Talos Energy, Inc.

Good morning, ladies and gentlemen, and welcome to the Talos Energy 3rd Quarter 2024 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. This call is being recorded on Tuesday, November 12, 2024. I would now like to turn the conference over to Clay Janone, head of investor relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to our third quarter 2024 earnings conference call. Joining me today to discuss our results are Joe Mills, interim president and chief executive officer, Sergio Myworm, executive vice president and chief financial officer, and John Spath, executive vice president and head of operations. For our prepared remarks, we'll refer to our third quarter 2024 earnings slide presentation that we have prepared to accompany our discussion today. It is available on TALIS' website under the investor relations section. We encourage you to review this presentation for a more detailed look at our results and operations update. Now let's start on slide two, cautionary statements. I'd like to remind you that our remarks will include forward-looking statements, Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in yesterday's press release and our Form 10-Q for the period ending September 30, 2024, which will be filed with the SEC on Tuesday, November 12, 2024. Forward-looking statements are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we may present GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in yesterday's press release, which was filed with the SEC and is available on our website. And now, I'd like to turn the call over to Joe.

Thank you, Clay. Good morning, ladies and gentlemen, and thank you for joining us this morning. I'm excited to be speaking with you today and proud to be here serving as TALO's interim CEO. Since joining Talos Board in March of 2024 as part of the Quarter North acquisition, I've been impressed by the highly talented Talos team. The board and I are working closely together and continue to be very focused on delivering long-term value to our stockholders. For today's call, I'll discuss some of the operational highlights for the quarter, and then I'll discuss some corporate matters. First, I'm pleased with our overall results, especially considering the challenges we faced during the quarter and including managing through four different named hurricanes affecting the Gulf of Mexico. If you'll turn to slide five, we're happy to report another consecutive quarter of record production totaling 96,500 barrels of oil equivalent per day, which was 70% oil, and including the NGL barrels, a total of 80% liquids. Despite disruptions from the hurricanes, we managed to navigate the effects of those storms and achieve production at the high end of our third quarter guidance range. We reported EBITDA $324 million, which equates to an EBITDA netback margin of about $37 per BOE. Our netback margin was slightly lower quarter-to-quarter due primarily to lower oil prices. However, we believe we rank in the top quartile among public EMP companies in this important category. We spent $119 million of capital expenditures, excluding the plugging and abandonment, which in turn led to positive free cash flow generation of $122 million during the quarter. With that free cash flow, we were able to continue paying down our debt. We paid down 100 million of debt and lowered our leverage ratio to 0.9, hitting our leverage target of one or below ahead of schedule. Sergio will give more color on our debt pay down in a few minutes. Looking at slide six, I want to highlight that TALOS continues to deliver on key expectations. Our third quarter results are building on the track record of our previous two quarters this year as we delivered record production results and strong EBITDA and free cash flow growth. I'm proud of the work and dedication of the Talos team as we continue to execute on our base business, including our integration of the Quarter North assets and employees into the Talos organization and culture. We believe we're on track to realize our estimated synergies of $65 million in 2025. Moving to slide eight and nine, we are focused on our 2024 and 2025 drilling program, which we finally have underway. We have a robust drilling program starting with the drilling of our important Katmai West number two delineation well in the Ewing Bank area, followed by the drilling of the high potential Daenerys exploration well, which will be located in the Walker Ridge area, followed by the Helms Deep prospect in the Green Canyon area. Our plan is to utilize the seed drill at West Vela seventh-generation drill ship to drill these wells. In addition to the West Vela rig, we've also committed to the Transocean Deepwater Conqueror, which is lined up for our SunSphere completion in early 2025. The SunSphere well is expected to commence production during the second quarter of 2025, and then we anticipate using the Conqueror rig to complete the Katmai West No. 2 well beginning later in the second quarter of 2025. Now, I'd like to touch on our discovery at Ewing Bank 953, which is on slide 10. In September, we announced that we logged approximately 127 feet of net pay, which was better than expected