TALO

Talos Energy’s second quarter results reflected strong execution within its core offshore oil and gas operations, underpinned by production optimization and operational uptime improvements. Management credited successful performance at the Cardona well and ahead-of-schedule Genovesa workover as key contributors to production growth. CEO Paul Goodfellow emphasized that these gains resulted from the company’s Optimal Performance Plan, which focuses on maximizing well productivity and uptime. The team also highlighted that disciplined capital allocation and efficiency in drilling and completion activities kept nonproductive time well below industry averages. Is now the time to buy TALO? Find out in our full research report (it’s free). Revenue: $590.7 million vs analyst estimates of $587 million (29% year-on-year growth, 0.6% beat) Adjusted EPS: $0.57 vs analyst estimates of $0.29 (93.7% beat) Adjusted EBITDA: $402.4 million vs analyst estimates of $380.8 million (68.1% margin, 5.7% beat) Operating Margin: 33.6%, up from -59.7% in the same quarter last year Oil production per day: up 7.2% year on year Market Capitalization: $2.60 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. John Cavanagh (Goldman Sachs) asked about the strategy behind Talos’s low-commitment ventures in Mexico and Honduras. CEO Paul Goodfellow explained these initiatives provide portfolio longevity and leverage the company’s technical expertise in proven and underexplored basins. Ajay Bakshani (BMO Capital Markets) inquired about leveraging AI and advanced seismic technologies for exploration. Goodfellow described a process-driven approach to applying AI across exploration, production, and corporate workflows, noting future updates on this front. Timothy Rezvan (KeyBanc Capital Markets) questioned the signals the Board would watch for to support production growth. Goodfellow emphasized continued disciplined execution and project delivery as the primary factors. Paul Diamond (Citi) asked for details on the timing and pricing for the West Vela rig contract. EVP Bill Langin confirmed a midyear 2027 start with pricing held stable through a strategic relationship with Seadrill. Michael Scialla (Stephens) probed the terms and implications of the recent noncore divestiture. Goodfellow and CFO Zachary Dailey explained the transaction eliminated future liabilities and fit the ongoing strategy of portfolio high-grading. Looking ahead, the StockStory team will be watching (1) the successful integration and production ramp-up from the Gulf of America bolt-on acquisition, (2) progress toward development milestones in Mexico and Honduras, including seismic acquisition and regulatory approvals, and (3) continued improvements in operational uptime and project delivery across the core Gulf of America portfolio. Execution on these strategic initiatives will be critical markers for Talos’s ability to sustain growth and profitability. Talos Energy currently trades at $15.50, up from $14.27 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Wednesday, August 5, 2026 at 10:00 a.m. ET Manager, Investor Relations - Kyle Sahni President and Chief Executive Officer - Paul Goodfellow Executive Vice President and Chief Financial Officer - Zachary Dailey Executive Vice President, Exploration and Development - Bill Langin Need a quote from a Motley Fool analyst? Email [email protected] Operator: Good morning, ladies and gentlemen and welcome to the Talos Energy Second Quarter 2026 Earnings Conference call. [Operator Instructions] This call is being recorded on Wednesday, August 5, 2026. I would now like to turn the conference over to Kyle Sahni, Manager, Investor Relations. Please go ahead. Kyle Sahni: Thank you, Operator. Good morning, everyone, and welcome to our second quarter 2026 earnings conference call. Joining me today to discuss our results are Paul Goodfellow, President and Chief Executive Officer; Zach Dailey, Executive Vice President and Chief Financial Officer; and Bill Langin, Executive Vice President, Exploration and Development. Please refer to our second quarter 2026 earnings presentation that is available on our website under the Investor Relations section for a more detailed look at our results and operations. Before we start, I would 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-K for the period ending December 31, 2025, filed with the SEC. 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 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 would like to turn the call over to Paul. Paul Goodfellow: Thanks, Kyle, and good morning to everyone joining us on the call today. We have a lot to cover this morning, but as always, I want to start by thanking our employees for their continued commitment to safety and environmental stewardship. The results that Zach and I have the privilege of discussing today are a direct reflection of their talent, drive and relentless focus on execution. I am incredibly proud of what the Talos team has accomplished during the first half of 2026. Just over a year ago, we introduced our enhanced corporate strategy built around 3 pillars designed to position Talos as a leading pureplay offshore E&P. Today, I'm pleased to highlight the significant progress we have made through a series of strategic actions that demonstrate execution across all 3 pillars of our framework and further strengthen our long-term portfolio. Before turning to those actions, I want to begin with the strength of the base business, which continues to provide the foundation for everything that we do. The second quarter was characterized by solid execution across our base business, which translated into stronger production and higher operational uptime, driven by production optimization initiatives across the organization. Oil production averaged approximately 69,000 barrels per day and total production averaged nearly 94,000 barrels of oil equivalent per day, both exceeding guidance