Talos Energy (TALO) Update - Dec 10
Posted: Tue Dec 10, 2019 11:31 am
New report from John White at Roth Capital 12-10-2019
"Our valuation is based on a net asset value (NAV) analysis which produced $39.79 per share which we adjusted higher to $40.00, which is our price target."
TALO: Updating Estimates
"Our production estimate for 4Q 2019 increases from the previous of 54,135 BOE per day to 55,950 BOE per day, in order to true up our figures with recent guidance. Our 4Q 2019 EPS/CFPS/EBITDA also moves higher, from the previous of $0.62/$2.44/$158.1 million to $0.82/$2.75/$172.5 million. < Compares to my Q4 forecasts of $0.86 EPS and $2.57 operating CFPS.
TALO’s production guidance for the full year 2019 is a range of 53,000 BOE per day to 56,000 BOE per day and TALO is further guiding to the low end of the range. Full year 2019 production has been affected by Hurricane Barry, the Boris 3 production and the Pompano shut-in.
The increase in earnings and cash flow is also aided by an increase in our commodity price estimates. Our WTI crude oil estimate increases from $54.00/bbl to $57.00/bbl and our Henry Hub natural gas estimate increases from $2.25/MMBtu to $2.65/MMBtu. < Talos sells all of their oil in the GOM market at a premium to WTI, about a $1/bbl below LLS which is trading close to $63/bbl today.
Near Term Catalyst: Premier Oil (PMO.L-NC) recently announced it has extended the bid deadline for its 25% stake in the TALO operated Zama oilfield to December after getting "significant interest." PMO.L started the sale process in August after raising resource estimates for the field in June. A Reuters report dated 11/14/2019 cited research away from ROTH Capital Partners that values PMO.L’s stake in Zama at $413 million. Applying this valuation to TALO’s 35% stake in Zama equals $578 million or $10.67 per share." < John told me that this is not in the NAV analysis and therefore not in his price target for TALO.
"Our valuation is based on a net asset value (NAV) analysis which produced $39.79 per share which we adjusted higher to $40.00, which is our price target."
TALO: Updating Estimates
"Our production estimate for 4Q 2019 increases from the previous of 54,135 BOE per day to 55,950 BOE per day, in order to true up our figures with recent guidance. Our 4Q 2019 EPS/CFPS/EBITDA also moves higher, from the previous of $0.62/$2.44/$158.1 million to $0.82/$2.75/$172.5 million. < Compares to my Q4 forecasts of $0.86 EPS and $2.57 operating CFPS.
TALO’s production guidance for the full year 2019 is a range of 53,000 BOE per day to 56,000 BOE per day and TALO is further guiding to the low end of the range. Full year 2019 production has been affected by Hurricane Barry, the Boris 3 production and the Pompano shut-in.
The increase in earnings and cash flow is also aided by an increase in our commodity price estimates. Our WTI crude oil estimate increases from $54.00/bbl to $57.00/bbl and our Henry Hub natural gas estimate increases from $2.25/MMBtu to $2.65/MMBtu. < Talos sells all of their oil in the GOM market at a premium to WTI, about a $1/bbl below LLS which is trading close to $63/bbl today.
Near Term Catalyst: Premier Oil (PMO.L-NC) recently announced it has extended the bid deadline for its 25% stake in the TALO operated Zama oilfield to December after getting "significant interest." PMO.L started the sale process in August after raising resource estimates for the field in June. A Reuters report dated 11/14/2019 cited research away from ROTH Capital Partners that values PMO.L’s stake in Zama at $413 million. Applying this valuation to TALO’s 35% stake in Zama equals $578 million or $10.67 per share." < John told me that this is not in the NAV analysis and therefore not in his price target for TALO.