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Core E&P Skill Sets Support CCS Ambitions

We hosted a fireside chat with President and Chief Executive Officer Tim Duncan on August 21, 2023. The conversation can be accessed on-demand in our full report accessible below. This report contains the full transcript. Talos’s business model is built on the premise of being a full lifecycle asset manager of producing oil & gas properties in the US Gulf of Mexico. Management is leveraging the technical skill sets Talos has relied upon for success in its core E&P business to participate in decarbonization projects in major Gulf Coast industrial corridors. Ram Powell exemplifies Talos’s efforts to add value to Gulf of Mexico assets. Ram Powell is a tension-leg platform that was installed by Shell in ~3,200 feet of water on Vioska Knoll 956. Talos acquired the asset in the 2018 acquisition of Stone Energy. During 2H22, Talos drilled two discovery wells at the Lime Rock and Venice prospects. The prospects were identified from a fresh geologic evaluation of the area aided by reprocessed 3D seismic. Both wells are expected to be turned to production in 1Q24 and could bring production at the Ram Powell facility to levels not seen in 15 years. Talos will collect production handling fees from third-party working interest owners that will reduce its net operating cost of the facility. Management is working through the initial blocking and tackling to integrate assets acquired in the February 2023 EnVen acquisition. The assets are being folded into Talos’s processes to add value through incremental exploration and development. A discovery at Sunspear was announced in August 2023 and will be tied into the Prince platform in the next 18-24 months. A seismic reprocessing project has commenced on acreage surrounding the Neptune tension-leg platform. The acquisition by Grupo Carso of a 49.9% minority stake in Talos Mexico for $125 million in May 2023 established a floor value for the Zama discovery offshore Mexico equating to ~$2/share. Talos Mexico owns 17.4% of the Zama discovery. Grupo Carso is a Mexican industrial conglomerate with extensive infrastructure investments in Latin America and Europe. The Zama partners continue to advance the project toward a final investment decision (FID) and first production. In a 13G filing on August 3, 2023, the Carlos Slim family disclosed a 5.9% equity stake in Talos. Talos is considering the optimal financial structure for the Talos Low Carbon Solutions (TLCS) business, which is developing three carbon capture and storage (CCS) sites in major Gulf Coast industrial corridors.