expectations. In addition, the Cardona well, which was brought online at the beginning of the year, continues to outperform expectations. These operational results translated into record free cash flow generation during the quarter and support an increase to our full year 2026 production guidance. Zach will provide additional detail on these results later in the call. Importantly, these results did not happen by accident. They are the outcome of a tremendous amount of work by our operations, production and development teams and a direct reflection of the progress being made under the Optimal Performance Plan. We achieved greater than 2/3 of our 2026 target during the first half of the year, and those efforts are translating into meaningful improvements in production, uptime and free cash flow generation. This is exactly what we mean when we talk about improving the business every day. My second takeaway is that Talos continues to distinguish itself through best-in-class execution. One example of this is the Genovesa workover. We successfully completed the workover and returned the well to production ahead of schedule late in the second quarter, with well performance in line with expectations. However, what I'm most proud of is how the opportunity was approached. Before the intervention rig was on location and during the planning phase, the team identified additional work that could be completed to support future access to a secondary zone. That is exactly the thinking that we encourage across Talos -- finding ways to create incremental value while maintaining capital discipline. It speaks to our culture of thinking outside the box and continuously improving the business. Full credit goes to our operations and development teams for identifying and executing on that opportunity. Execution excellence is also evident across our drilling and completion activities. Year-to-date, our program has operated with approximately 50% lower nonproductive time than the Gulf of America basin average. This level of performance not only enhances capital efficiency, but it also reinforces one of Talos's key competitive advantages as a technically differentiated offshore operator. We also continued advancing several important projects during the quarter. At Monument, the first development well was successfully drilled and the operator will now shift to the second well. We continue to progress rig reactivation activities for the Brutus program and now expect the first well to spud during the third quarter. In addition, we commenced the Daenerys appraisal program as part of our ongoing evaluation efforts. Operations are progressing as planned with results from the first appraisal well expected before year-end. And now I'd like to conclude with a few thoughts on the strategic actions we have taken to extend our resource life and further develop a long-lived portfolio. Collectively, our recently announced Gulf of America bolt-on acquisition, offshore Mexico development farm-in, newly established offshore Honduras acreage position and noncore gas-weighted shelf divestment advance all 3 pillars of our strategic framework. These actions immediately increase our deepwater scale with approximately 20% oil production growth, expand our development inventory in a proven basin through a high-impact greenfield opportunity, and establish a large-scale position in an underexplored basin at an extremely low entry cost. At the same time, the shelf divestment improves the overall quality and oil weighting of our portfolio while eliminating approximately $54 million of future abandonment obligations. The strategic rationale is compelling and represents meaningful steps forward in positioning Talos as a leading pureplay offshore exploration and production company. As a brief update on the recently announced bolt-on, BP elected not to exercise its preferential right. This sets the stage for us not only to operate the Coulomb field, but also to become a partner in the Na Kika platform and several other associated fields. The assets we are acquiring produced approximately 18,000 barrels of oil equivalent per day in the second quarter, with an oil cut, unit operating expense and EBITDA margin that are all expected to be accretive to our company averages. This transaction further strengthens our leadership position in delivering top-decile EBITDA margins across the entire E&P sector. Preclose integration activities are underway, and we look forward to closing the transaction later in the third quarter. Looking ahead, we're focused on advancing these newly announced opportunities across our portfolio. In the Gulf of America, we continue to evaluate the operated Coulomb drilling opportunity, which we expect to compete for capital in 2027, while also advancing additional ILX opportunities that could provide upside to the current production base. In Block 29, our near-term efforts are centered on submitting the field development plan with our partner, to SENER, as we work towards a targeted FID in 2027, while progressing technical work in support of a future exploration well. Importantly, Block 29, where Talos and Repsol are the sole partners, is a development-led opportunity anchored by 2 existing oil discoveries, providing a clear path to FID and development and production. We believe this differentiates the opportunity. In Honduras, we're preparing to commence the first-ever 3D seismic program across the deepwater acreage in the second half of this year, an important step towards evaluating the basin's broader potential. While these opportunities are at different stages of maturity, the speed and alignment with which our teams and partners are advancing them is a key strength and differentiator for Talos. Our ability to progress multiple strategic initiatives in parallel reflects the depth of our technical capabilities, the quality of our partnerships and our ability to execute across a broad portfolio. The