Talos Energy Announces Second Quarter 2025 Operational and Financial Results
HOUSTON, Aug. 6, 2025 /PRNewswire/ -- Talos Energy Inc. ("Talos" or the "Company") (NYSE:TALO) today announced its operational and financial results for the three months ended June 30, 2025. Talos also provided third quarter 2025 guidance for production and updated its operational and financial guidance for the full year 2025.
Second Quarter and Recent Key Highlights
Announced enhanced corporate strategy designed to position Talos as a leading pure-play offshore E&P company.
Improved full-year 2025 guidance reflects higher production, lower operating expenses and lower capital expenditures.
Produced 93.3 thousand barrels of oil equivalent per day ("MBoe/d") (69% oil, 77% liquids).
Initiated first production from Katmai West #2 and Sunspear wells(1).
Resumed drilling operations at the Daenerys prospect, with results anticipated by the end of the third quarter of 2025.
Recorded Net Loss of $185.9 million which includes $223.9 million of non-cash ceiling test impairment charges, or $1.05 Net Loss per diluted share, and Adjusted Net Loss(2) of $48.3 million, or $0.27 Adjusted Net Loss per diluted share(2).
Generated Adjusted EBITDA(2) of $294.2 million.
Allocated $126.1 million to capital expenditures, excluding plugging and abandonment and settled decommissioning obligations.
Recorded net cash provided by operating activities of $351.6 million.
Generated Adjusted Free Cash Flow(2) of $98.5 million.
Repurchased approximately 3.8 million shares for $32.6 million.
Improved balance sheet with $357.3 million of cash, an undrawn credit facility, a Net Debt to Last Twelve Months ("LTM") Adjusted EBITDA(2) of 0.7x, as of June 30, 2025.
Increased hedge positions that cover over 38% of the second half of 2025 expected oil production at the midpoint of guidance, with a weighted average floor price approximately $71.50 per barrel, and mark-to-market hedge book value of $56 million, as of June 30, 2025.
"We continued to deliver on our commitments this quarter, with Adjusted EBITDA and Adjusted Free Cash Flow exceeding consensus estimates," said Paul Goodfellow, President and Chief Executive Officer of Talos. "This strong performance enabled us to repurchase 3.8 million shares for approximately $33 million, reflecting our continued commitment to returning capital to shareholders while also increasing our cash position to $357 million. Operationally, we reached several key milestones this quarter, including first production from our Katmai West #2 and Sunspear wells, the resumption of drilling at the high-impact Daenerys prospect, and continued advancement of our Monument development. We exited the second quarter with a solid financial foundation, including a leverage ratio of approximately 0.7x and total liquidity of approximately $1.0 billion."
"With our enhanced corporate strategy in motion, we are strategically positioning Talos in the long-term to further lead in the offshore E&P sector, which we expect will play an increasing larger role in supplying global energy demand. We will continue to capitalize on this trend by leveraging our unique capabilities, low-cost operating structure, and solid balance sheet to ensure flexibility to manage through cycles while remaining committed to returning capital to shareholders."
Footnotes:
(1)
In July, production from Sunspear was temporarily shut in due to an early failure of the surface-controlled subsurface safety valve ("SCSSV"). Talos expects Sunspear to return to production in late October 2025.
(2)
Please see "Supplemental Non-GAAP Information" for details and reconciliations of GAAP to non-GAAP financial measures.
RECENT DEVELOPMENTS AND OPERATIONS UPDATE
Corporate Strategy:
In June 2025, Talos announced its enhanced corporate strategy designed to position the Company as a leading pure-play offshore exploration and production company. The three pillars of Talos's new strategy are:
Improve our business every day. Talos is targeting approximately $100 million in increased annualized cash flow in 2026 through capital efficiency, margin enhancement, commercial opportunities, and general organizational improvements.
Grow production and profitability. Talos plans to invest in high-margin organic projects, complemented by disciplined, accretive bolt-on acquisitions in deepwater basins, which will enhance production and profitability.
