TALO - Earnings call transcript Q2 2020

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Operator

Good morning, and welcome to Talos Energy Second Quarter 2020 Earnings Call. [Operator Instructions] Please note that this event is being recorded.

Now I'd like to turn the conference over to Mr. Sergio Maiworm, Vice President of Finance, Investor Relations and Treasurer. Please go ahead.

Sergio Maiworm

operator. you, Thank and conference everyone, our quarter second Good welcome earnings call. XXXX morning, to

today results Executive Joining President discuss to me our Executive Chief Officer. and and and are Officer; Shane President Young, Vice Financial Chief Duncan, Tim

obligation materially Factors to XX, XX-Q filed forward-looking results a as on from the Before this set on on we remind and these those our are today include Form contemplated opportunity new remarks to to results for of Actual we result statements. no take forward-looking of that the quarter we by this our or Any update ending I'd yesterday. statements. yesterday's that these that may as future in June are events. to these press started, will get based differ could like and assumptions XXXX, statements SEC cause you call information differ forth make with today statements forward-looking materially undertake release

this And of GAAP to present During which available website reconciliation yesterday's measures SEC included was was with measures. non-GAAP the earnings to talosenergy.com. like the on both non-GAAP in financial over also filed call, at Tim. and GAAP release, to now A which and I'd is may press turn our we call

Tim Duncan

despite rapidly industry, of the challenges have how Sergio, than across as livelihood. Despite forward. reduced today global transaction all and Thank a ourselves lowered leave the well unprecedented and impact proud even lives morning this, of inventory, up quarter position debt, adapted had and company that ago, best greater today. which added whole, to executed difficult our costs success but I'm of brought to bolt-on to a We've macroeconomic and quarter significant energy good not The moving daily board. the you, for backdrop. everyone to XX better depth exploration tactical days joining all make net economy our of our we the past us We a set our as across dramatically the as in only the

the number in developments of with XX,XXX the our of various of as our equivalent production. campaign, quarter. the I'll production the XXX shuttering transaction have the discussed a address yesterday, We XXXX second barrels in an an approximately the rate additional key well deferrals legacy shallow barrels We as await forward. which moving bolt-on average year, of about closing development and of the and completing remain a a reduction XX,XXX We half expect of day the equivalent the we of excited two includes next the day barrels drilling which opportunities that equivalent day, key business daily production from highlights starting recorded water months. a of material

However, production second day. in we online new approximately XXXX, XX,XXX with XX,XXX a as that returns expect the wells exit half and year to bring equivalent to the barrels we of

and million expect basis, XXXX $XX LOE During approximately in reductions pro expect XX% our cost, sustained compared the our adapt of a sustained $XXX or approximately decisive with from measures approximately environment and G&A and XXXX year-over-year reductions. as forma million we $XX cost XX% to or in to quarter, changing the initial aggressive to cost-cutting million On continued reductions cost rapidly we guidance.

previously economics months value-accretive over EBITDA for was will million shallow evaluation on the continue working debt balances, of an it during valued and an lowered with improve And and the PDP water closed assets. producing and our last additional certain acquisition times of based the the available week, liquidity. commodity acquisition PV-XX rebound. prices XX to opportunistic net debt quarter have announced of to was at leverage metric It our net Earlier total interest in $XXX debt the we closing Finally, we of quarter, in our as attractive X.X approximately the shareholders. our

In fields forward. most those addition, moving us operational with of control it over provides

On these with key BP. partnership will Kaleidoscope in second quarter. deepwater on at online provide XX% of several on flow $XXX economic production leases. third the over Claiborne rate remain brought in in we were we and of into interest won current high-impact XX,XXX the fresh our Talos awarded a lease in the Miocene and side, cost acres production first advancements #X from portfolio a all by covers well quarter, and Each acre. The an fourth and IV, several bidding XXXX. quarter projects of of expect Bulleit, projects, working acreage price achieve those made moving under sub-salt prospects Late Tornado to the which cash we highly the end including oil and the environment a

We in have in Mexico. also of positive taken steps discoveries our offshore both high-impact forward

discovery, on unitize provides of when Block adjacent best discovery Sewell's ends. on certainly hope order the to a that in continue discussions to January to and instruction with our the to constructive gross instructions agreement Block block, XXXX, independent have of which X second maintain with government's for we time Pemex XXX results and Netherland, equivalent evaluation the period We we line business days expect country. of major of unitization firm provides Mexican a third-party million barrels estimate resource Xaxamani Zama by validation by we the discovery of resolution received over oil reach our target. our on the dialogue a XX, unitization an hit sooner With in of and Pemex required Separately, XXX

over which this for is miles feet XX two located reminder, water the less good and of economics be highly than to discovery quality in of XX% shore, project. estimated to oil, from all a the As competitive is contribute

