Energy Sector, Meets the New Talos Energy

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Talos Energy Sector

Talos recent participation in the Louisiana Energy Conference and J.P. Morgan Energy Conference

 

Since becoming a publicly traded company in May, Talos Energy has been responding to the buzz within the E&P sector by attending and presenting at local and national energy conferences. In what was considered a revere initial public opening, Talos Energy Inc. merged with Stone Energy Corporation to become Talos Energy. The new E&P company entered into a new credit facility agreement with an initial Borrowing Base of $600 million, $300 million of which is available. The leadership team at Talos Energy has always stayed in tune with industry trends using trade shows and conferences, but this year, it was time to show off the new E&P’s abilities and ambitions.

J.P. Morgan Energy Conference

This conference was a part of the J.P. Morgan Investor Series which bring corporate leaders, financial sponsors and institutional investors together to examine market and sector trends. This year’s Energy Conference featured company presentations from independent oil and gas corporations like Talos Energy. 1,200+ investors and presenters attendees were slated to participate this year. Talos successfully delivered a snapshot of the company and showcased the expertise of their leadership and management team.

During the Energy Conference, Talos Energy gave some insight into their near term, midterm, and long-term value creation. The company described itself as a positive cash flow generating business in an underinvested basin. In the near term, the company was the biggest public pure-play offshore oil company in the GoM with predicted average daily productions ranging from 49- 53 barrels per day in 2018. It was emphasized that Talos was focused on corporate returns and NAV growth starting with the drill-bit.

In terms of Talos Energy’s medium-term value creation it is a logical pure-play Gulf of Mexico consolidator, that continues to holistically develop their Gulf of Mexico portfolio on both the U.S. and Mexican coasts. Always a consummate admirer and follower of the Major Integrated oil and gas companies, Talos pointed out the Majors were monetizing high quality assets in US Gulf. Further the E&P company has its eye on a number of minor players and privates looking to exit the U.S. Gulf of Mexico. The 3 founders of Talos have become experts in acquisition’s and it will be interesting to see Talos’ next move.

The companies long term value creation comes from the operation of its Zama discovery which was Mexico’s earliest private offshore exploration well. Talos has initial gross original oil in place that could hold up to 2 billion barrels. Talos will be exploring additional prospects on 160,000 acres of Mexican offshore fields. Further, Talos anticipates the lease sale of both U.S. and Mexican property will provide for additional growth opportunity.

Louisiana Energy Conference

The new Talos also made it to the Louisiana Energy Conference. The conference is held annually to foster an understanding of the key opportunities and challenges that face the energy industry through direct interface between panels of management from public and private energy companies and other industry experts, in a comfortable and conducive setting. Talos President and Chief Executive Officer Timothy S. Duncan gave a presentation about Gulf of Mexico Basin E&P: Why It Makes Sense Today.

Talos has a history with the regional energy conference. Last year, the managing director of Mexico for Talos Energy LLC, Loren Long headed up a panel at the conference. When asked about the productivity of Mexican offshore operations in the midst of a $50 dollar a barrel environment. Long commented, “One thing we can depend on for the U.S. is at least the regulators here have a real familiarity with the industry. On the other hand, in Mexico, what we’ve seen is while they don’t have nearly the expertise with the technical issues [as the U.S. regulators do], they do have enthusiasm and a willingness to truly partner with us,” said Long. “We’ve seen that in Mexico and that’s been really refreshing. We want to see that more on this side of the border as well.”

The Regional and Federal Energy Conferences welcomed the ambitions of the new Talos and the new energy and production company welcomed the opportunity to keep a pulse on the industry. All in all, a good time was had by all.

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS

This communication may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included in this communication, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this communication, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events.

We caution you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures,  potential adverse reactions or changes to business or employee relationships resulting from the business combination between Talos Energy LLC and Stone Energy Corporation, competitive responses to such business combination, the possibility that the anticipated benefits of such business combination are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies, litigation relating to the business combination, and other factors that may affect our future results and business, generally, including those discussed under the heading “Risk Factors” in our final consent solicitation statement/prospectus, dated April 9, 2018, filed with the Securities and Exchange Commission pursuant to Rule 424(b)(3) under the Securities Act.

Reserve engineering is a process of estimating underground accumulations of oil, natural gas and NGLs that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil, natural gas and NGLs that are ultimately recovered.

Should one or more of these risks occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, to reflect events or circumstances after the date of this communication.

Free cash flow after debt service is a supplemental non-GAAP financial measure used by management and external users of the Company’s financial statements, such as industry analysts, investors, lenders and rating agencies.  The Company defines free cash flow after debt service as net cash from operations less capital expenditures, dividends and cash interest paid.

 

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