common theme across all of these actions is disciplined execution. We are advancing our strategic priorities while continuing to deliver strong operational and financial performance from the base business. As a result, we increased stand-alone production guidance despite the impact of the shelf divestment, generated record free cash flow, and we entered the second half of the year with significant momentum. With that, I will turn the call over to Zach to discuss our financial results, enhanced financial flexibility, capital allocation activities and outlook in greater detail. Zachary Dailey: Thanks, Paul. This morning, I will focus on 3 key takeaways: record free cash flow generation, increased stand-alone production guidance and enhanced financial flexibility resulting from our recent capital markets transactions. I will also touch briefly on our unchanged capital allocation framework. Starting with the quarter. The operational execution Paul just discussed translated directly into strong financial outcomes. We generated adjusted EBITDA of approximately $402 million and record adjusted free cash flow of approximately $232 million, driven by production that exceeded guidance and stronger crude oil realizations relative to WTI. On the heels of a great first 6 months, we're increasing our full year 2026 production outlook for the stand-alone business. Our revised guidance range is 64,000 to 68,000 barrels of oil per day and 87,000 to 91,000 BOE per day. This updated outlook excludes the previously announced Gulf of America acquisition, which hasn't yet closed, and it includes the impact of the noncore shelf divestment, which closed early in the third quarter. Said differently, the base business is performing well enough to more than offset the production impact of the divestiture. For the third quarter, we expect oil production of 61,000 to 65,000 barrels per day of oil and total production of 81,000 to 85,000 barrels of oil equivalent per day. As a reminder, this third quarter and full year guidance excludes the Gulf of America bolt-on acquisition, and we expect to provide updated guidance following the expected close of that transaction later in the third quarter. During the second quarter, cash on hand increased to approximately $578 million and total liquidity increased to approximately $1.2 billion, while our leverage ratio declined to 0.5x. This position of financial strength gave us the flexibility to execute an important financing in support of the previously announced Gulf of America acquisition, while also further enhancing liquidity and extending debt maturities. We issued $800 million of new 8% senior notes due 2034, with proceeds used to fully redeem our $625 million 9% notes due 2029 and to fund a portion of the acquisition. The transaction extended our debt maturity profile, reduced the coupon on the refinanced notes and enhanced our financial flexibility. In addition, we secured $150 million of incremental commitments from our existing bank group, increasing our credit facility borrowing base from $700 million to $850 million, effective upon closing of the acquisition. These positive transactions were executed from a position of strength. They support an acquisition that increases deepwater scale and cash flow and they preserve the financial flexibility needed to execute across all 3 pillars of our strategy. We continue to expect pro forma year-end 2027 leverage to be below 1x, consistent with our long-term leverage target. Our return of capital framework remains unchanged. We continue to expect to return up to 50% of annual free cash flow to shareholders through share repurchases, while also investing in high-return projects, maintaining balance sheet strength and pursuing selective accretive growth. During the second quarter, we did not repurchase shares due to the acquisition-related corporate blackout period. Since announcing the framework in the second quarter of 2025, we have returned approximately $135 million to shareholders through repurchases, reducing our outstanding share count by approximately 7%. Bottom line, we delivered record free cash flow, increased stand-alone production guidance despite the shelf divestment and enhanced financial flexibility through capital markets transaction that support our strategic priorities. These results reflect the strength of the underlying business, disciplined execution across the organization and a balance sheet that provides the flexibility to pursue our strategic priorities while continuing to create long-term shareholder value. With that, we will open the line for Q&A. Operator: [Operator Instructions] Our first question comes from John Cavanagh from Goldman Sachs. John Cavanagh: For the latest announcements on Mexico and Honduras, I was wondering if you could walk us through the overall strategy behind these low upfront commitment ventures into new international offshore areas. And also, if you could expand on the exploration and development opportunities you are seeing for Mexico and Honduras, respectively. Paul Goodfellow: Thanks, Jack. Let me start by giving a bit of the frame, and then I'll pass it over to Bill, who can talk about the second part of the question. I think it's important, Jack, that we think about your specific question on Mexico and Honduras in the context of the totality of what we've done. And so, first and foremost, it really is the quality of the underlying operations here in the Gulf of America that's allowed us to actually pursue options in that second and third pillar of the strategic frame that we set out a year ago. Now the first one, of course, being the bolt-on with Na Kika that immediately enhances free cash flow through giving us access to material and immediate production growth, gives us scale, both through reserves and resource potential in terms of what we can do in the area around it and it is very accretive to the totality of the metrics that we