and billion SEC to these outstanding. million and alone the discuss focusing mid-year XX of over into XX SEC forma I'll also at a pro included at call highlight approximately of associated a over billion closed the abandonment are Talos important billion, $X $X.X at to discoveries costs of to a share WTI had Tuesday's It year we'll reserve perpetuity. PDP representing Lastly, $X.X These reserves Talos count over of are our $XX in is reserves quarterly barrels just to properties. And XXX were half these approximately value on Mexico of billion, transaction, prices held the figures on figures of offshore inclusive equivalent, based million and barrel, discuss proved the with over how mid-year our and plugging new enterprise these prices. flat, numbers. neither million that of oil oil Shane PV-XX in then of second of barrels PV-XX. close XXXX. the and results the turn and compare to shares we're current $X.X were

Shane Young

you, greater second Thank some XX,XXX impact to in categories of shut-in half taking production, detail vast quarter Production a forward in scheduled and approximately from year. the the multiple quarter. by advantage deferring second maintenance equivalent was production Tim, of pull environment, of quarter's was good the the liquids. while barrels opportunity which of the of results discussing to included everybody. The XX% of for of volumes price which the per also morning, majority higher cases, of voluntary, like to the I'd start the day,

a high also realizations hedges. conditions. for cost, operating and per quarter the permanently inclusive of as per averaged $XX.XX Talos historically Oil chose crude margins the shallow by of the only XXX quarter not to excluding pricing, impact hedge Coast $X.XX realized as barrel the but differentials of were per the and impact was gains. $XXX.X index MMBtu, of Gulf negative rebalanced. Boe impacted by day addition, result the negatively Realized market production million, in shutter the Revenue low water In lower economic of pricing

company quarter the $XXX.X adjusted as levels While of first line margins later prices differentials importantly, totaled quarter to have activity simultaneously. we with quarter. were levels. second the improve inclusive spending. $XX.X Activity expect levels equivalent projects XX%. in in advanced WTI EBITDA the the expected, to and third as achieve for barrel company abandonment million, high, recovered And or conclude oil per and $XX.XX approximately historical Capital majority equating The of to have continued expenditures for to XXs, the generated plugging of quarter to the numerous for of the this million, more

was commodity and profile in cash neutral For free generate the flow for Talos XXXX, flow maintained the roughly industry. attractive relative the full still expects economic an to of positive year. Prior absolute the half credit downturns, Talos the first and free cash to to and

million of recent net metric and credit and maintained months ended very of with EBITDA a have remains volatile focus times quarter this over strong. throughout position have currently $XXX We debt-to-LTM We pro forma leverage the the X.X liquidity. our

spring as tough industry, April developed continues borrowing strengthen assets our lows. the their our the base from season redetermination While commodity was and bank are to prices recover for

As worst and to and we we business, took the credit balance shareholders' our executed the profile. strong our the that sheet crisis, business, the navigated costs we end, enhance throughout mindful capital To were aggressively to opportunistically interest. our we commodity of and cut we critical projects protect reduce steps leverage

quarter, lien million $XX exchange of outstanding we principal of notes were second debt, our an million XX% of primarily to via eliminate $XX approximately second able elimination from During of the the the transaction. total

forward. they opportunistically the we that credit of ideas is a transaction best being and to while proactively is will provided savings markets prepared type while the our case, out, improve. interest cash and XXXX creative not evaluate interest markets the as make helped evaluating available future To address us. in concluded of become one-off the capital strong are was maturity, brought significant be our were the reinvested priority exchange to this going when the shareholder-friendly that While in again, profile we this In to something manage business can shareholders, our we maturity ideas continue progress seeking financeable incremental maintaining

as anticipated well half the end low fall. to financially. new we bit repairs, of to positioned be exit value believe now the higher the head deepwater as for year, at At unplanned downtime remains our shut-in with forward Ram look additional the of the the Powell at average we addition guidance wells help the same ongoing for a the originally of time, we XXXX. year volumes the quarter, we production strong bolster With expect Talos we third than the second production we also facility in into year collateral and will the make full As which to expect

related our across costs. well CapEx, G&A as despite shut-in as G&A expect be within on increased guidance cost categories to costs teams increased and responded as COVID on OpEx and of the reducing acquisition expense front, OpEx by end on the recent and On associated range the low capital we significantly have the operating expenses, with and

includes this contribution of acquisition year outlook. the Castex 'XX All full the of on

hedging remainder per of for Our with weighted XXXX the is of barrel and per a $XX solid, position price average MMBtu. $X.XX

continue we to as opportunistically We move forward. will hedges add

as that, prices, while on improve the driving HSE from in their the working prices that of period. significant echo I to throughout down cost half hedging wherever rapid possible, response second the Castex is like I'm turn XXXX pulling In and with downtime, past maintenance their for operational XXXX at and maelstrom company stabilized, downturn acquired to 'XX the by Additionally, position, as the in using transaction. acquisition I'd gas case well either portion our relative the back have expected remains from safety volumes supporting all year contracts attractive we proud practices strong well relationships forward managing on volumes to investment Tim's the particular, the economics as that the for line substantially of for front, costs excited their focus through the in and over we a front, creativity in on and and endured performance hedge future the and With and continuing beyond. successfully our teams beyond. the additional interest Tim. sentiment call positioned, resumed our

