Talos Energy, Inc.

Good morning, ladies and gentlemen, and welcome to the TELUS Energy Third Quarter 2025 Earnings 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 Thursday, November 6, 2025. I would now like to turn the conference over to Mr. Clay Johnson, VP of Investor Relations.

Thank you, operator. Good morning, everyone, and welcome to our third quarter 2025 earnings conference call. Joining me today to discuss our results are Paul Goodfellow, President and Chief Executive Officer, Zach Daley, Executive Vice President, Chief Financial Officer, and Bill Langan, Executive Vice President, Exploration and Development. For our prepared remarks, please refer to our third quarter 2025 earnings presentation that is available on TALIS's website under the Investor Relations section for a more detailed look at our results and operational 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 September 30, 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 is furnished with our form 8K, 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, and good morning. I would like to start by thanking the entire TALIS team for their hard work, dedication, and unwavering commitment to safety and delivery of our business. The results we'll discuss today are as a direct result of their efforts. We're pleased to report zero serious injuries or fatalities year to date, underscoring our steadfast commitment to the health and well-being of our employees and contractors. Additionally, our environmental stewardship remains a core focus with a spill rate significantly below industry averages, exemplifying our commitment to protecting the community's environment in which we live and operate. Our team has made significant progress since we announced our enhanced corporate strategy in June. Our transformation into a leading pure play offshore E&P company is centered around three strategic pillars, improving our business every day, growing production and profitability, and building a long-lived scale portfolio, all underpinned by a disciplined capital allocation framework. Since our strategy announcement, we've taken decisive steps to execute on this vision. I'd like to highlight a few key actions we've taken so far. We've strengthened our leadership team with the appointments of Zach Daly as Executive Vice President and Chief Financial Officer, and Bill Langan as Executive Vice President of Exploration and Development. Both bring deep oil and gas expertise and leadership to Thales. I want to welcome them to the Thales team. We continue to drive progress through our Improving Our Business Every Day initiative, surpassing our 2025 Optimal Performance Plan targets during the quarter, further strengthening Thales' position as the low-cost E&P operator in the Gulf of America, and we've had a very promising exploration discovery at Daenerys. I'll share more details on that shortly. Now turning to third quarter results, which represented another quarter of consistently delivering on our commitments and executing on our strategy, I'd like to highlight a few key takeaways. First, we delivered outstanding operational performance that translated into strong financial results. Production of over 95,000 barrels of oil equivalent per day exceeded the high end of our guidance range with approximately 70% comprised of oil. The absence of storm activity, solid base performance from our assets and high facility uptime drove this outperformance. The team did an excellent job of operating our deep water facilities and huge recognition is deserved by all. A great example of operational excellence by our teams is the successful de-bottlenecking efforts at our Thales-operated tarantula facility, which enabled production from the Katmai field to average over 36,000 barrels of oil equivalent per day. Additionally, we completed the Sunspear workover ahead of schedule and returned the well to production in late September. The well is back online and flowing to the Thales-owned Prince facility. The second key takeaway is the continued generation of free cash flow. underscoring the strength of our business model and the ability to convert operational success into meaningful free cash flow generation. During the quarter, we delivered $103 million in free cash flow, significantly exceeding consensus estimates. This performance reflects our disciplined capital allocation, great operational execution, and ongoing focus on cost management. The substantial free cash flow enables us to return capital to our shareholders and maintain a strong balance sheet, positioning us well for the long term. Year to date, we've generated approximately $400 million in free cash flow. We also delivered on our commitment to return capital to our shareholders. The robust free cash flow generation allowed us to repurchase approximately five million shares for $48 million in the quarter. And Zach will provide more details on our return to capital program later on. Looking at slide eight, A key element of our strategy is driving continuous improvement across every part of our business. We set a year-end 2025 target of delivering an additional $25 