Build a long-lived, scaled portfolio. Talos will take a strategic and measured approach in assessing opportunities within the Gulf of America and other conventional offshore basins. A scaled portfolio will provide Talos with significant production growth potential, and ultimately the ability to generate long-term consistent free cash flow.
Share Repurchase Program:
In the second quarter of 2025, Talos opportunistically repurchased approximately 3.8 million shares for $32.6 million, representing an average price of $8.48 per share. Year-to-date, the Company has repurchased 6.1 million shares for $54.6 million. Under Talos's share repurchase program, management expects to allocate up to 50% of its annual free cash flow to share repurchases. Purchases under the share repurchase program may be made from time to time in privately negotiated transactions or open market transactions under Rule 10b-18 of the Securities Exchange Act of 1934, as amended. These purchases will depend on market conditions, legal requirements, and other relevant factors.
Production Updates:
Sunspear: Late in the second quarter of 2025, Talos successfully initiated first production from the Sunspear well, which is tied back to the Talos-operated Prince platform. In July, production was temporarily shut in due to an early failure of the surface-controlled subsurface safety valve (SCSSV). The West Vela rig is scheduled to return to the well following the drilling of the Daenerys exploration prospect and Talos expects Sunspear to return to production in late October 2025. Estimates of Sunspear's initial productive capacity is expected to be at the high end of the range. Talos holds a 48.0% working interest ("W.I.") in the well, an entity managed by Ridgewood Energy Corporation holds a 47.5% W.I., and H.E. holds a 4.5% W.I.
Katmai West: Also, late in the second quarter of 2025, Talos successfully initiated first production from the Katmai West #2 well. Total gross production from the Katmai East and West fields is approximately 35 Mboe/d (71% oil), which flows to the Talos-operated Tarantula platform. Given that the facility at Tarantula is at maximum capacity the current production rate is estimated to remain at that level for several years. The greater Katmai area is estimated to contain a total resource potential of up to 200 million barrels of oil equivalent ("MMBoe"). Talos, as operator, holds a 50% W.I., with entities managed by Ridgewood Energy Corporation holding 50% W.I.
Project Updates:
Daenerys: Talos is currently drilling the Daenerys exploratory well, utilizing the West Vela deepwater drillship. Daenerys is a high-impact subsalt prospect that will evaluate the regionally prolific Middle and Lower Miocene section and carries an estimated pre-drill gross resource potential between 100–300 MMBoe. Results are anticipated by the end of the third quarter of 2025. Talos, as operator, holds a 30% W.I., Shell Offshore Inc. holds a 25% W.I., Red Willow holds a 25% W.I., Cathexis holds a 10% W.I., and HEQ Deepwater holds a 10% W.I.
Monument Discovery Farm-in: In March 2025, Talos increased its interest in the Monument discovery to a 29.76% W.I., up from 21.4% W.I. Monument is a large Wilcox oil discovery in Walker Ridge blocks 271, 272, 315, and 316. Talos expects to develop it as a subsea tie-back to the Shenandoah production facility in Walker Ridge. First production is expected between 20–30 MBoe/d gross by late 2026. There is an additional drilling location adjacent to the discovery with an estimated 25–35 MMBoe that could extend the resource. Beacon Offshore Energy LLC as operator, holds a 41.67% W.I., and Navitas Petroleum LP holds a 28.57% W.I.
Impairment
In the second quarter of 2025, the Company recorded a $223.9 million non-cash ceiling test impairment charge. Capitalized oil and natural gas costs are limited to a ceiling based on the present value of future net revenues from proved reserves, computed using a discount factor of 10%, plus the lower of cost or estimated fair value of unproved oil and natural gas properties not being amortized less the related tax effects. The Company performs this ceiling test calculation each quarter utilizing pricing as defined by the U.S. Securities and Exchange Commission ("SEC").