Tim Duncan

projects. our the well-advanced the historically the towards optimizing initiatives, quarter performance strong challenging first credit Talos us, highly oil position for With Shane. of on XXXX. focused We're XXXX near a and the from benefitted remainder behind and Thanks, looking cost-cutting

similar be up the we the quarter activities deployment the we the as investment wrap On year. expect and third second for completion to side, our quarter capital all drilling to

current we significantly. decrease once our However, rig our activity, should spending capital complete

XXXX key production rates and higher from will beyond. quarter oil underpin fourth the First in wells

of flow rate as exit XX,XXX We expect to Shane and baseline equivalent a expect barrels XXXX day approximately mentioned, positive the be to year. free XX,XXX for per cash

From plans with no year's for adapt We have planning capital best conditions market design year full layered optionality environment next monitor will to - we hedges, the commodity continue good towards have move program, as front. to capital next for the providing depending the capital price us our accordingly and and being, next commitments the XXXX on year. on we'll time we

scale. assets synergies, competencies in accretive to of can the cycle, deep our drive to This the shareholders. We mature and are creation, despite assets, continues that of proven expertise of offshore various business provinces the offshore be world and with investment significant believe in believe ultimately, well which development being diversification core our stages greater continue to other of transactions under-invested exploration positions we M&A through the basins creation to an technical hydrocarbon also shareholder Talos' drive realization evaluate firmly for We opportunities. managing portfolio area the and subsurface solid economics. coupled execute that from value operations Mexico with attractive company around value life experience Gulf greenfield

With and to the step business be. and and ourselves execute we what aspires must take well to operationally, positioned company what is strategically a back it remind also our

in energy our to the support ways the And year, safe, we're exploration as a life. we the of some of reduction gas biggest the BP's We ever, And emissions and challenging on secure to maximizing is and over have our is provide we are from plays in ever to in that And planet. energy offshore energy harshest of and higher and resource, economy energy COX basin the the Gulf forefront bigger than basins, affordable rate it than within operationally and dedicated of with oil and a conditions resources more our statistical the X%, diverse an at down XX-year a part mix more production natural mix role daily the nation most average. largest to are reliable, oil-producing energy second plentiful of country, a a been. energy According mix, energy as The federal being was energy as and country, global important than renewables security. review Mexico, still last our of product.

basin and across from in approximately support supply of operators jobs economy every $XX XXX,XXX the Additionally, the deepwater least COX in production entire billion the benefits our over chain. year our amount subsea invest And high-paying least summary of want amount natural value per you production. It resource oil. and created, energy is present any emits emissions of the to this invest where in that dollar produce of means net which

seriously and stewards growing very in we responsibility operator visible products environmental in As a proud more the role basin, a society. critical we're modern being take our play and as our that

how and ultimately of X.X pragmatic basin the to number near-term industry, that in role effectively, Talos role the low-emission creation, for barrels are federal plays to But and related our on on of the half revenue It rhetoric which is of prevail producing with acres, production politically. its held government acreage in the job our to embrace more the Recent belief exploration million other seeing the We society. by leasing, generation is of federal concerns on specifically, or and will results is have important upcoming political our explorations. approximately term minimum a being primary role maintains in robust business our our our basin, raised and a increasingly half concept our election. headlines run ability around depending the

projects of inventory several acreage. deep activity Our our drilling subsea tiebacks, years short-cycle, high-impact and both of on exploration existing provide

of policy. year we I'm opportunities the supply Talos structural the to potential of the continue achieve, us The will have In and to coming the XXXX. weather excited Talos to change bringing online development new to about coupled the in conclusion, any allow second and cost the result, with in will drilling couple expects wells years the a significant anticipate months, reductions rebound over next half market. of in robust political on capitalize As

our the of value strong excluding even the potential and demonstrate Mexico. upside world-class portfolio the in our reserves current Our stock, portfolio in

organic through the we for come. and to to years to that opportunities in economic but for to also provide significant inventory we our the evaluate opportunities shareholder continue We believe company efforts, our growth create value M&A have

So the Q&A. line with for that, operator, up open we'll

Operator

comes question ahead. Capital First Please from Grampp, Instructions] go [Operator Jeff Northland Markets.

