluting and selling shares (thru issuing) and think it's free money

A total cluster fxxk.


Dan, how does the models capture these risks? That's why I model 3 x on ebitda max for everyone and prefer a FCF valuation on EV. 15% min No FCF, no investment until you get your sxxt together
Cliff_N
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Location: Seabrook, TX
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Re: talos down hard

Post by Cliff_N »

Dr. George Box (Statistician and Chemist) once said: "All models are wrong. Some are useful." It is next impossible to account for special causes in the future. I suppose one mitigate one's estimate by some factor, but that would be wrong too in normal times (common cause variation).

Operational Definitions of the Two Types, developed by Dr. Walter Shewhart in 1931 (refined by Dr. W. Edwards Deming in 1947):

Common Causes—those causes inherent in the process over time, affect everyone working in the process, and affect all outcomes of the process
Common cause of variation (day to day variation in WTI)

Special Causes—those causes not part of the process all the time or do not affect everyone, but arise because of specific circumstances
Special cause of variation (fears of recession, debt ceiling fears, China shut downs,

Unfortunately, markets are riddled with Special Causes, both Macro and Micro. Good news, when other people get spooked by a special cause, one can make good money off the frenzy. Warren Buffet strategy of buying and selling says as much: "...it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful."
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