Energy Prospectus

HOUSTON, Sept. 7, 2021 /PRNewswire/ -- Talos Energy Inc. ("Talos" or the "Company") (NYSE: TALO) again clarified today that the Company's assets were not the source of an oil release in Bay Marchand Block 5, off the coast of Port Fourchon, Louisiana in the U.S. Gulf of Mexico. As a responsible operator, Talos has chosen to continue to lead response efforts to contain and control the release to protect the safety of the public and the environment.

Talos was initially notified of a release observed on Bay Marchand Block 5 in Louisiana state waters on Tuesday, August 31st due to its status as a prior lessee of the block. The Company ceased production from the block in 2017. Subsequently, all Talos wells were appropriately isolated from the producing reservoir according to regulatory standards and all Talos pipeline infrastructure was removed by 2019.

Upon notification, the Company immediately initiated its response team and vessels began to arrive on location on Wednesday, September 1st to conduct oil containment and recovery operations with booms and skimmers. A lift boat equipped with a dive spread arrived on location on Saturday, September 4th and divers were deployed on Sunday to investigate potential sources of the release.

Talos conducted both physical inspections and subsea sonar scans that confirmed Talos assets were not the source or cause of the release. The Company has observed several non-Talos owned subsea pipelines that were likely impacted by Hurricane Ida, including a 12" diameter non-Talos owned pipeline that appears to be the source of the release. On Monday, September 6th, response personnel installed a containment dome on the affected pipe, which allows for the recovery of the release and transfer to surface vessels.

As confirmed by recent United States Coast Guard ("USCG") visual surveillance, surface evidence of the release has significantly diminished and there have been no observed impacts to shoreline or wildlife.

Talos is working closely with the USCG and Louisiana state officials to identify the owner of the line and is continuing to collaborate with USCG and other state and federal officials to receive approval to initiate permanent repair of the line. A timeline for repair operations is still being determined.

John Spath, Talos Senior Vice President of Production Operations, who is leading the Company's response efforts, commented: "Our team is doing everything possible to spearhead a fast, effective and safe containment and clean-up. Although the spill was unrelated to our operations, it was important to mobilize and identify the source and to contain the release to reduce safety and environmental risks. Though we have confirmed our assets are not involved, Talos is committed to establishing containment and control of the release. Our team reacted quickly and did the right thing, and we will continue working with local, state and federal regulators to see this through."

On September 6, Reuters reported the U.S. Coast Guard said it was probing nearly 350 reports of oil spills in and along the U.S. Gulf of Mexico in the wake of Hurricane Ida. Hurricane Ida's 150 mile per hour winds wreaked havoc on offshore oil production platforms and onshore oil and gas processing plants. About 88% of the region's offshore oil production remains shut and more than 100 platforms unoccupied after the storm made landfall on August 29. The Coast Guard has been conducting flyovers off the coast of Louisiana looking for spills. It is providing information to federal, state and local authorities responsible for cleaning the sites. Offshore oil producer Talos Energy Inc (TALO-Buy), which hired divers and a cleanup crew to respond to an oil spill in Bay Marchand, said old pipelines damaged during the storm were apparently responsible.

The source of the Bay Marchand leak remains unknown, said Coast Guard spokesman Lieutenant John Edwards. A Coast Guard-led team "will be looking at all potential sources in order to ensure any future risk is mitigated," he said. The spill off the coast of Port Fourchon, Louisiana, had decreased substantially since it was first discovered last week, Talos said. The company is not the owner of the pipelines and had ceased production operations in the area four years ago, said spokesman Brian Grove.

On September 6, Reuters reported Saudi Arabia slashed prices of all crude grades to Asian customers in October versus September, but left prices to northwestern Europe and the United States steady. The deep price cuts come as lockdowns across Asia to combat the highly infectious delta variant of the coronavirus have capped fuel demand in the region. Global oil supplies are also increasing as OPEC+ is raising output by 400,000 barrels per day a month between August and December. State oil giant Saudi Aramco lowered for the first time in four months the official selling price (OSP) of Arab Light crude for delivery to Asia in October to a premium of $1.70 per barrel versus the average of DME Oman and Platts Dubai crudes, according to a company pricing document. The price differential in September was a premium of $3 per barrel, the highest since February 2020.

On September 6, Reuters reported oil output from Kazakhstan's huge Kashagan field has dropped to 209,812 b/d so far this month, down 45% from 383,397 b/d in August, three sources familiar with production data told Reuters on Monday. The decline is because of maintenance scheduled for September 1-10, the sources said. Oil output from Kashagan had been planned at 333,000 b/d for September, the sources added. Kashagan output in August rose by 15% from July as the OPEC+ producer group eased output curbs. The Kashagan consortium includes Eni (EN-NC), ExxonMobil (XOM-NC), Shell (RDS-NC), Total (TTEF-NC), Inpex (1605.T-NC) and Kazakh state energy firm KazMunayGaz (KMGZ.KZ-NC).

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