SECOND QUARTER 2025 RESULTS
Key Financial Highlights:
($ thousands, except per share and per Boe amounts)
Three Months EndedJune 30, 2025
Total revenues
$
424,721
Net Income (Loss)
$
(185,937)
Net Income (Loss) per diluted share
$
(1.05)
Adjusted Net Income (Loss)(1)
$
(48,316)
Adjusted Net Income (Loss) per diluted share(1)
$
(0.27)
Adjusted EBITDA(1)
$
294,247
Adjusted EBITDA excluding hedges(1)
$
260,932
Capital Expenditures
$
126,057
(1)
Please see "Supplemental Non-GAAP Information" for details and reconciliations of GAAP to non-GAAP financial measures.
Production
Production for the second quarter 2025 was 93.3 MBoe/d (69% oil, 77% liquids).
Three Months Ended June 30, 2025
Oil (MBbl/d)
64.0
Natural Gas (MMcf/d)
129.7
NGL (MBbl/d)
7.7
Total average net daily (MBoe/d)
93.3
Three Months Ended June 30, 2025
Production
% Oil
% Liquids
% Operated
Deepwater
83.4
71
%
79
%
81
%
Shelf and Gulf Coast
9.9
49
%
58
%
73
%
Total average net daily (MBoe/d)
93.3
69
%
77
%
80
%
Three Months Ended June 30, 2025
Average realized prices (excluding hedges):
Oil ($/Bbl)
$
64.08
Natural Gas ($/Mcf)
$
3.34
NGL ($/Bbl)
$
17.23
Average realized price ($/Boe)
$
50.00
Average NYMEX prices:
WTI ($/Bbl)
$
63.74
Henry Hub ($/MMBtu)
$
3.44
Lease Operating & General and Administrative Expenses
Total lease operating expenses for the second quarter 2025, including workover, maintenance and insurance costs, were $137.0 million, or $16.12 per Boe.
Adjusted General and Administrative expenses for the second quarter 2025, adjusted to exclude one-time transaction-related costs, and non-cash equity-based compensation, were $34.4 million, or $4.05 per Boe.
($ thousands, except per Boe amounts)
Three Months Ended June 30, 2025
Lease Operating Expenses
$
136,971
Lease Operating Expenses per Boe
$
16.12
Adjusted General & Administrative Expenses(1)
$
34,364
Adjusted General & Administrative Expenses per Boe(1)
$
4.05
(1)
Please see "Supplemental Non-GAAP Information" for details and reconciliations of GAAP to non-GAAP financial measures.
Capital Expenditures
Capital expenditures for the second quarter 2025, excluding plugging and abandonment and settled decommissioning obligations, totaled $126.1 million.
($ thousands)
Three Months EndedJune 30, 2025
U.S. drilling & completions
$
102,961
Asset management(1)
7,042
Seismic and G&G, land, capitalized G&A and other
14,058
Total Capital Expenditures
124,061
Investment in Mexico
1,996
Total
$
126,057
(1)
Asset management consists of capital expenditures for development-related activities primarily associated with recompletions and improvements to our facilities and infrastructure.
Plugging & Abandonment Expenditures
Capital expenditures for plugging and abandonment and settled decommissioning obligations for the second quarter 2025 totaled $28.8 million.
Three Months EndedJune 30, 2025
Plugging & Abandonment and Decommissioning Obligations Settled(1)
$
28,847
(1)
Settlement of decommissioning obligations as a result of working interest partners or counterparties of divestiture transactions that were unable to perform the required abandonment obligations due to bankruptcy or insolvency.
Liquidity and Leverage
At June 30, 2025, Talos had a borrowing base of $925.0 million under its Bank Credit Facility, subject to a total availability cap of $800.0 million with approximately $42.8 million in outstanding letters of credit. Letters of credit that are outstanding reduce the available revolving credit commitments. Cash was $357.3 million, providing Talos approximately $1,114.5 million of liquidity at quarter end. On June 30, 2025, Talos had $1,250.0 million in total debt. Net Debt(1) was $892.7 million, Net Debt to Last Twelve Months ("LTM") Adjusted EBITDA(1) was 0.7x. Talos recently completed its regularly scheduled borrowing base redetermination, resulting in a borrowing base reduction from $925.0 million which was subject to a total availability cap of $800.0 million to $700.0 million under the Company's Bank Credit Facility.