Jeff Grampp

just kind internal on oil there? to compared? that steps you with that The can guys number, million and XX, And next of ever that XXX then, how ultimately generally, that barrel give wanted first maybe formally resource put you but start past, the you see some I us estimate have. that don't Block this I in compared? how guys anything for first you context think the asset, for out FID expectations,

Tim Duncan

Sure, the way? by doing, Jeff. you How're Yes.

Jeff Grampp

Thank you. Good.

Tim Duncan

You bet.

look, to and go what ourselves was. So back that remind so of trade just kind

covered X. a Block a of round picked lot we a a obviously, what It's questions we south of some attention So Block we a that. block great answer to in lease that about and out lot can called seismic that project. of Zama, Zama, called certainly we - data But subsequent a like and first which in block very on had also seismic And data did up reprocessed the sale. was XX, coming

Mexico. in since X, we reforms. also at as partner a the oil the for development, American. They that They're which the were operator They're was development Block we the visible talked sector private the so operator folks bringing development there. And called Pan at looking to have Hokchi in second a another offshore produced

Block in we found trade. did our on So we backwards, XX, we We would and So would far ended They a we too but of were potential Block drilled we And a trying but in I'm we where lot we on participate when enough couple let a well up saw And as XX? Block of in how on some well. reprocessing those they be them end to this of non-operator a look, not Block participate so were obviously a commercial. as hydrocarbons that XX. couple on guys. our reworking up we of a surprised that, know potential to On with go Block trade, Block in sees familiar worked project then and projects XX. X there, wells first not effort X,

much well think thing. the this of second and it over. And previous I calls, The size down extended was is dip, well what really about second it than talked really the on we tipped we where thought thicker

is over in geological that the it the as to be we to oil, And in in the the U.S. developing talked developing all stuff underexplored ago Now of and would you're geological is section. offshore oil. and Gulf how in only shallow produces we've about in where this we Mexico, lease, section, find we past this not years other Mexico, really believe similar is I've well. all the as here but that it, areas of this Gulf were section basin is discovered which Shallow underexploited U.S. the contract Miocene when area, the over Pliocene seems Mexico that the in but

this XX the So This try estimate is in shore. of Sewell this is not depth, water. about from again, very It's did on around miles "Hey, estimate million found, to what all of you it's have have subsea in barrels. what X,XXX what and let's XXX of - feet Netherland, is and feet. is couple best you prospective a a wells and prospective And they you look, block, is date." best resource based resources those XX came resource their a of shallow, but contingent so And on in three give a to just said,

developing hole. the but total we So in two as some geologic and In of things were it's offshore and it's Gulf I we've we've had similar two again, in, that do were others section ago this drilled, in would now, dry eight U.S. Mexico. we were Mexico discoveries come commercial, think, a, six to of years wells the

about can't enough I there. down say team's So the effort

decision in 'XX, put plans more then Now would think There the the in they and some late early appraisal, some on what's to the 'XX be it's to Mexico. than next? probably way additional to make I a in ultimately, to milestone But get more we're right else, think trying market. I to create that value this on offshore continuing the a progress anything on CNH.

Jeff Grampp

maybe perfect. as clarify guys you That's of kind of XQ of appreciate on more Great, we if we is true a for about that XXXX, number? the sustainability can view that next you And on just that touch my exit then that rate thoughts rate into can the And Should provided? as that. progressing how year? think follow-up, you a average or type exit think number you about

Tim Duncan

Yeah.

But to come hope a of be I I that couple in run depends a a Could kind in on of production back. somewhat minimum, in drift do could So think in think clean it come that the repair online queue. call ebbs talked and Ram it's I about, that flows of rate in little We our think, it's a see to December. how we're the There's things It December. bit? rate - a is on think September. the we Powell. there's a And run a clean potentially there. Certainly, at totality reflected going

exit got you. thinking contracts how book you've don't where got we look, We're yet. some see get that year, front we year of market rate, manage base think, earlier, flexibility. right in total place. Now hedges in do kind now. rig open some with happens year We've We've next recovers. mentioned what we as the And of next later options we have about think to when what into got got I you we want in We've the as I

what to a decide risk dig really and into spot we're is that portfolio which then of want do sure think lower manage exploration year understand between we're really handful of a - and varied how So can that trying to really ideas. nice to kind a make I it's this did in stuff, we nice we people this

we about how plans. the we about we're exit we about think time the rig quarter, our the think that is this start as market is, so fourth can going year, portfolio, think of as setting where to we as And

end we're So spot a of I I about year, doubt the great the no - think at it. think in we're

Jeff Grampp

Great.

