Talos Energy (TALO) Update - Mar 12

[dan_s]

We will be publishing an updated profile on Talos on Wednesday. The QuarterNorth Acquisition has closed three weeks earlier than expected. It increases Talos' production by ~30,000 Boepd (75% oil). Talos reported a 4,000 Boepd production increase from Q3 to Q4 2023. They will report production increases over the next two quarters that will be much larger. This is why I added TALO to our Sweet 16.
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HOUSTON, March 11, 2024 /PRNewswire/ -- Talos Energy Inc. ("Talos" or the "Company") (NYSE: TALO) today provided updated 2024 operational and financial guidance to reflect the closing of the QuarterNorth Energy Inc. ("QuarterNorth") acquisition earlier than expected. Prior guidance was based on an end-of-first-quarter 2024 close.

For the full year 2024, Talos expects average daily production between 89.0 and 95.0 thousand barrels of oil equivalent per day ("MBoe/d"), an increase from the previous guidance of between 87.0 and 93.0 MBoe/d.

This updated guidance includes approximately ten months of QuarterNorth contributions, as well as expected planned downtime and risking for unplanned downtime and weather-related events. < Each year my forecast model for TALO includes a 10% dip in production from Q2 to Q3 to account for potential hurricane related shut-ins.

Full year 2024 Cash Expenses guidance includes approximately ten months of QuarterNorth and a full twelve-month impact of the EnVen transaction, compared to only approximately ten and a half months incurred in 2023. Talos expects approximately $15 million in expenses related to the Helix Producer I ("HP-I") drydock and other associated maintenance. This guidance also includes multiple deepwater workover projects expected to increase and/or reinstate production.

For the first quarter 2024, Talos expects average daily production between 78.0 and 80.0 MBoe/d, an increase from the previous guidance of between 70.0 and 72.0 MBoe/d. First quarter guidance includes March impacts of approximately one month of contribution from QuarterNorth, partial impact of the planned HP-I dry-dock shut-in and planned downtime at the Tarantula facility, impacting production from the Katmai field.

For more details go here: https://www.talosenergy.com/investor-relations/news/news-details/2024/Talos-Energy-Increases-2024-Operational-and-Financial-Guidance-Following-Early-Closing-of-QuarterNorth-Acquisition/default.aspx

[dan_s]

TipRanks: "In the last 3 months, 4 ranked analysts set 12-month price targets for TALO. The average price target among the analysts is $19.25. The most recent 3 price targets updates are all at $20/share."

At the time of this post TALO was trading at $12.72.

The QuarterNorth Energy Acquisition that closed on March 11th is a BIG DEAL. It adds ~30,000 Boepd of current production and a lot of high-quality running room.

[dan_s]

Our updated profile on TALO has been posted to the EPG website. Take a hard look at the 3rd page.

The primary reason for putting TALO into the Sweet 16 for 2024 is because the Company will be reporting BIG production increases for three straight quarters, starting with a 6.3% Q over Q production increase in Q4 2023. The Q1 and Q2 production increases will be MUCH LARGER.

Timing is good on this trade.

TipRanks' price target is now $19.25. My current valuation is $23.00.