Talos Energy, Inc.

Good morning, ladies and gentlemen, and welcome to the Talos Energy first quarter 2025 earnings conference call. At this time, all lines are in 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 zero for the operator. This call is being recorded on Tuesday, May 6, 2025. I would now like to turn the conference over to Clay Johnson. Please go ahead.

Thank you, Operator. Good morning, everyone, and welcome to our first quarter 2025 earnings conference call. Joining me today to discuss our results are Paul Goodfellow, President and Chief Executive Officer, and Sergio Myworm, Executive Vice President and Chief Financial Officer. For our prepared remarks, please refer to our first quarter 2025 earnings presentation that is available on TALIS's website under the Investors section. for a more detailed look at our results and operations update. Before we start, I'd like to remind you that our remarks will include forward-looking statements subject to various cautionary statements identified in our presentation and earnings release. Actual results may differ materially from those contemplated by the company. 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 March 31, 2025, filed with the SEC. Forward-looking statements are based on assumptions as of today, and we undertake no obligations 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 certain non-GAAP to GAAP measures is included in yesterday's press release, which was furnished with our Form 8-K, filed with the SEC, and is available on our website. And now, I'd like to turn the call over to Paul.

Thank you, Clay. Good morning, everyone, and thank you for joining us on our call today. I'd like to begin with some remarks on our financial and operational results for the quarter. Following that, I will hand the call over to Sergio, who will provide a more detailed overview of our financial performance and guidance. Finally, I'll conclude with some closing thoughts before opening the call to Q&A. I want to start by saying how honored I am to be here and join you all for my first earnings call as Thales' CEO. Over the past two months, I've spent a lot of time connecting with our employees and stakeholders. These conversations have been invaluable. They've given me a deeper understanding of where we stand as a company, the challenges we face, and the opportunities ahead. I've spent my entire career in the oil and gas industry with a particular focus on deep water operations. With over 30 years of experience, getting the chance to lead a company like Thales presented an extraordinary and exciting opportunity. Thales has a solid asset base in the Gulf along with a history of operational performance. The company's established infrastructure coupled with its ability to capitalize on growth opportunities positions it well in the industry. However, what has stood out even more is the entrepreneurial culture and a sense of pride shared by Thales' talented and skilled workforce. It is something I noticed early on in my time here, and it is a fundamental strength that I intend to build on during my tenure. I'd like to thank our Thales team for their warm welcome, sharing their perspectives, and their hard work and dedication that delivered the strong results that we will discuss with you today. We are leveraging our unique culture, history, and strengths to enhance our assets and foster stronger relationships with both internal and external stakeholders. By maintaining open communication and collaboration with stakeholders, employees, shareholders, analysts, and partners, we gain valuable insights that drive progress and build on Talas's success. My goal is to take a very good company and make it great. I believe great companies are built on continuous improvement, so I'm challenging our entire team to enhance efficiency and reduce costs across the board. We're making steady progress through the first 100 days as planned, advancing the development of our go-forward strategy. This plan is built around three strategic lenses, the near-term, medium-term, and long-term to build upon our strong assets and further strengthen the organization. I understand that you are eager for more details. Rest assured, I plan to present the full plan to you in the coming weeks. Now, I'd like to address our strong first quarter results, starting with slide four. Our first quarter results demonstrate our continued focus on operational execution and consistent free cash flow generation. We're extremely proud that the first quarter marks our fifth consecutive quarter of record production. This is also highlighted on slide five. For the first quarter, we achieved production totaling 100.9 thousand barrels of oil equivalent per day, which was at the top end of our quarterly guidance range. The production was comprised of 68% oil and including the NGL barrels with 78% liquids. We reported record EBITDA of $363 million for the first quarter, which equates to an EBITDA net back margin of about $40 per barrel of oil equivalent. We believe we have consistently ranked in the top quartile among public E&P companies