going into the project. Preliminary assessments indicate an estimated recoverable resource potential of approximately 15 to 25 million barrels of oil equivalent from a single subsea tieback to the Megalodon platform, which TALOS partially owns and which we believe should lead to a production flow rate of between 8,000 to 10,000 barrels of oil equivalent. Talos owns a 33% work interest in the well, and we expect first production by mid-2026. Next is our Katmai West No. 2 well, which is on slide 11 of your presentation. We recently commenced drilling of the Katmai West No. 2 well in late October as a down-dipped delineation well to further appraise the field and potentially add additional approved reserves. Our original plans were to spud this well earlier this year, but the rig was delayed by the previous operator and the various hurricanes in the Gulf of Mexico this past summer. Notwithstanding, our rig campaign is underway, and we still expect first production from the well around mid-year 2025. Our Katmai field is a major asset and a key focus area for us. We continue to evaluate the reprocessed seismic imaging of this area and see even more upside within the broader Katmai area. We estimate potential resources in the greater Katmai area of up to 200 million barrels of oil equivalent gross. Recall, we own a 50% working interest and operate the Katmai field. Talos also owns 100% and operates the host facility, which we call Tarantula. In order to further increase throughput capacity at our tarantula facility, in late October, we started additional topside work on the platform, which should enable us to increase the daily throughput from 27,000 barrels of oil equivalent per day to 35,000 barrels of oil equivalent per day. We recently completed the topside work and are currently bringing the platform back online and ramping up the volumes. We look forward to sharing more with you regarding the Katmai West No. 2 well results in early 2025 once we have the well down. Turning next to our Daenerys prospect on slide 12, we are looking forward to drill and evaluate this high-impact four-way subsalt myosin prospect and see Daenerys as another potential cap-my-size opportunity with estimated gross resource potential between 100 and 300 million barrels of oil equivalent. We expect to spud Daenerys in the first quarter of 2025 following the drilling of Katmai. Talos is also the operator of Daenerys with a 27% working interest. If successful, Daenerys could be another key project to Talos' long-term organic growth potential. Another exciting area for Talos is the Wilcox trend in the ultra-deep waters of the Gulf of Mexico, which we highlight on slide 13. This geological trend has already produced over 1 billion barrels of oil equivalent out of 10 existing fields and is producing over 250,000 barrels of oil equivalent each day. Leading the way in this trend are the majors like Chevron, which are developing the successful adoption of high-pressure technology that is rated to safely operate at up to 20,000 PSI equipment and subsea trees. Chevron recently announced the successful startup of their anchor field utilizing 20K equipment, which is key in helping to unlock the potential in this lower Wilcox trend. Talos has a significant acres position in the lower Wilcox trend, and we believe this represents a growth opportunity for us with prospects like Coronado, Enterprise, and Dunharrow being actively evaluated using current seismic technology. Back in August, we acquired a 21.4% increase interest in the Monument discovery operated by Beacon Offshore Energy. Looking at slide 14, Monument was drilled and discovered with two-well penetration and was FID'd for development back in February of this year. We estimate proved plus probable gross reserves of approximately 115 million barrels of oil equivalent and expect to flow production back to the Shenandoah production facility which Beacon is expected to start up by mid-2025. We expect first production of Monument by late 2026, with incremental upside of another 25 up to 35 million barrels of oil equivalent from an additional prospective drilling location on the south side of the main trapping fault in the field. TALIS is well positioned to be a key player in this growing Wilcox play, and we intend to leverage our broader acres position to drive future production and reserve growth. Now, before turning the call over to Sergio, I want to touch on the Stockholder Rights Agreement that the Board put in place at the beginning of October. The Rights Agreement was implemented in response to Control Empresario de Capitales' continued accumulation of shares, resulting in a significant ownership stake of about 24%. The rights agreement is meant to protect all of our stockholders by preventing any single stockholder from taking actual or effective control of Talos without paying a premium for that control. We'll continue to work with Grupo Carso, which is controlled by Control Empresario, on our mutual investment in the Zama field in Mexico. We will continue to have open and constructive conversations with their team. Now I'll turn the call over to Sergio to address some financial details for the quarter.