look at. That then has allowed us to look at other opportunities where, as I've always said, we start with, do we understand the rock and do our technical -- or can our technical capability actually maximize the value from the opportunity. And that's what I and we believe we've done with Mexico and Honduras. And so strategically, Mexico gives us a greenfield development opportunity that is pre-FID to discoveries that are all on block with a high-quality partner and also gives us exploration upside on block in addition to that, such that we can then look at development that is host-based, based off the initial hub and allows us to grow through the longevity. The third part of this, of course, is Honduras, which actually gives us portfolio longevity through long-term exploration optionality at an incredibly low cost. This is a significant acreage position, some 4 million acres, equivalent to 700 Gulf of America blocks, with a proven oil system on it. There was a discovery in the 1970s, where we see that and the working petroleum system from 2D seismic really gives us a level of excitement to move forward with that. So that's the context. But let me hand it to Bill to talk about the near-term activities, which I think was the second part of your question. Bill? William Langin: Yes. Thanks, Paul. On Block 29 in Mexico, we're really excited to progress with Repsol as our partner on this project towards FID. And to be clear, the FID will be anchored by the 2 existing, entirely on-block discoveries of Polok and Chinwol. At the same time, we see additional exploration potential on the block, and we're working with Repsol to prepare for a potential well late next year to derisk one of those opportunities. And therefore, we could see further increased scope even within the block. At the same time, the infrastructure to produce Polok and Chinwol could ultimately be used to produce other stranded discoveries and create even additional value within the region. So we see this as a core development of Miocene sands, which is Talos's bread and butter from the U.S. side of the Gulf. And so it fits our technical skill sets quite strongly, and we trust Repsol as a partner to get after the project in a way that fits with our value system. So we're just excited to get moving there. In Honduras, and Paul mentioned several of the aspects that were attractive around the working petroleum system from several previously drilled wells, evidence from 2D seismic, and we'll commence the 3D seismic program within -- before the end of the year here and quickly get after what we see as a really attractive deepwater opportunity set. Once we acquire the 3D and apply the latest seismic processing methods and our team's expert skills in evaluating those, we'll have the decision ultimately to progress it if it's attractive or not, if it's not. But we see 4 to 5 exploration plays within the block we've acquired and the evidence of the working petroleum system gives us a lot of confidence that we can potentially see something that's worth going after. John Cavanagh: For my follow-up, I was wondering if you could talk through the Coulomb development opportunity with the pending Gulf of America bolt-on and what you are seeing with that opportunity that makes it compete for capital in 2027, potentially. Paul Goodfellow: Yes. I mean, look, historically, Talos has been incredibly strong at acquiring assets like these and then looking for opportunities in the near field that we can tie back in short cycle and bring production back. And so as we looked at this opportunity, we were already starting to look at the potential within the vicinity. This opportunity happened already to be under our leasehold, and therefore, it's the easiest one, let's say, the most mature one to bring forward to compete for capital as we think through the 2027 plan. Now having said that, we will continue to do a lot of work in the vicinity to really understand the totality of the potential, which we think could be significant and take this project down the same line that we've taken Brutus and Ram Powell and others that Talos has acquired, which is to extend the life through doing low-unit-cost, short-cycle tiebacks to build production. Operator: Your next question comes from Phillip Jungwirth from BMO Capital Markets. Ajay Bakshani: This is Ajay Bakshani on for Phil. I know you're still working on next year's program, but would you expect to include much of the 300 million BOE unrisked resource from the December lease sale? And generally, what's your level of excitement around the upcoming lease sale? Paul Goodfellow: I'll take the first part, and I'll pass the second part to Bill. I think, as I've said before, we look at those opportunities to compete for capital in 2027. Clearly, some of them are more advanced than others, but I would expect that at least 2 or 3 of those would be under consideration for us to invest in 2027. The key criteria, of course, is that they have the same type of return profile that we look for in all of the opportunities that we execute within the Gulf. But Bill, do you want to take the second part? William Langin: Sure. I think we've looked at all the open blocks, and there aren't a tremendous amount of first-time open blocks, but we'll selectively look to add where we see the opportunities create value for Talos and meet our relatively high technical and commercial thresholds. So we're, at the moment, finalizing the list of blocks for consideration, and next week we'll ultimately make decisions on those that we see as most attractive. Ajay Bakshani: And for my follow-up, one of the majors last week referenced AI-powered exploration, identifying additional opportunities and 4D seismic unlocking value. Recognizing it's a different scale, but how much is Talos able to leverage some of these new technologies across the Gulf to advance the exploration strategy across the new basins? Paul Goodfellow: Yes. I mean, look, it's fundamental to the work that we're doing across the totality of the organization is how do we think about the value that AI can bring at a process and workflow level. And so I think we're not looking at it as a singular use case approach; rather, thinking process by process, how do we use the technology to drive efficiency of our work and effectiveness of the outcome of that. Part of that is clearly in the exploration and subsurface process, but we're also advancing that same type of application within production processes, but equally within, let's say, the functional components of finance and accounting as well. And so whilst we clearly don't have the investment level that maybe some of the majors have, I think we have the ability and entrepreneurship to work with the right type of partners in this space to actually advance that work. And I would say stay tuned, and in the coming quarters, I'm sure we'll be talking more and more about that. Operator: Your next question comes from Tim Rezvan from KeyBanc Capital Markets. Timothy Rezvan: Paul, I know growth has been a 4-letter word in the industry in the last couple of years. But as we look globally, everyone sees the physical inventories dwindling. You've got the balance sheet in a spot of strength that really has never been. You have a lot of opportunities on your plate. I know you're not going to give 2027 guidance, but can you talk about what signals the Board might look for to lean into growth as you exit the year around 110,000, with more opportunities than you've ever had on your plate? Paul Goodfellow: Yes. Thanks, Tim. Look, I would say I think the Board and the management team are very aligned with the strategic framework that we laid out. And so the lean-in is really leaning into that strategic frame, whether that's improving our business each and every day. And again, I don't want the announcements of Mexico and Honduras and Na Kika to overshadow the phenomenal work that the organization is doing, because that is the foundation that allows us to look for these types of opportunities and to grow and build out the company in a very disciplined way. And so the word we use is disciplined execution of everything that we do. And so I think one of the things that I look for and the Board looks for is that continued disciplined execution in every opportunity that we bring forward. And whether that's how to restore Genovesa to production, how we're drilling Daenerys or how we look for new frontier opportunities that maybe have been overlooked by others that I think is the key factor that will continue to drive our appetite to push that strategic frame to the next step, Tim. Zachary Dailey: Tim I'd just add on to what -- this is Zach -- just add on to what Paul said. As we think about the 2027 program and as we get into that capital allocation discussion later this year, it really is -- it's beyond just production growth. It's growing profitability and investing in the business for the long term, which is what you're seeing play out in some of these strategic announcements we've made today and in the last month. Timothy Rezvan: Okay. That's fair. We'll have to stay tuned on that. And then, Paul, just as a follow-up. You gave good updates on Monument and Daenerys. Can you give an update on what the milestones are for the back half of the year? And then related to that, you're bringing the West Vela rig back. Is that going to be for incremental work at Daenerys? Just trying to understand the outlook for these 2 prospects. Paul Goodfellow: Yes. So I think, look, the key milestones for the rest of the year, we laid out in the deck, but clearly, finalizing the reactivation of Brutus and starting that program is an important step for us. Clearly, with our partner and operator, Beacon, on the Monument field, executing the totality of that program and having production right at the back end of the year. Clearly, successfully getting Daenerys down to TD and seeing what that well informs in terms of the next steps for the overall appraisal and development potentially. And then clearly, the new steps that related to Mexico and Honduras once those are finally closed, which would be the seismic in Honduras, of course, and then getting the regulatory approval and progressing both the development decision as well as the next exploration well on Block 29. So those are the key milestones that we will continue to talk about and update you against, all the time making sure that each and every one of those fits within that financial framework that we have laid out so clearly and will continue to be one of the guiding principles by which we work. Then sorry, on the West Vela rig, because I didn't get to that point, so look, so what we recognize with the portfolio that we're building now is that we can actually be a little bit more strategic in terms of how we think about contracting rig capacity. And this is the next step you've seen us take on that. Now we contract the rig for a full 12 months plus options beyond that. And that's because of the depth of opportunities that we have allows us to do that. Now within that, we hope that follow-on activity at Daenerys will be part of that, but that rig commitment is not dependent on Daenerys alone. And as we've always said, we will go after the most value-accretive opportunities within the portfolio that fit within the overall strategic frame of what we're trying to deliver here. Operator: The next question comes from Paul Diamond from Citi. Paul Diamond: Sticking quickly on West Vela, can you give us some idea of the timing of operations in 2027, basically when you expect it to come back? And also, was there any notable directional move on the pricing you're seeing versus what you were paying for in the prior run. Paul Goodfellow: Bill, do you want to pick that one up in terms of the plan for next year? William Langin: Sure. Notionally, right now, based on our