million in free cash flow, and I'm proud to report that we have achieved that ahead of schedule during the third quarter, with over $40 million already realized. The team is actively working on incremental opportunities for the balance of 2025, and we look forward to sharing a further update on this at the end of the year. The accelerated delivery, combined with outstanding execution in exceeding our 2025 target, gives us excellent momentum towards achieving our annualized $100 million target in 2026 and beyond. Now I'd like to turn your attention to slide 9. Our advantage cost structure continues to differentiate us from our offshore peers. Year to date, we've successfully lowered our operating expenses by almost 10% from just under $17 a barrel in 2024 to $15.27 a barrel in the third quarter of this year. We've achieved these results by maintaining a laser focus on continuous improvement across our operations. This progress is driven by more than 60 initiatives implemented company-wide to reduce costs and enhance efficiencies. all aligned with our commitment to improving the business every single day. These outcomes are especially noteworthy given the extensive facility turnarounds and maintenance activities carried out throughout 2025. Over the past three years, while the industry trend for EMPs in the Gulf of America has been an increased cost structure, Thales' relentless efforts on proactively managing the cost base has resulted in a reduction in operating costs on a unit basis. In fact, for the first half of this year, our operating costs are, on average, 40% lower than those of the peer group. This advantage cost structure has helped us to generate top decile EBITDA margins in the E&P sector for this year. While commodity price volatility remains an ongoing challenge across the industry, we remain focused on projects that offer low break-even economics and more stable production profiles. Looking ahead to the fourth quarter and into early 2026, our teams will commence drilling activity at the Thales-operated Brutus, Cardona, and CPM projects, and the non-operated Manta Ray and Monument projects. These development projects have break-evens in the $30s and $40s a barrel. We've improved our 2025 operational and financial outlook, reflecting continued progress in driving efficiency and disciplined capital execution. We now expect full-year oil and oil equivalent production to be approximately 3% higher than prior guidance. For the fourth quarter, we anticipate a production mix averaging 72% oil. In addition, we've further reduced our full-year operating expense in capital guidance by 2%, driven by the structural cost savings from our optimal performance plan efforts. As we approach the end of 2025 and look ahead to 26, we will exit the year with strong operational momentum. While it is still early to talk about 2026 in detail, we expect our 2026 program to deliver flat year-over-year oil volumes while investing in both near-term development and longer cycle projects that will come online over the next couple of years. Our focus remains on delivering strong financial outcomes while continuing to invest in high-quality development projects for our future. At Thales, we remain laser-focused on improving our business every day through driving efficiencies and further optimizing our advantage cost structure. Now I'd like to provide a brief update on our successful discovery at Daenerys. The well was drilled to a total vertical depth of approximately 33,200 feet and confirmed oil pay in multiple high-quality subsalt myosin sands, validating our geological models. We drilled the well ahead of schedule and under budget, demonstrating that we can deliver solid operational performance to underpin our growth strategy. We've temporarily suspended the wellbore to preserve its future utility and are now planning an appraisal well, which we expect to spud in the second quarter of 2026. The appraisal program is designed to test the northern part of the prospect. It is strategically planned to penetrate multiple prospective intervals enabling a thorough assessment of reservoir and fluid properties. Additionally, the well has been engineered to support multiple future sidetracks, allowing for further appraisal and development. As part of our balanced capital program, exploration remains a vital element of Thales' strategy. We're committed to driving sustainable growth and value creation over time, while maintaining strong operational execution, underpinning near-term financial delivery. Successful exploration discoveries have the ability to add reserves, extend production horizons, and ultimately enhance shareholder returns. The Daenerys discovery is a prime example of our second strategic pillar continuing to pursue organic growth opportunities in the Gulf of America. And finally, we will continue to advance the third strategic pillar by selectively evaluating projects with significant potential in the Gulf of America and other conventional basins that align with our technical capabilities to ensure we are building a long-lived scale portfolio. And with that, I'd like to turn it over to Zach.