Looking forward the it. Thanks content. for to

Tim Duncan

You got that.

Operator

Thank you.

Our go Please from KeyBanc. Leo ahead. is question Mariani next of

Leo Mariani

Hey, has recently down sector little be there, bit follow open guys. mean made of kind than AMLO, in of statements I to down wanted future kind I Pemex. new some about more President Mexico kind on no a lease I that might activity sales of up the Mexico. of shutting sort private guess and maybe to anyone other

wanted leases push big well you there a anything going down of going existing any of Is in terms Just kind Zama there there? potentially whether to just thoughts as he's get affect there sense not as kind of had kind a recently could if or how else of projects, was on place kind that and putting of forward? of here that kind existing in nationalistic

Tim Duncan

And get contracts. some - nervousness I there there this lot Yes. Leo, around and that's always there's a on way, of questions. administration, of sector role And that. - reviewing good with role the out those the the mean campaign, there of those new. of look, rhetoric right a not all in are about what's new the down And all the coming by are Hey, private Pemex? we was was what's discussion the

by which in followed basin. not he on of the XXX sector to way, we're look, we're contracts saying, going are to the over the going we think private - have, honor I through contracts all

he's again, those recent comments over to XXX in by saying, the his comments, we've caveated most even we're that honor, contracts entered into. think I going

that. So I've found consistent. in That has statement always comfort been

help almost immediately And opportunity them terms giving sales I his farm-outs, in in going think have how he's navigated more suspended leases. to forward, we with the Pemex administration. of he new can

- private and here's I conversation. would Mexico, about interesting be I I think I really of if part changed. I the to what But has in know sector tell don't Leo, which needs So lot think offshore the you a is look,

of XX investing us group, out in the $XX a in sector, have There's lined members, look to in up, we're group meaning XX that the spent Mexico. we're we a you as spend We AMEXHI. $XX to are if collective contract, So there's at billion, offshore private another have all - And billion called trade there. we that projects AMEXHI. date a

to So is Pemex's call close think, $XX in that billion. $XX around this I budget billion E&P. year,

At very to of impossible go do. the And minimum, what Pemex it's they're out about private Pemex not a So we think can there do doubling sector. up contribution the and to want successful, well. know also there's the private ours included. plenty sector We that is in been to on of want again, investment them And be down and discoveries but Mexico. offshore doubling

we a politics big I think that data pretty always production are offshore that keep get online discussion politics and the and and what is with in respect pounding continue President's well I this look, our With big oil. there's think private role takes our while to sector Pemex. So pounding bit mean administration is statement push and little we're we to of negotiate that to see prepared while of terms a to we compelling Mexico. just Zama, in message of the It a private to the the on sector But in is contributing down there.

forward. form to going in going and shareholders value what takes imagine, It's the you an time. the pull - it discovery. contract price We really so amazing today. we in value the And to And know need as that have to not that We've we to portfolio. can What diminished. had all the been risk crystallize we're in the Leo, that have have the any We're under I'm certainly, that is never our reflected it rights lucky contract in to we're is value months. pull coming

Leo Mariani

to wanted terms in tackling you on guys the of on maturities just updated if made might Okay, be sheet. sort what wanted balance I XXXX any thanks. the bit there's for remaining some see a looking comments there. of follow thoughts I up you on the to at of little strategies

Tim Duncan

Yes.

I start, way, by I'm understand it think in opportunistic. kind the us did Shane right second you what to I thoughts. let to Leo, it we were. then and is the some to I'll And Shane. hand noteholders on Look, of it me But the was the over Let quarter, going was him think and kind focused hyper allowed give move who pretty of

Shane Young

Yes. think No, that very, highly focused XXXXs, Look, a something for very about. this lot Leo, on it. thanks We're the a question. on is we the bunch

the I you have get there? which markets most of the is in we is in the possible way sort to financeable to things is think control transaction. when option taken if How us. we've a sort is that of capital approach control, refinance A, to We regular the we will, market available credit do can

off all we're top, things we do the certainly, So that to trying there. to do be to need the

Now that the access, of control that is timing of the we don't access. things the sort

I be more so think creative. to bit we've got a little And

seen a a sort that of things you've couple us So help to quarter little maturity of course bit. the over last the do of manage

first our same That's tell reducing number. that sort of of bottom I much to other and April, time, at between that that. with team, a we'll would million would But ideas which creative profile. them. manageable people a always the May, of big about I back the clear So after the more there's thinking was of the in always open lot the commodity of say, a it's principal of in interest of sort you, amount And $XX we're particularly step, be makes business

second over evaluate the half this of again, we'll course year. the so And of other opportunities

Tim Duncan

Yes, think on you you see the Leo, mid-year coverage credit. and the the can saw ratio reserves, and I

are, And just be the and feel patient good opportunity so see we where we and where have we about to is.

