Talos Energy (TALO) JP Morgan Energy, Power and Renewables Conference summary

Strategic Growth and Operational Highlights

• Grew from five employees to a leading Gulf of Mexico operator over 12 years, focusing on infrastructure, oil-weighted assets, and low-cost M&A.

• Achieved record production in 1Q 2024, averaging 79.6 MBOE/D with 71% oil and 80% liquids mix, and increased FY guidance by ~2.5 MBOE/D after closing the $1.29B QuarterNorth acquisition.

• Closed the QuarterNorth acquisition, funded 50% equity/50% debt, restructuring the balance sheet and lowering cost of capital.

• Sold the CCS business for a high IRR, using proceeds to accelerate debt repayment and achieve leverage targets ahead of schedule.

• Maintained financial stability through commodity cycles, never breaching covenants or facing distress.

Growth Strategy and Asset Base

• Holds the 5th largest operator position and 4th largest acreage in the Gulf of Mexico, with over 1.5MM gross acres.

• Focuses on infrastructure-centric M&A to build drilling inventory, leveraging seismic technology for risk mitigation and opportunity identification.

• Owns and operates key infrastructure, enabling rapid tiebacks and high-margin production, with a project inventory spanning quick development to high-impact exploration.

• Offshore assets exhibit lower decline rates (20–21%) compared to onshore, supporting stable long-term production.

• Maintains a robust inventory of over 100 development, exploitation, and exploration projects near owned infrastructure.

Recent Transactions and Catalysts

• QuarterNorth acquisition completed at 2.5x–2.6x EBITDA, with all value underwritten inside proved reserves.

• Katmai West and Daenerys projects highlighted as major near-term catalysts, with Katmai West #2 well to be drilled in Q3 2024 and Daenerys targeting 100–300 MMBOE in 2H 2024.

• Advanced seismic imaging enables identification of large new prospects, such as a 200–300 million barrel inverted structure to be drilled next year.

• Free cash flow generation used to rapidly pay down debt, with revolver expected to be fully repaid by year-end and debt paydown target increased to $550M.

• Venice and Lime Rock wells delivered first production ahead of expectations, achieving highest rates at Ram Powell in 15 years.