Talos Energy (TALO) Update - Nov 4
Posted: Thu Nov 04, 2021 3:46 pm
As I posted here earlier, TALO is probably moving to our Small-Cap Growth Portfolio, just because of its size. MTDR, MGY and NOG all deserve promotions to the Sweet 16. I will work on TAKO early next week. My valuation is $28/share.
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Stifel's take:
Talos Energy Inc. (TALO, $13.22, Buy; Target $26.00)
3Q Mixed, Balance Sheet Quickly Improving - Michael S. Scialla
We view the release as neutral to slightly positive. The positives included: i) 3Q21 FCF beat our estimate as capex was 20% below our forecast and 8% below consensus; ii) production has been largely restored following Hurricane Ida and could beat lowered expectations barring additional storms as late September rates were tracking above the 4Q21 guidance midpoint; iii) the company's emerging CCS business could benefit from proposed legislation that would amend the 45Q tax credit for sequestering CO2 in permanent geologic storage to $85/ton from $50/ton. The negatives included: i) 3Q21 CFPS was 8% below our estimate on higher than expected unit cash costs. In summary, TALO would have likely reported a stronger quarter were it not for Hurricane Ida. The company is well positioned to compete for accretive acquisitions as its balance sheet is quickly deleveraging.
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Stifel's take:
Talos Energy Inc. (TALO, $13.22, Buy; Target $26.00)
3Q Mixed, Balance Sheet Quickly Improving - Michael S. Scialla
We view the release as neutral to slightly positive. The positives included: i) 3Q21 FCF beat our estimate as capex was 20% below our forecast and 8% below consensus; ii) production has been largely restored following Hurricane Ida and could beat lowered expectations barring additional storms as late September rates were tracking above the 4Q21 guidance midpoint; iii) the company's emerging CCS business could benefit from proposed legislation that would amend the 45Q tax credit for sequestering CO2 in permanent geologic storage to $85/ton from $50/ton. The negatives included: i) 3Q21 CFPS was 8% below our estimate on higher than expected unit cash costs. In summary, TALO would have likely reported a stronger quarter were it not for Hurricane Ida. The company is well positioned to compete for accretive acquisitions as its balance sheet is quickly deleveraging.