Leo Mariani

flexibility. certainly appreciate there's I And Okay. of lot a

status other guess a any in is. trying be projects West, no get the like have non-op on might what in is up beyond visibility But that sure on horizon there then coming And of I quarter? anything that on the from Puma Maybe here rig XXXX? the third in side, side just non-op that, contracts there to what's the is else You can see finishing XXXX. on that you not apart sense,

Tim Duncan

how - and the at a think you back own year, if assets capital pro at the But we the how generated by we million design back. coming to West. I raises do XXXX, And about I forma, with a think flow. of suspension think, capital I I of and collectively about price program about it it's around full the our the at it, think was will we come didn't $XXX that project. Right. look Well, a mentioned And had question these look, Puma There raises think It was allocating then mention last project these free back. cash great about assets way, portfolio. we look I it temporary assets had today, mean intention the million. I again, of - $XXX do

about a which - the doing in we a today, in budget. set design reacted of maintenance We budget we really considered may it's Zama, So downturn the to be with some thinking kind maintenance more we're work of maintenance, good by assets. although of not have

about do The a want trickling go got we high-impact into we've question about simply and got the to then we is portfolio do we've we that low-risk good in back with maintenance well. can to think can or we next exploration? year, portfolio As we think it maintenance a as news that do be some is, want

So that the kind that considering. kind - also big of that bat, Puma we're a on if it's don't right is There's anything we're others one. know West there's the huge non-op thinking couple of I about. a horizon, off

for in months. then, there's crystallize we'll the - some goals coming I one so all about our think as had we've shifted their have and that keep I a And with unitization probably the cetera. to non-op partners going discussions, of budgets, I to schedule were et kind to next I so of Zama we of think to that's the think that course, - and both suspect get calls, think FID, is going trying year

So we think, option, we expect How year. is busy it busy is, have place to I next year we really at now. which to want right be want be to our a the

Leo Mariani

Okay, thanks.

Tim Duncan

got you right, All it.

Operator

Scialla Michael Please And of ahead. you. from Thank go question next Stifel. our is

Michael Scialla

if line to morning. has in on good particular, those give need weighed just a you your than Tim, can to in be any conversations of around on conversations finalized? Hi, time they you share when SENER if with wondering anything Pemex other wondering CNH

Tim Duncan

the what saw underscore haven't in you question. Yes. want importance They look, Thanks to for you that I weighed don't weighing will. But outside publicly. the of in, if

leadership. think I showed - some it that think I

process. wanted showed part it think they the that to be a I of

I think transparency. it showed

I look, that a knew think to of reservoir us. that we need made great to to something that sure they this needed and is that they interest project make filing to make say, was we things that to positive those a were be thought sure that do. all is shared unitized. to a we this We And - want it's recognized, this knew

together. $XXX just not But with certainly tremendous about in work. obviously, all great mindful why spent, budget don't all share, Those our got We've that, COVID appraised $XXX million These between to I million, amount me, be under safety project net and - the discussions penetrations. And in we've as on but of And our look, face-to-face, to different a first we're Obviously, to pull so can't and - are contribution we're of And XX% closed-door got a varying feel them been pull think oil. parties. four a interest obviously, situations. discussions. negative. we good isn't we We've that. reason schedule. discussions. trying there's see here. done we've And We better to and different this these to is Pemex. of done a We've we've partnership, We've are

is slowed understand And it's made doing that. think But the President so the that and here. mean And the about I an a comments right interesting. earlier we government things I down little. question thing

that any think best made then kind to the that nature trying the it basins the to take I but - be track value time. these bulk in global and about probably just might got of the And and do disputes. do in. of under time, And We'll day-to-day will the comments there's but bulk of the do down we by the think to to of our administration to take try solve trying sneak time our business here, heading the effort of it. of create work we're negotiations You've will I the probably

Michael Scialla

realize - there's at lot you your maybe a ultimately be. CapEx ownership I will as ballpark a then point project might to Can of still give be And the the this year? for next what that. estimate uncertainty appreciate the on what gross I

Tim Duncan

Well, guidance regardless. don't the think I and little do year, but will a - don't next next I amount year, that, of on it a spend think we'll material be get closer

glad has ton and pace, we you this get development on I and get work of contract, then a engineering submitting a still formalize and we plan. partnership, got to stayed through we've year think, to we look, got soon but the I'm partnership, as done you're that - as adjudicated that unitization

where start yard. cut it's in saying, the year. we've you So construction really look, spend the the picked right to steel, actual really later time That's

been, that's and pick is so kind And XXXX XXXX. up of

to frankly, is of look assessment they instructed terms all pretty release, more if similar that say In and map I what of our but made that publicly, Sewell one are, at we side. that's in Sewell they what XX-XX when Netherland, the brought you that then our and a look, look at used. at than to to on won't Netherland, said data us interests why think really I unitize, thing map we the press think look SENER's And this we

is feel look is we're there drive be the in shareholders. And spending, that reflective then of terms isn't year. will to point value out There's much of where for home, I And continue science though, the that. good we no what is the about the today around doubt So like. to about splits trading The obviously that. ought in later it

