Talos Energy Inc. (TALO) | Investment Case

1. Company Snapshot

1.a. Company Description

Talos Energy Inc., an independent exploration and production company, focuses on the exploration and production of oil and natural gas properties in the United States Gulf of Mexico and offshore Mexico.As of December 31, 2021, the company had proved reserves of 161.59 million barrels of oil equivalent, consisting of 107,764 thousand barrels of crude oil, 236,353 million cubic feet of natural gas, and 14,435 thousand barrels of crude oil.The company was founded in 2011 and is based in Houston, Texas.

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1.b. Last Insights on TALO

Talos Energy's recent performance was negatively impacted by the upcoming transition to a new CEO, Paul Goodfellow, who will assume the role on March 1, 2025. The company's Q4 2024 earnings release highlighted a loss of $0.01 per share a year ago, which may indicate a challenging operating environment. Additionally, the company's acquisition strategy, while essential for growth, carries inherent risks. Furthermore, the recent appointment of a new CEO may lead to a period of uncertainty, potentially affecting the company's short-term performance.

1.c. Company Highlights

Last Price	11.89
Change Percentage	1.02%
Open	11.89
Previous Close	11.78
Market Cap ( Millions)	2114
Volume	825360
Year High	12.2
Year Low	6.22
M A 50	10.13
M A 200	8.94

FCF Yield	69.34%
Dividend Yield	0.00%
ROE	-6.36%
Debt / Equity	49.28%
Net Debt / EBIDTA	75.57%
Price To Book	0.84
Price Earnings Ratio	-12.26
Price To FCF	1.44
Price To sales	1.09
EV / EBITDA	2.56

2. Talos Energy's Q3 2025 Earnings: A Strong Performance

Talos Energy reported a robust financial performance in Q3 2025, with production exceeding 95,000 barrels of oil equivalent per day, and approximately 70% comprised of oil. The company's actual EPS came out at '-0.19', beating estimates of '-0.35'. The strong operational performance translated into $103 million in free cash flow, significantly exceeding consensus estimates. Year-to-date, the company has generated approximately $400 million in free cash flow. Revenue growth is expected to be -4.5% next year, according to analysts' estimates.

Publication Date: Nov -12

                                    📋 Highlights
                                    Production Exceedance:
                                                Generated over 95,000 BOE/day, with 70% oil content, driven by stable operations and no storm disruptions.
Free Cash Flow:
                                                Delivered $103 million in Q3 FCF, exceeding consensus, and $400 million YTD, reflecting disciplined capital and cost management.
Share Repurchases:
                                                Returned $48 million to shareholders via 5 million share buybacks in Q3, aligning with capital return commitments.
Exploration Success:
                                                Confirmed promising discovery at Daenerys, with plans to drill a second appraisal well in Q2 2026 to assess commercial potential.
Cost Savings:
                                                Surpassed $100 million annual savings target, reinforcing low-cost operator status in the Gulf of Mexico.

                                

Operational Highlights

The company's operational success was driven by the absence of storm activity and solid base performance from its assets. The Sunspear workover was completed ahead of schedule, and the well was returned to production in late September. Talos also made a promising exploration discovery at Daenerys, with plans to drill a second well in the second quarter of 2026. As Paul Goodfellow stated, "We're proud of the teams here at Talos for delivering outstanding performance on the first well at Daenerys."

Financial Flexibility and Capital Allocation

Talos continued to demonstrate its commitment to financial discipline, with a resilient balance sheet that prioritizes financial flexibility and returning capital to shareholders. The company repurchased approximately 5 million shares for $48 million in the quarter. Looking ahead to 2026, the company expects to deliver flat year-over-year oil volumes while investing in both near-term development and longer cycle projects.

Valuation Metrics

Talos Energy's current valuation metrics suggest a relatively attractive profile, with a P/S Ratio of 0.98 and an EV/EBITDA of 2.38. The company's Free Cash Flow Yield is 77.37%, indicating a strong ability to generate cash. However, the ROE is -6.36%, and the ROIC is 2.44%, which may raise concerns about the company's profitability. The Net Debt / EBITDA ratio is 0.76, indicating a manageable debt burden.