Footnotes:
(1)
Please see "Supplemental Non-GAAP Information" for details and reconciliations of GAAP to non-GAAP financial measures.
OPERATIONAL & FINANCIAL GUIDANCE UPDATES
For the third quarter 2025, Talos expects average daily production to be in the range of 86.0 to 90.0 MBoe/d, with 69% oil volumes.
Talos has revised its full year 2025 operational and financial guidance and expects average daily production to range from 91.0 to 95.0 MBoe/d, consisting of 69% oil and 78% liquids. Full year guidance reflects lower cash operating expenses and workover and lower capital expenditures.
The following summarizes Talos's full-year 2025 operational and production guidance.
Original
Revised
FY 2025
FY 2025
($ Millions, unless highlighted):
Low
High
Low
High
Production
Oil (MMBbl)
22.7
24.0
23.0
24.0
Natural Gas (Bcf)
41.9
44.3
45.0
47.0
NGL (MMBbl)
3.1
3.3
2.8
3.0
Total Production (MMBoe)
32.8
34.7
33.3
34.7
Avg Daily Production (MBoe/d)
90.0
95.0
91.0
95.0
Cash Expenses
Cash Operating Expenses and Workovers(1)(2)(4)(7)
$
580
$
610
$
555
$
585
G&A(2)(3)(7)
$
120
$
130
$
120
$
130
Capex
Capital Expenditures(5)
$
500
$
540
$
490
$
530
P&A Expenditures
P&A, Decommissioning
$
100
$
120
$
100
$
120
Interest
Interest Expense(6)
$
155
$
165
$
155
$
165
(1)
Includes Lease Operating Expenses and Maintenance.
(2)
Includes insurance costs.
(3)
Excludes non-cash equity-based compensation and transaction and other expenses.
(4)
Includes reimbursements under production handling agreements.
(5)
Excludes acquisitions.
(6)
Includes cash interest expense on debt and finance lease, surety charges and amortization of deferred financing costs and original issue discounts.
(7)
Due to the forward-looking nature a reconciliation of Cash Operating Expenses and Workovers and G&A to the most directly comparable GAAP measure could not be reconciled without unreasonable efforts.
HEDGES
The following table reflects contracted volumes and weighted average prices the Company will receive under the terms of its derivative contracts as of June 30, 2025.
Instrument Type
Avg. DailyVolume
W.A. Swap
W.A. Floor
W.A. Ceiling
Crude, WTI
(Bbls)
(Per Bbl)
(Per Bbl)
(Per Bbl)
July - September 2025
Fixed Swaps
25,370
$
71.57
---
---
October - December 2025
Fixed Swaps
22,967
$
71.33
---
---
January - March 2026
Fixed Swaps
14,000
$
66.26
---
---
Collar
11,000
---
$
60.46
$
68.50
April - June 2026
Fixed Swaps
14,000
$
65.11
---
---
Collar
11,000
---
$
60.46
$
68.50
July - September 2026
Fixed Swaps
2,000
$
65.00
---
---
Collar
11,000
---
$
60.46
$
68.50
October - December 2026
Fixed Swaps
2,000
$
65.00
---
---
Collar
11,000
---
$
60.46
$
68.50
Natural Gas, HH NYMEX
(MMBtu)
(Per MMBtu)
(Per MMBtu)
(Per MMBtu)
July - September 2025
Fixed Swaps
50,000
$
3.47
---
---
October - December 2025
Fixed Swaps
40,000
$
3.53
---
---
January - March 2026
Fixed Swaps
35,000
$
4.19
---
---
April - June 2026
Fixed Swaps
30,000
$
3.77
---
---
July - September 2026
Fixed Swaps
20,000
$
3.65
---
---
