Talos Energy Announces New Discovery and Adds Additional 2024 Prospect in the Gulf of Mexico

Rhea-AI Summary

Talos Energy Inc. (NYSE: TALO) has announced a new oil and gas discovery in the Gulf of Mexico and participation in an additional 2024 prospect. The Ewing Bank 953 well discovered commercial quantities with an estimated gross recoverable resource potential of 15-25 MMBoe and an initial production rate of 8-10 MBoe/d. First production is expected in mid-2026.

Separately, Talos entered an agreement to participate in the Sebastian prospect, currently drilling in Mississippi Canyon Block 387. This prospect has an estimated gross resource potential of 9-16 MMBoe with a potential initial production rate of 6-10 MBoe/d. Results are expected in late Q4 2024.

Positive

• EW 953 well discovery with 15-25 MMBoe gross recoverable resource potential
• Initial gross production rate of 8-10 MBoe/d for EW 953 well
• Sebastian prospect with 9-16 MMBoe estimated gross resource potential
• Potential initial production rate of 6-10 MBoe/d for Sebastian prospect
• No update required to capital expenditures guidance for 2024

Negative

• None.

Insights

Petroleum Engineer

The EW 953 well discovery is a significant find for Talos Energy, with 127 feet of net pay and an estimated 15-25 million barrels of oil equivalent in recoverable resources. The 8-10% initial production rate is impressive for a single subsea well. The tie-back to existing infrastructure at South Timbalier 311 Megalodon platform will likely accelerate time-to-market and reduce development costs. The Sebastian prospect, while smaller, targets a proven reservoir and could provide quick returns if successful. Both projects align with Talos's strategy of leveraging existing infrastructure for cost-effective production growth.

Financial Analyst

This discovery strengthens Talos's production outlook without straining its capital budget. The EW 953 well's 15-25 million BOE resource potential could significantly boost Talos's reserves. With a 33.3% working interest, Talos's net share could be 5-8.3 million BOE. The Sebastian prospect, if successful, would add another 3-5.3 million BOE to Talos's portfolio. These projects demonstrate Talos's ability to generate organic growth through exploration, potentially improving its valuation metrics and attracting investor interest in the competitive E&P sector.

Market Research Analyst

Talos's strategy of focusing on "tactical, lower-risk opportunities" that can be brought online quickly is well-suited to the current market environment. With oil prices volatile, the ability to rapidly bring new production online allows for better capital allocation decisions. The company's approach of tying back to existing infrastructure not only reduces costs but also minimizes environmental impact, which is increasingly important to investors. The diversification of Talos's portfolio with these new prospects could help mitigate risk and potentially smooth out production and revenue streams, making the stock more attractive to risk-averse investors.

HOUSTON, Sept. 5, 2024 /PRNewswire/ -- Talos Energy Inc. ("Talos") (NYSE: TALO) today announced that its Ewing Bank 953 well ("EW 953 well") successfully discovered commercial quantities of oil and natural gas. Separately, Talos entered into an agreement to participate in the Sebastian prospect, currently drilling in the Mississippi Canyon Block 387 of the U.S. Gulf of Mexico.

The EW 953 well encountered approximately 127 feet of net pay in the target sand at approximately 19,000 feet true vertical depth ("TVD"). Preliminary data indicates an estimated gross recoverable resource potential of approximately 15 – 25 million barrels of oil equivalent ("MMBoe") from a single subsea well with an initial gross production rate of 8 – 10 thousand barrels of oil equivalent per day ("MBoe/d"). First production is expected in mid-2026. Current plans are for the well to be tied back to the South Timbalier 311 Megalodon host platform, which Talos partially owns. Talos holds 33.3% working interest ("W.I.") in the EW 953 well, with Walter Oil & Gas Corp. (Operator) holding 56.7% W.I. and Gordy Oil Company holding 10% W.I.

The Sebastian prospect began drilling in late August 2024, targeting the regionally prolific Upper Miocene K-1 reservoir at approximately 12,000 feet TVD. This amplitude-supported prospect contains an estimated gross resource potential of 9 – 16 MMBoe with a potential initial production rate of 6 – 10 MBoe/d. Results are expected late fourth quarter 2024. If successful, the Sebastian prospect will be tied back to the Delta House facility, where Talos has a partial interest. Murphy Oil Corporation will be the operator.

Talos Interim President and Chief Executive Officer Joe Mills stated, "We are excited about the results of the Ewing Bank 953 well. The well logged better than expected rock properties, which we believe should lead to a robust initial flow rate. This discovery follows a series of successful single-well subsea exploitation wells tied back to Talos-owned existing infrastructure, like Venice and Lime Rock, Sunspear, and Claiborne sidetrack. Additionally, we were able to include the Sebastian prospect in our second-half 2024 drilling portfolio without requiring updates to our capital expenditures guidance for the year. These drill-ready projects exemplify our focus on tactical, lower-risk opportunities that can be brought online relatively quickly and supplement our larger, longer lead drilling projects."

ABOUT TALOS ENERGY

Talos Energy (NYSE: TALO) is a technically driven, innovative, independent energy company focused on maximizing long-term value through its Upstream Exploration & Production business in the United States Gulf of Mexico and offshore Mexico. We leverage decades of technical and offshore operational expertise to acquire, explore, and produce assets in key geological trends while maintaining a focus on safe and efficient operations, environmental responsibility, and community impact. For more information, visit www.talosenergy.com.

INVESTOR RELATIONS CONTACT

Clay Jeansonne
investor@talosenergy.com

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 "will," "could," "believe," "anticipate," "intend," "estimate," "expect," "project," "forecast," "may," "objective," "plan" 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, our ability to realize our 2024 capital expenditures guidance; successful development of the prospects described herein; reservoir performance; the outcome of future exploration efforts; profitability and other results of wells we expect to drill and other exploration activities; timely completion of development projects; technical or operating factors; the uncertainty inherent in projecting future rates of production and cash flows; our access to capital to finance such opportunities; estimating resource potential; implementing successful drilling programs and the other risks discussed in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2023 and "Risk Factors" in our subsequent Quarterly Reports on Forms 10-Q filed with the U.S. Securities and Exchange Commission (the "SEC").

Should one or more of the risks or uncertainties described herein occur, or should underlying assumptions prove incorrect, our actual results, including project plans, production rates and resource recoveries, could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this communication 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, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this communication.

PRODUCTION ESTIMATES 

Estimates for our future production volumes are based on assumptions of capital expenditure levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. The production, transportation, marketing and storage of oil and gas are subject to disruption due to transportation, processing and storage availability, mechanical failure, human error, adverse weather conditions such as hurricanes, global political and macroeconomic events and numerous other factors. Our estimates are based on certain other assumptions, such as well performance, which may vary significantly from those assumed. Therefore, we can give no assurance that our future production volumes will be as estimated.

RESERVE INFORMATION

Reserve engineering is a process of estimating underground accumulations of oil, natural gas and natural gas liquids ("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 upward or downward 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. In addition, we use the terms "estimated gross recoverable resource potential," "net pay," "true vertical depth," and "estimated gross resource potential" in this release, which are not measures of "reserves" prepared in accordance with SEC guidelines or permitted to be included in SEC filings. These resource estimates are inherently more uncertain than estimates of proved reserves or other reserves prepared in accordance with SEC guidelines.

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SOURCE Talos Energy

FAQ

What is the estimated gross recoverable resource potential of Talos Energy's Ewing Bank 953 well?

The Ewing Bank 953 well has an estimated gross recoverable resource potential of approximately 15-25 million barrels of oil equivalent (MMBoe).

When is the first production expected from Talos Energy's Ewing Bank 953 well?

First production from the Ewing Bank 953 well is expected in mid-2026.

What is the potential initial production rate of Talos Energy's Sebastian prospect?

The Sebastian prospect has a potential initial production rate of 6-10 thousand barrels of oil equivalent per day (MBoe/d).

When are the results expected for Talos Energy's Sebastian prospect drilling?

Results for the Sebastian prospect drilling are expected in late fourth quarter 2024.

How does the Sebastian prospect affect Talos Energy's (TALO) capital expenditures guidance for 2024?

The inclusion of the Sebastian prospect in Talos Energy's second-half 2024 drilling portfolio does not require updates to their capital expenditures guidance for the year.