work with Seadrill, we should expect to receive the rig around midyear, depending on how their operations with its current contract go. And I think we've seen -- we were able to leverage the existing relationship and performance with Seadrill to hold pricing relatively close to where it's been. So I think we're really happy with that ongoing strategic relationship that we've developed with them, because the ability to take a rig over a longer period of time will just continue to improve its performance with us as we continue to embed our systems and ways of working. So we see this as a significant opportunity to continue to deepen that relationship and drive even better performance than we've seen before. Paul Diamond: Circling back on the share buybacks, you guys were blacked out in the quarter. But given the current market conditions and where you see the pricing movement, should we expect -- how should we expect to see the cadence through 2H? Are you all expecting to jump right back in? Or is there still -- is there any shift there in methodology? Zachary Dailey: Yes. Paul, it's Zach. Thanks for the question. When it comes to cash returns in the back half of the year, first and foremost, the disciplined capital allocation framework that we speak about is unchanged. One element of that framework is to have the flexibility to grow the business through the selective, accretive opportunities, which is exactly what we've done here with some of these deals we're talking about today. And as you mentioned, buybacks were temporarily paused during the quarter due to the M&A-related blackouts, but shareholder returns remain an important part of how we allocate capital, and we'd expect to be back in the market. So look, the balance sheet provides a tremendous amount of financial flexibility for us to continue investing in the business, continue pursuing accretive bolt-ons and return capital to shareholders while we run the business, execute the strategy and keep long-term leverage under 1x. Operator: Your next question comes from Michael Scialla from Stephens. Michael Scialla: I want to go back to Honduras. Obviously, a huge acreage position there. I want to see how long do you have to evaluate that? And it looks like you have the option to bring in a partner. I wanted to get a sense of your thinking there. Would you look to do that before you drill, or maybe even before you shoot seismic? Paul Goodfellow: Bill, please. William Langin: Yes. Thanks for the question. So we'll commence the 3D seismic here. And at the same time, we're maturing a specific permit with the government to achieve what's called the environmental permit to drill by the end of the year, and that will start a 2-year clock once that permit is received. So we'll be well-positioned to acquire the seismic and evaluate its potential by approximately the middle of next year, which gives us another 1.5 year to ultimately make the optional decision to drill or not. So we're comfortable with the time frame we've got. On thinking about a partner, we're framing those opportunities now, and we'll look at the potential of potential dilution preseismic or waiting until after we acquire, but we'll do it in the way we think creates the most value for Talos. Michael Scialla: Wanted to ask on the divestiture. Was there any compensation? I didn't see anything listed there. Is it just a matter of eliminating the ARO? And I guess with these things, you've got to worry about the buyer. Is there -- does that completely eliminate your liability there? Or how confident, I guess, are you in the financial position of the buyer? And does this open up other opportunities to do similar noncore divestitures for you? Paul Goodfellow: Yes. Thanks. Let me start on that and then maybe I'll ask Zach to add into it. Look, I think your question is the right question to ask. And so these were primarily nonoperated activities, gas weighted, that didn't really fit the portfolio or the strategy that we have on a go-forward. But the most critical item for us was that the structure of the deal was done in such a way that the likelihood of any return of that liability was eliminated. And that's what we have been able to do with this. And as you saw in the release, it eliminates a sizable amount of future ARO liability that we have. And we're very comfortable with the construct and the counterparty that we've transacted with here. Michael Scialla: Are there possibilities -- or are you looking to do more noncore divestitures? Paul Goodfellow: Clearly, look, we're always looking to high-grade the portfolio and if we see an opportunity to do that, regardless of which part of the portfolio it sits in and if that leads to a path of creating more value for Talos, then we will absolutely look at that. And I think this quarter has been, let's say, dominated by the acquisition side of portfolio management, but we're equally always looking at the high-grading side as well. Operator: Your next question comes from Michael Furrow from Pickering Energy. Michael Furrow: I'd like to hit on the offshore Mexico farm-in. The entrance seems development-led with the Polok and Chinwol discoveries in the 200 million barrels equivalent gross resource. Understanding that there's limited development or infrastructure in the region and anything would be moving forward to an FPSO if the project reaches FID later this year. But with this update, it sounds like there's an additional 200 million barrels of equivalent resource potential, which could really lower the entry cost into the field. So does this additional resource potential increase your confidence in the prospectivity of the original 2 discoveries? And if so, can you share if there's any exploration or seismic that the operator plans in the near term? Paul Goodfellow: Yes. The 2 discoveries are robust, let me say that. And so, hence, Repsol was moving forward through the process towards FID. We have now joined