Talos Raises Production Outlook After Record Cash Generation
Second-quarter production reached 93.7 MBoe/d, exceeding the offshore energy producer’s guidance.
Talos Energy (TALO), an offshore energy producer, raised its full-year production outlook after generating a record $231.6 million of adjusted free cash flow in the second quarter.
Production benefited from optimization work, strong base-asset performance, high facility uptime and continued outperformance from the new Cardona well. Oil output totaled 68.6 MBo/d during the quarter. Lease operating expense was $18.25 per Boe, including about $1.75 per Boe of one-time well-intervention costs.
Operating cash flow totaled $300.6 million, while capital expenditures were $112.5 million. Talos ended the quarter with $577.6 million of cash and $672.4 million of net debt, reducing net leverage to 0.5 times last-12-month adjusted EBITDA. Cash had increased $214.8 million since the end of 2024.
Talos now expects full-year production of 87 MBoe/d to 91 MBoe/d, lifting the midpoint by 1.5 MBoe/d, even after accounting for its completed shelf divestment and excluding the pending Gulf of America acquisition. The company also raised its oil-production range by 2 MBo/d at each end, to 64 MBo/d to 68 MBo/d.
The July divestment removed assets that produced about 3.5 MBoe/d in the second quarter, with oil accounting for roughly 20%, and eliminated about $54 million of asset-retirement and decommissioning obligations. Talos increased its adjusted general and administrative expense forecast by $5 million at both ends, to $135 million to $145 million, while leaving its capital spending, cash operating expense and interest expense ranges unchanged.
Talos issued $800 million of 8.000% notes due 2034, using part of the proceeds to redeem $625 million of 9.000% notes due 2029 and help finance the pending Gulf acquisition. Its borrowing base is set to rise by $150 million to $850 million when that transaction closes.
The company made no second-quarter share repurchases during an acquisition-related blackout, though its board restored the authorization to $200 million. Repurchases since the framework began in the second quarter of 2024 totaled about $135 million and reduced shares outstanding by approximately 7%.
At Monument, the first development well encountered about 250 feet of net pay, and first production remains expected by year-end at 20 MBoe/d to 30 MBoe/d gross. Talos also agreed to acquire an 80% operated interest across more than 4 million gross offshore acres in Honduras, closing an initial 45% interest and awaiting approval for the remaining 35%.