So sitting in think equity as good you're an I spot. owner, a

Michael Scialla

it you can wasn't know debt more detail remarks, notes a issued bit little for prepared completed? as on on your Shane the had good. completely one but I new that give clear there in Very you if you well. Shane, exchange I mentioned were there. I

Shane Young

was so that No, X(a)(X) to what's - a a exchange. Yes. referred as

over that, debt holder would I a to that was an it's well, the little our holder had exchange that there. this for out on some you, with our and with And we seeing mean about securities would they of have good So for for conversations yeah, was in securities I we knew interest tell background approached time us equity a us this. a bit been of existing while, if an

of rise, four these I'd from might in and again, of et just I the this better sort discussions when things say, that and originally played so cetera standpoint and began, really, our we sort many weeks, near have looked the think price-wise, to market over six stock as price or weeks, were talked markets, like this over of the to commodity-wise, bottom that deal began other to seen of they the And us. course better period.

well, working eliminated the So the Board that to we together notes. with team, management pull able the talking were as to those trade

Michael Scialla

shares you there? were how Can say involved many

Shane Young

about was It X million.

Michael Scialla

Got it. Great, you. thank

Shane Young

Thanks.

Operator

next go Thank comes of Please question John you. The ahead. Capital. ROTH from White

John White

your to commentary. Gulf multifaceted of on comments That how energy the fits want into was nice the I I say Tim, Mexico picture. overall appreciated

Bulleit, and there? Kaleidoscope production Looking any be ahead on to might color what the rates initial

Tim Duncan

because them specifically let's these haven't time. - at guided we reason so the do one each is that Well, of a

that really part field there was Exxon. we're Kaleidoscope, think old million-barrel that's part competitive an that transaction, It interesting a to a I XX is. was doing the We're in Canyon of speaks did of it's and have an our by specific blocks strategy taking transaction. what Green and So XXX project there the we we a facility called developed

barrels And try to up, so three we open think, I reprocessed and and to going then go better with million objectives. a to we're that's remapped the and five data well XXX development drilling data in going

them; to find are we going one find. all And those all so expectations. have are of question going of to find rate which And them? five the John, of we is, we different will of objectives those

in have that wells wells in produced produced that a field There's X,XXX X,XXX have a day. been And so the field day. the been there's barrels barrels

could outcomes. a the And is range news of we up nice immediately. there's good hook it So

now. So we're that in of project depths the right

that. as because, imagine, team you with they're has but delays trying Some supply in hung and the can the to there chain, execute

a by the which though a so tricky field Bulleit, and rates guidance. same been miles from X,XXX Canyon on really the is there's between that with X,XXX a about. to day I to Even Bulleit from talked the Bulleit. Kaleidoscope the barrels day. way, Green north, XX barrels So it's that's And platform, where miles to well, do why those ties perfect XX sometimes,

it at just we - a And could that, on be think high looking the but there's so of outcomes. of the side well, we range

sand an versus these kind maybe of of and you know of can produce the wells of it's that to of are - of they going that variable. look can deepwater kind thick kind project, just ring-fence mature projects These types a tie terms the some a I more to, little X. more hey, I exploration say, So and in big, and setting these at it little where what

November. what gave that's basin an a you the and our those And So like. I But lot about to why respect you will in wells a do going - people pragmatic with have idea get of some the I of think how it offshore. be manage don't then that believe do do the about is just think impacted we see what we're of that be views offshore. they what asked look about could look, spend And to to then of commentary, And I I time guidance. beneficial of our talking views we how lot

that make engine benefit the the provide offshore they the of see production people policy that that the that about intact. and that we Mexico is revenue hopeful sure Gulf I'm always confident and jobs of when I'm think so they stream And will. do we we and it what and And the support stays

John White

a It's U.S. energy in picture. know feel. very you how Well, basin underappreciated I the

Tim Duncan

Yeah.