them in that. We see prospectivity on the block. The block is a fairly large swath. And therefore, we will look to progress the exploration opportunities almost in parallel with the development of Chinwol and Polok, such that we then build a pipeline of, let's say, backfill to go to the host, which, as you rightly say, will most likely be an FPSO. But Bill, any color to add to that? William Langin: Sure. As we mentioned, these are Miocene sands equivalent to the producing intervals on the northern side of the Gulf, which Talos has known very well and has deep experience in. They have clear seismic responses, which we can then use to calibrate against one another. So the exploration prospect that we will likely drill late next year has a similar seismic response to the 2 existing discoveries, as do the other identified prospects. So we have fairly high-quality seismic, so no need to add to that inventory in the near term. So it will be about characterizing the additional volume that ultimately could either backfill or result in additional development. Paul Goodfellow: Look, that was really one of the key elements of attractiveness to this was not only did we have an anchor development that was moving towards FID with a quality partner and operator, but we also saw the potential for fairly significant exploration upside on block as well. Michael Furrow: For a follow-up, I'd like to hit on the confirmation of BP waiving its pref right on Na Kika platform. Ultimately, the economics of near-term tieback should be more attractive going forward, right? So Paul, can you maybe help us understand what Talos's allocation of the ullage is now? Does Talos now control ullage of the platform at its current interest? Or does that ullage just only apply to new developments? Paul Goodfellow: Yes. So Talos and our partner, Ridgewood, of course, that have done this deal with Shell will step into Shell's allocation. And that's [ really ] split between the overall platform allocation as well as the dedicated allocation that's linked to the operated field of Coulomb that ties back to Na Kika. Operator: Your next question comes from Nate Pendleton from Texas Capital. Nathaniel Pendleton: Congrats on the strong quarter. Paul, in your prepared remarks, you talked about successful production optimization initiatives during the quarter. Can you elaborate on what some of those initiatives were? And perhaps on the Cardona outperformance, was that due to geology, or was there something specific that your team was doing there? Paul Goodfellow: Yes. Thanks for the question. Look, I think on the first part, it really is just great work by the production and development teams to think about how can they maintain the uptime of facilities, how can they maintain the throughput of facilities, great surveillance work to understand what's happening downhole and in wellbore. And as they see any changes, how do they intervene on those to make sure that well productivity stays up. And so there is not 1 thing that I can point to. I would say it is just a high-quality team that is on top of its business, looking at the wells and making sure that they're producing as close to their optimum level as we can. And the great credit goes to Will Bunkers and his team for continuing to look for the opportunities. Now what then tends to happen, of course, is that in combination with the development teams, they start to look for optimization opportunities, are there areas that maybe can compete for capital from a recompletion point of view from opening up a new horizon. That's exactly what you saw happen at Genovesa, where clearly the prime drive was to reinstate that well. But once the teams got to look at it, they saw an opportunity to access a lower zone that could put another maybe 4 million barrels into the inventory that otherwise would have been left behind pipe. So it really is that constant questioning of how can we do better today than we did yesterday with all the available data that is at hand. On Cardona, maybe let me ask Bill to give you a few specifics on that. William Langin: I think on Cardona, in particular, the team did an excellent job in delivering that restoration ahead of schedule. And if you describe this operation, this is essentially hitting a 0.5 inch target a few miles away from the rig. And I think if you -- when we brought the production online and saw how we could improve the throughput between the overall system optimization and the production, I think it's just an amazing testament to the way the teams continuously monitor the reservoir performance and tweak the parameters to get the most out of it. Nathaniel Pendleton: Shifting gears a little bit. While Mexico's Block 29 is still somewhat familiar, Honduras seems to represent a pretty material step out from the historical focus on the Gulf of America. So I'm really interested in your willingness to further shift the portfolio internationally and how those opportunities compare to the growth opportunities you see in your current portfolio or what you're looking at in the Gulf of America itself? Paul Goodfellow: Yes. Thanks. Look, we look at every opportunity through that strategic lens that we have, from the 3 pillars and then the capital allocation framework. And as we've always said, we start with, do we understand the rock. And so that is first and foremost. And we look at that irrespective, if you like, of where the geography is, but do we understand the rock and does it fit into the skill set that we have. But I think we have shown and proven over a number of years to become masters of understanding, and we can take a very competitive view of that. And so that is the lens that we look at. And as we've said, we will look to where that geology exists, which in gross terms, should we say down and up the Atlantic margin. And so that's the area of focus of where we are looking and we'll continue to look. But of course, it all fits