Talos Energy (TALO) Update - April 11

[dan_s]

At the time of this post, TALO was trading at $14.96. Pre-Pandemic (at end of 2019) this stock traded at $30/share. The Company is in much better shape today with lower leverage, more than enough operating cash flow and liquidity to fund double digit production growth and it offers investors significant Exploration Upside.

Note that Puma, Zama and Talos' growing Carbon Capture & Sequestration (CCS) business (partnership with Chevron) are not included in my valuation model.

Many investors fear the offshore companies, with TALO you get a lot of potential upside. They recently closed the EnVen Energy Acquisition that increases production by 23,000 Boepd (41% higher than Q4 actual production) and gives Talos a clear line of sight to multiple high-rate well completions over the next twelve months.

Talos is a very profitable company with net income of $4.63/share in 2022 with $7.84/share of operating cash flow.

I have posted my updated forecast/valuation model to the EPG website and we will be publishing an updated profile tomorrow morning.

My current valuation is $29.00 based on just 3.5X annualized operating cash flow.
TipRanks: "In the last 3 months, 3 ranked analysts set 12-month price targets for TALO. The average price target among the analysts is $22.00. The 3 price targets are $18, $22 and $26.

[dan_s]

I have posted the updated Talos Energy profile to the EPG website.