Talos Energy (TALO) Update - Dec 9
Posted: Wed Dec 09, 2020 12:50 pm
HOUSTON, Dec. 9, 2020 /PRNewswire/ -- Talos Energy Inc. (NYSE: TALO) (the "Company") announced today that it has priced its underwritten public offering of 8,250,000 shares of common stock of the Company (the "Offering") for expected gross proceeds of $73,425,000 before associated fees and expenses. < $8.90 per share.
Additionally, the Company has granted the underwriter an option to purchase up to an additional 1,237,500 shares of common stock. The Company expects to use the net proceeds from the Offering to facilitate its general financing strategy and to repay a portion of its outstanding borrowings under its reserves-based lending facility as well as for general corporate purposes. The Offering is expected to close on December 11, 2020.
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Assuming the full allotment of 9,487,500 is sold, it will push Talo's total outstanding common stock to 82,518,000 shares.
> Cash proceeds will shore up the balance sheet and increase liquidity, which justifies using a higher multiple to value the stock. I raised it from 3.0 to 3.5 X operating cash flow per share.
> In a report released late yesterday, Subash Chandra from Northland Securities maintained a Buy rating on Talos Energy, with a price target of $19.00.
> Also on December 8 KeyBanc analyst Leo Mariani downgraded Talos Energy to Sector Weight from Overweight.
> Based on the higher share count for 2020 and 2021, my operating cash flow per share forecasts adjust to $3.74 for 2020 and $6.27 for 2021 < based on WTI averaging $50/bbl in 2021.
> So, my valuation is calculated as ($3.74 + $6.27)/2 X 3.5 = $17.52, which I round to $17.50.
My forecast/valuation spreadsheet will be posted to the EPG website this afternoon.
Additionally, the Company has granted the underwriter an option to purchase up to an additional 1,237,500 shares of common stock. The Company expects to use the net proceeds from the Offering to facilitate its general financing strategy and to repay a portion of its outstanding borrowings under its reserves-based lending facility as well as for general corporate purposes. The Offering is expected to close on December 11, 2020.
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Assuming the full allotment of 9,487,500 is sold, it will push Talo's total outstanding common stock to 82,518,000 shares.
> Cash proceeds will shore up the balance sheet and increase liquidity, which justifies using a higher multiple to value the stock. I raised it from 3.0 to 3.5 X operating cash flow per share.
> In a report released late yesterday, Subash Chandra from Northland Securities maintained a Buy rating on Talos Energy, with a price target of $19.00.
> Also on December 8 KeyBanc analyst Leo Mariani downgraded Talos Energy to Sector Weight from Overweight.
> Based on the higher share count for 2020 and 2021, my operating cash flow per share forecasts adjust to $3.74 for 2020 and $6.27 for 2021 < based on WTI averaging $50/bbl in 2021.
> So, my valuation is calculated as ($3.74 + $6.27)/2 X 3.5 = $17.52, which I round to $17.50.
My forecast/valuation spreadsheet will be posted to the EPG website this afternoon.