John White

Sewell the opening XX. Netherland, Block on in your remarks estimate In best

did that's oil? you say missed think but I I XX% it,

Tim Duncan

audit Netherland, proved and we It's probable estimate, oil kind And of a lot Sewell a our project. GOR, of to in all reserves. XX% a ways. the best can right. low is, you different of use use again, them That Obviously,

in that's You what at those prospective to have we Gulf can in discovery. disclosure the that that can them we're guys us - contingent outside bring discovered how bring a give and do. those a they of and just that also there made and look of that basins what you've report else in about. they use and And guys is resource prudent once when of you what something what to to your found Mexico, It's that's see we've of it's view

John White

All results we're nice given And question. environment the in. thanks taking right. for Well, my

Tim Duncan

John. You got it,

Operator

Instructions] next from Richard [Operator One. comes Tullis question Please Capital of Our go ahead.

Richard Tullis

that and/or Shane. A opportunities Hey, company. Gulf Tim offshore more In and mentioned you looking outside for release, of ample morning. thanks. the resilient a diversified a Good for the earnings become or Could on question business development expand Maybe Mexico that Mexico? to M&A bit. include

Tim Duncan

the backdrop we everyone explorers Yeah. say, a were quarter and preeminent if in just still and the were results to quarter the And able - going terms the I Look, is add in we Richard, our pretty who and and by being in a the to quarter the PDP of at think me, and a at, of on. second look with for the lot hope I pandemic what you're you of able excuse first mean basin. another bolt-on; I manage, still would that, demand of a to inventory the doing situation I think were in bidding serious was do announced We to industry BP, one PV-XX we difficult agreement our a well. trough commodity obviously, of discovery.

could the than out transformative got on So cycle. last out I think doing to that side we that ultimately we too transaction of that we how private in made as that's quarter. the of not the it look, a different commodity best market were led And we

offshore We've looking U.S. and the this be I outside business how pound is opportunities assets ahead, Mexico, team brought Obviously, all good highlighted And management we technology We a seismic in that offshore Look, we're it so it teams think Mexico? they really has places to geology, and geology, And dedicated, conventional that's Gulf geology we're set the been I for and Can supply in rules. call conventional I do seismic. so. development we we the jurisdiction. It's a they while find to at do, we opportunities. conventional other look our got look we think we're always the down can think and the operator we're creates for Could geology asset Richard. of to manage and very, scale happen steward believe looking there. skill in how never is and operations. affects to in to responds the a of we U.S. Gulf? that which executed achieve think make social of a something do got got diversity different that. to that the do think managed certainly sense. something always other value for potentially. that of, in to We've good right place ways good we've and the good we really we value. areas? But what proud and need and the for long-term very we're shareholder chain - at believe we're be - It's We And Yes, content there. been outside

Richard Tullis

just Tim. the storm roughly, in is And reflected downtime helpful, That's second half for me, much 'XX updated lastly guidance? production how XXXX

Tim Duncan

XX% about we down second in so Well, were quarter. the

non-operated. has Murphy say of maintenance, I got in coming House. is back. is accelerated Some a was almost of maybe of Half little still that that would do work back. of half that to some Delta that,

to we've got job it. And way more get little They've a about a Powell, all just that Ram there. I there, back. think the they've some repairs done do talked great to

guidance. how quarter. get we I see all rate this run we've stuff get think talked the So think production until into that's may We'll but you the cleanest we eventually about not why back about fourth the

Richard Tullis

Thanks that's me. from right. All Well, everyone. all

Tim Duncan

Thank right, you. All Richard.

Operator

This concludes our question-and-answer session.

to Now turn ahead. go go back for remarks. I'd closing Duncan Please conference Please the over like to ahead. Tim Mr.

Tim Duncan

operator. All right. questions Look, Thanks, there. some good

very a moves. opportunistic second I'm of how certainly, been all and 'XX particularly us 'XX. type that of in challenges, challenge appropriate And those we've 'XX, all very, was challenges, we've how I managing were has some were we the we this different 'XX. agree of had Those 'XX, kind in year that proud the But of think challenge. quarter, been a made companies

keeping balance of and one our to space. the mid-cap certainly small for sheets opportunities. to as a sheet committed And are we're balance more We continue our in look going to competitive for

we're to it year So XXXX. about end we've the second flexibility where how got driven want then into half and in I'm we and We keep about think really We've down full there. going our cost the be going year. of rebounding where the excited next we to into structure. year

So want we participation your forward end to I'll call. next with I the and thank look that, you talking for to you to time.

Operator

The concluded. conference for has you now today's attending Thank presentation.

You may now disconnect.

Sergio Maiworm	VP of Finance, Investor Relations and Treasurer
Tim Duncan	President and Chief Executive Officer
Shane Young	EVP and Chief Financial Officer
Jeffrey Scott Grampp	Northland Capital Markets
John Marshall White	Roth Capital Partners
Leo Paul Mariani	KeyBanc Capital Markets
Michael Stephen Scialla	Stifel, Nicolaus
Richard Merlin Tullis	Capital One Securities

Talos Energy (TALO) 9 Aug 202020 Q2 Earnings call transcript