3. NewsRoom

Talos Energy Inc. $TALO Shares Sold by Geode Capital Management LLC

Nov -29

Source: defenseworld.net

Talos Energy Inc. (NYSE:TALO) Given Consensus Rating of “Hold” by Brokerages

Nov -27

Source: defenseworld.net

Talos Energy Inc. (TALO) Q3 2025 Earnings Call Transcript

Nov -06

Source: seekingalpha.com

69,622 Shares in Talos Energy Inc. $TALO Bought by Y Intercept Hong Kong Ltd

Nov -06

Source: defenseworld.net

Talos Energy (TALO) Reports Q3 Earnings: What Key Metrics Have to Say

Nov -06

Source: zacks.com

Talos Energy (TALO) Reports Q3 Loss, Tops Revenue Estimates

Nov -06

Source: zacks.com

Talos Energy Announces Third Quarter 2025 Operational and Financial Results

Nov -05

Source: prnewswire.com

Talos Energy Inc. $TALO Position Increased by AlphaQuest LLC

Nov -03

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Upstream

Expected Growth: 4.0%

Talos Energy Inc.'s upstream segment growth is driven by increasing crude oil prices, rising production volumes from its Gulf of Mexico assets, and strategic acquisitions. Additionally, the company's focus on cost optimization and operational efficiencies has led to improved margins, further contributing to its growth.

7. Detailed Products

Offshore Exploration and Production

Talos Energy Inc. is engaged in the exploration, development, and production of oil and natural gas properties in the Gulf of Mexico and the Gulf Coast region.

Onshore Exploration and Production

Talos Energy Inc. also explores and produces oil and natural gas onshore in the United States, primarily in Texas and Louisiana.

Well Intervention and Abandonment

Talos Energy Inc. provides well intervention and abandonment services to help operators optimize production and safely abandon wells at the end of their life cycle.

Decommissioning and Abandonment

Talos Energy Inc. offers decommissioning and abandonment services to help operators comply with regulatory requirements and minimize environmental impact.

Project Management and Consulting

Talos Energy Inc. provides project management and consulting services to help operators plan, execute, and optimize their oil and gas projects.

8. Talos Energy Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Talos Energy Inc. operates in the oil and gas industry, which has limited substitutes. However, the increasing focus on renewable energy sources and electric vehicles could pose a threat to the company's operations.

Bargaining Power Of Customers

Talos Energy Inc. sells its products to a diverse range of customers, including refineries, petrochemical companies, and power generation companies. The bargaining power of customers is low due to the lack of concentration in the buyer's market.

Bargaining Power Of Suppliers

Talos Energy Inc. relies on a few major suppliers for its drilling and extraction operations. While the company has some bargaining power due to its size, the suppliers also have some leverage due to the specialized nature of their products and services.

Threat Of New Entrants

The oil and gas industry has high barriers to entry, including significant capital requirements, regulatory hurdles, and technical expertise. This limits the threat of new entrants to Talos Energy Inc.'s operations.

Intensity Of Rivalry

The oil and gas industry is highly competitive, with many established players competing for market share. Talos Energy Inc. faces intense rivalry from its peers, which can lead to downward pressure on prices and profit margins.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	32.68%
Debt Cost	9.80%
Equity Weight	67.32%
Equity Cost	13.87%
WACC	12.54%
Leverage	48.54%

11. Quality Control: Talos Energy Inc. passed 0 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

PEDEVCO

A-Score: 4.6/10

Value: 8.7

Growth: 7.3

Quality: 7.1

Yield: 0.0

Momentum: 0.5

Volatility: 3.7

1-Year Total Return ->

Talos Energy

A-Score: 4.1/10

Value: 9.2

Growth: 3.9

Quality: 4.6

Yield: 0.0

Momentum: 3.0

Volatility: 3.7

1-Year Total Return ->

Calumet Specialty Products Partners

A-Score: 4.0/10

Value: 9.8

Growth: 2.6

Quality: 5.6

Yield: 0.0

Momentum: 3.0

Volatility: 3.0

1-Year Total Return ->

Ring Energy

A-Score: 3.9/10

Value: 9.1

Growth: 3.7

Quality: 6.4

Yield: 0.0

Momentum: 1.0

Volatility: 3.0

1-Year Total Return ->

Vivakor

A-Score: 3.3/10

Value: 9.8

Growth: 6.4

Quality: 3.6

Yield: 0.0

Momentum: 0.0

Volatility: 0.0

1-Year Total Return ->

USE

A-Score: 2.6/10

Value: 7.8

Growth: 2.2

Quality: 2.3

Yield: 0.0

Momentum: 2.5

Volatility: 0.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-10.81%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

12.54%

Talos Energy Inc. - US87484T1088

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on TALO

1.c. Company Highlights

Lower Yield

Average Quality

Fairly Valued

Earnings Beats

Revenues Beats

Weak Momentum

Stable Momentum

Average Growth

Earnings Miss

Cheaper

Medium Volatility

2. Talos Energy's Q3 2025 Earnings: A Strong Performance

Operational Highlights

Financial Flexibility and Capital Allocation

Valuation Metrics

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.00%)

6. Segments

Upstream

Expected Growth: 4.0%

7. Detailed Products

Offshore Exploration and Production

Onshore Exploration and Production

Well Intervention and Abandonment

Decommissioning and Abandonment

Project Management and Consulting

8. Talos Energy Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Talos Energy Inc. passed 0 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

11.89$

Current Price

11.89$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA