Talos Energy Announces Share Repurchase Program Updates and Ongoing Debt Paydown

Rhea-AI Summary

Talos Energy (NYSE: TALO) has announced updates to its share repurchase program and ongoing debt reduction efforts. In Q2 2024, the company repurchased approximately $43 million of common stock, totaling 3.8 million shares at an average price of $11.26 per share. The Board of Directors has authorized an additional $150 million for the existing repurchase program. Talos has also reduced borrowings by $100 million under its Bank Credit Facility, with $225 million remaining outstanding. This brings the total debt to $1,475 million at the end of Q2 2024. Since closing the QuarterNorth acquisition in March 2024, Talos has repaid $325 million of debt, aiming for a long-term leverage ratio below 1.0x while focusing on strategy execution.

Positive

• Repurchased $43 million of common stock in Q2 2024
• Additional $150 million authorized for share repurchase program
• Reduced borrowings by $100 million under Bank Credit Facility
• Repaid $325 million of debt since March 2024
• Targeting long-term leverage ratio below 1.0x

Negative

• Total debt remains high at $1,475 million

Insights

Financial Analyst

Talos Energy's announcement of share repurchase program updates and ongoing debt paydown signifies a strong commitment to enhancing shareholder value and maintaining financial health. By repurchasing approximately $43 million worth of common stock, Talos is confident in their stock's undervaluation, suggesting a belief in future growth prospects.

The additional $150 million authorization for the repurchase program offers increased flexibility and signals positive sentiment from the board. Reducing borrowings by $100 million under the Bank Credit Facility also strengthens the company’s balance sheet by lowering debt obligations and interest expenses, which could improve profitability metrics.

This dual approach of debt reduction and share repurchase is a strategic move to optimize the capital structure, making the stock potentially more attractive to investors. Share repurchases can lead to higher earnings per share (EPS) and return on equity (ROE), while debt reduction reduces financial risk, aligning with Talos's goal of maintaining a long-term leverage ratio below 1.0x.

Market Research Analyst

This development reflects Talos Energy's proactive strategy in managing its capital and responding to market conditions. The repurchase of 3.8 million shares at an average price of $11.26 per share indicates management's belief that the share price is undervalued, thus presenting a good investment opportunity. This action often boosts investor confidence, potentially driving up the stock price in the short term.

Moreover, the additional $150 million authorization for share repurchases provides the company with sufficient ammunition to take advantage of future market dips, maintaining flexibility in capital allocation. This could also signal to the market that Talos is generating strong free cash flows, allowing it to not only service debt but also return capital to shareholders without jeopardizing financial stability.

From a market perspective, these actions could lead to improved stock performance and market sentiment, particularly if the company continues to demonstrate disciplined financial management and consistent execution of its strategic goals.

Legal Expert

The share repurchase program authorized by Talos Energy is designed to comply with applicable state and federal securities laws, providing assurance to investors of the program's legal robustness. The flexibility to repurchase shares in the open market, through private negotiations, or other compliant means ensures that Talos can adapt to varying market conditions while staying within legal boundaries.

However, it's important to note that the program's ability to be extended, modified, suspended, or discontinued at any time also introduces a level of uncertainty. While this flexibility is advantageous from a strategic standpoint, it means investors should remain vigilant of any changes to the program that might signal shifts in company policy or market conditions.

Overall, Talos Energy's commitment to returning value to shareholders through a legally compliant and flexible share repurchase program is a positive indicator of solid governance practices and strategic foresight.

HOUSTON, July 22, 2024 /PRNewswire/ -- Talos Energy Inc. ("Talos" or the "Company") (NYSE: TALO) today announced that Talos made updates to its share repurchase program and ongoing debt paydown, including:

• Repurchased approximately $43 million, or 3.8 million shares, of common stock at an average price of $11.26 per share during the second quarter 2024. Talos's Board of Directors also recently authorized an additional $150 million for Talos's existing common stock repurchase program.
• Reduced borrowings by $100 million under its Bank Credit Facility with $225 million remaining outstanding, bringing total debt to $1,475 million at the end of the second quarter 2024.

Talos President and Chief Executive Officer Tim Duncan stated, "Since closing the QuarterNorth acquisition in March 2024, we have repaid $325 million of debt. This paydown is a positive step toward our goal of using our free cash flow to reduce debt and targeting a long-term leverage ratio below 1.0x while maintaining a clear focus on executing our strategy. We repurchased 3.8 million of our shares in the second quarter because we are confident in our business and committed to opportunistically allocating capital to maximize shareholder value. In order to continue doing so, we increased the share repurchase authorization to maintain flexibility going forward."

Under the program, Talos management has the authority to repurchase common stock opportunistically in the open market from time to time, in privately negotiated transactions, or by such other means as will comply with applicable state and federal securities laws. The timing of any repurchases under the share repurchase program will depend on market conditions, contractual limitations, and other considerations. The program may be extended, modified, suspended or discontinued at any time, and does not obligate the Company to repurchase any dollar amount or number of shares.

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, 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, the timing and amount of any repurchases made pursuant to the share repurchase plan and repayment of debt; the ability to attain capital allocation goals; the uncertainty inherent in projecting free cash flow; and the other risks discussed in our Annual Report on Form 10-K for the year ended December 31, 2023. Should one or more of the risks or uncertainties described herein 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, 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.

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SOURCE Talos Energy

FAQ

How many shares did Talos Energy (TALO) repurchase in Q2 2024?

Talos Energy repurchased 3.8 million shares of common stock at an average price of $11.26 per share during the second quarter of 2024, totaling approximately $43 million.

What is the new authorization amount for Talos Energy's (TALO) share repurchase program?

Talos Energy's Board of Directors authorized an additional $150 million for the company's existing common stock repurchase program.

How much debt has Talos Energy (TALO) repaid since the QuarterNorth acquisition?

Since closing the QuarterNorth acquisition in March 2024, Talos Energy has repaid $325 million of debt.

What is Talos Energy's (TALO) total debt as of Q2 2024?

Talos Energy's total debt stood at $1,475 million at the end of the second quarter of 2024.

What is Talos Energy's (TALO) target long-term leverage ratio?

Talos Energy is targeting a long-term leverage ratio below 1.0x while maintaining focus on executing its strategy.