Talos Energy (TALO) Update - Dec 21

[dan_s]

Talos Energy will "officially" move from the Sweet 16 to our Small-Cap Growth Portfolio on January 1, 2022.
> The increased financial flexibility announced below is good news.
> I expect Talos to announce a production increase of ~8,500 Boe per day from Q3 to Q4 when they announce Q4 results.
> The year-end reserve report should show the company's net asset value [(PV10 of P1 reserves) - total debt] / share of common stock to be greater than my valuation of $28/share.
> First Call's target price is $19.86 as of today.
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HOUSTON, Dec. 21, 2021 /PRNewswire/ -- Talos Energy Inc. (NYSE: TALO) ("Talos" or the "Company") today announced the successful completion of its semi-annual reserves-based loan ("RBL") redetermination process. The Company added an additional lender to the RBL facility and increased commitments from one other, adding a total of approximately $62 million of new commitments. Additionally, Talos added key provisions to increase flexibility for early-stage, pre-FID investments in carbon capture and sequestration ("CCS") business opportunities.

The Company's borrowing base was reaffirmed at $950 million. Total commitments increased from $730 million to approximately $792 million, including one new major lender joining the RBL facility with initial commitments of $50 million as the fourteenth lending bank. In combination with additional RBL paydown from cash flow, Talos expects liquidity at year-end 2021 of over $450 million, representing approximately a $75 million increase from September 30, 2021, and the Company expects liquidity to further increase in 2022. The Company also introduced provisions to the RBL facility to further increase its flexibility to invest in CCS and other emerging energy transition opportunities. Talos intends to progress stratigraphic well tests and other costs associated with Class VI injection permits, front-end engineering and design ("FEED") and additional sequestration site leasing as part of its 2022 capital program.

Talos President and Chief Executive Officer Timothy S. Duncan commented: "This successful redetermination process highlights the strong relationships we have with our lenders and the high quality of our asset base as we continue to attract capital and add flexibility to grow our business. We've steadily expanded liquidity throughout the year with a combination of debt paydown and increasing commitments and we expect that trend to continue as we approach our 1.0x – 1.5x leverage target in 2022 through additional debt reduction from free cash flow. In the coming months we expect to return our balance sheet to its pre-pandemic position of high liquidity, low leverage and no major maturities, and will do so while continuing our 20+ year track record of protecting equity shareholder value in the process. I believe that Talos is well-positioned for continued success in 2022."

Duncan continued: "Additionally, I'm very pleased with the additional flexibility we've gained to fund early-stage investments in our rapidly growing CCS business, which will allow us to advance our two identified project sites as well as continue to explore additional opportunities along the U.S. Gulf Coast. In the second half of 2021, our team has successfully won the only announced offshore CCS project site in the U.S. in Jefferson County, Texas. We also announced what we expect could be the first active "point source" CCS project on the Gulf Coast with Freeport LNG, allowing for substantial decarbonization of their facility onsite. In 2022, we plan to dedicate a small portion of our capital program to advancing these projects and other potential opportunities as we build a material, industry-leading CCS business unit for the future."

ABOUT TALOS ENERGY

Talos Energy (NYSE: TALO) is a technically driven independent exploration and production company focused on safely and efficiently maximizing long-term value through its operations, currently in the United States and offshore Mexico, both upstream through oil and gas exploration and production and downstream through the development of future carbon capture and storage opportunities. As one of the Gulf of Mexico's largest public independent producers, we leverage decades of technical and offshore operational expertise towards the acquisition, exploration and development of assets in key geological trends that are present in many offshore basins around the world. With a focus on environmental stewardship, we are also utilizing our expertise to explore opportunities to reduce industrial emissions through our carbon capture and storage initiatives along the U.S. Gulf Coast and Gulf of Mexico. For more information, visit www.talosenergy.com.