in net back margins, as shown on slide six. Our capex in the quarter was $118 million, and we spent an additional $10 million on plugging and abandonment activities. We're executing our plugging and abandonment activities with a prudent approach. Typically, these activities are better performed during the summer months, despite potential weather disruptions. As planned, we anticipate an increase in plugging and abandonment expenditures throughout the remainder of the year. After taking into account our capital expenditures and plugging and abandonment spending, we achieve record free cash flow of $195 million for the quarter. Given our robust free cash flow and the inherent value of our asset base, the Board has approved an increase in our stock repurchase authorization to $200 million. We plan to execute the share repurchase plan through a structured, programmatic approach, and we expect to allocate up to 50% of our annual free cash flow to share buybacks. During the quarter, we repurchased 2.3 million shares for some $22 million. Our strong financial results enabled us to maintain our leverage ratio of 0.8%. At the end of the quarter, we built our cash balance to approximately $203 million, while also repurchasing our shares, and improved our liquidity to approximately $960 million. This positions us well to capitalize on opportunities that may arise in the current environment. Operationally, we continue to make real progress in our drilling program, finishing our completion operations on our SunSphere Discovery, and starting completion operations on Katmai West number two. Moving to slide seven and eight, our 2025 drilling program is progressing as planned, with significant progress across multiple projects. The team from Thales and the West Vela drill ship are working in close coordination, which is helping to drive smooth and efficient operations, ensuring we meet our operational milestones. At the Sunspear discovery, Completion operations have concluded successfully. First production is anticipated late second quarter 2025 as planned. The well is being tied back to the Thales-operated Prince platform with a projected gross production rate estimated to be between 8,000 to 10,000 barrels of oil equivalent per day. And we hold a 48% working interest in Sunspear. Similarly, completion activities are underway on the Katmai West No. 2 well. and are nearing completion as planned. First production is also expected by late second quarter 2025. Production will flow back to Thales' 100% owned and operated Tarantula facility, which is expected to be running at maximum capacity. Thales holds a 50% working interest in and operates the Katmai field. Following this, we expect drilling operations for the high impact Miocene prospect Daenerys to start late second quarter 2025. We estimate it will take around 100 to 120 days to drill the well, with results expected mid to late third quarter 2025. Calus holds a 30% working interest in and serves as the operator of Daenerys. Additionally, our non-operated Ewing Bank 953 discovery and monument project are advancing as planned as we continue making investments in ordering and procuring long lead equipment for both. As previously announced, preliminary assessments for Ewing Bank 953 indicate an estimated recoverable resource potential of approximately 15 to 25 million barrels of oil equivalent, which we believe should lead to a production flow rate of between 8,000 and 10,000 barrels of oil equivalent per day. The well will be a single subsea tieback to the Megalodon platform, which Telos partially owns. We estimate that Ewing Bank 953 is economic at some $25 per barrel. Pallas owns a 33% working interest in the well, and we expect first production by mid-2026. For our monument development project, a large Wilcox oil discovery in the deep waters of the Gulf, we estimate proved and probable gross reserves of approximately 115 million barrels of oil, with production expected to tie back to the Shenandoah production facility. We expect to spread our first well at Monument by late fourth quarter 2025, with first production anticipated in late 2026. Palace has a significant acreage position in the lower Wilcox trend, which we believe represents a growth opportunity for the company. In March, we increased our working interest in Monument from 21.4% to just under 29.8%. These updates highlight steady achievements in our key operational projects. Before handing over the call to Sergio, I want to reiterate my gratitude to all Thales employees for their continued efforts driving our success while upholding our values and key priorities, safety and environmental performance and protection. Slide nine highlights our continued attention to safety and protection of the environment. This success reflects our personnel's commitment to rigorous safety systems, proactive maintenance, unto upholding the highest operational standards here at Thales. We never take safety for granted and view it as a critical practice that reflects our commitment to our most important asset, our people. With that, I'll now turn over the call to Sergio.