in that frame of investing in the base business, making sure that is successful, making sure that we maintain the strength of the balance sheet, that we return cash to shareholders and then and only then looking at accretive acquisitions that can grow out the portfolio and actually give us the longevity that we're looking for, where we can have projects compete for capital and also maybe take positions where we can create value by bringing partners in, because we're very early into those, and we can get value for the derisking activity that goes out in front of us. Operator: Your next question comes from Subhasish Chandra from StoneX. Subhasish Chandra: Does Pemex come back in for 51%? Paul Goodfellow: No. If you're referring to Block 29, then no. These are totally on-block opportunities that were under Repsol's control and now are under Repsol and Talos partnership. Was that the question you were asking? Subhasish Chandra: Yes, yes, exactly. So I guess it's different. It looks different than Zama. The politics look currently different than Zama. Is it fair to say that those are key distinctions -- that having Repsol operated, Pemex not in the operating group -- that these are differences to the Zama experience? Paul Goodfellow: Yes, is the simple response to that. Clearly, the Zama situation arose because the discovery went off block onto a Pemex block, and therefore, that drove the unitization. We do not see that risk here at all. The map discoveries are all on block. And I think as well, the overall environment in Mexico is trending in a slightly more positive direction. The fact that Repsol has already taken this a fair way down the fairway in terms of being FID-ready were all elements that gave us the confidence that we could take a position here and help them move it forward through to final investment decision and onward to production. Subhasish Chandra: And then on CaribX, they've been developing that prospect for quite some time. Just curious, when did Talos begin to look at their data? Paul Goodfellow: Look, this has just been part of the ongoing strategy that we've had. And so since we announced that strategic frame last year, that kicked off that work. Subhasish Chandra: Okay. And then just finally, was that negotiated between you and CaribX, or were they out there looking for partners and there was a bidding situation? Paul Goodfellow: We're not going to get into the specifics. What I will say is we will look at all opportunities that are out in front of us, either those that are going through some form of a public process or ones that we can identify with a counterparty to create the opportunity set that we need to. Operator: [Operator Instructions] Our next question comes from Noel Parks from Tuohy Brothers. Noel Parks: It was good to hear some of the background on your thinking about evaluating the acquisition opportunities. And I was thinking specifically about these new international opportunities. I guess for the last year, 1.5 years, you have been pretty clear that international projects were definitely part of what you would be looking for. And so I guess if you could maybe talk a little bit about just in general terms, what things you have been evaluating and how Honduras, for example, did manage to get over your hurdle maybe when other types of projects didn't. And your remark just a minute ago about the up and down the Atlantic margin, I just wondered, are you still considering yourself or are you considering yourself more or less confined to that geographically? Paul Goodfellow: Thanks. Look, I think we've been clear in terms of our strategic frame leads all of our thinking and work, and that's the work that we have been doing over the last 12 to 16 months. And I'm not going to comment on specific areas that we've looked at or will look at, but just to say that we are driven by the geology and the rock first and foremost -- do we have the skills and the knowledge to actually evaluate those effectively and competitively; and do we feel that we have a skill set to bring that can actually create incremental value compared to whoever or whatever the position of the holding is at this point in time. And that's the approach that we've taken and that's the approach that we will continue to take. Now in general terms, we've said that those areas of interest happen to be down through South America and up the West Coast of Africa, and that's what we will continue to look at. Now that doesn't mean to say that if there are other areas where we see that commonality of geology that we won't look, but we will be very, very careful before we step out of, let's say, our backyard of the very near outboard of the Gulf of America and now Southern part of that in Mexico and through the Caribbean. Noel Parks: And we -- this year has launched us into a pretty chaotic capital markets environment and a lot of capital looking for a home. And I was just wondering if you were seeing, I guess, I'd call it, intermediary or third-party capital, in other words, outside of the traditional operators or majors looking to get into the Gulf. And I was wondering if you had approaches from unconventional sources just as -- certainly because deepwater projects offer a time horizon that could be attractive to folks looking to put capital to work. Zachary Dailey: Noel. It's Zach. Appreciate the question. The short answer is, yes, there's lots of interest in the Gulf, and you've seen that through multiple transactions over the last 6 to 12 months. We're always actively evaluating the best source of capital for us. I would take you, however, back to the refinancing that we just did and the bond deal that we executed in early July on the heels of the Na Kika-Coulomb acquisition, where we were able to extend our maturity out to 2034 and lower our interest rate from 9% to 8%. So I feel like we're in a really good spot right now, and we've got a very strong balance sheet, and we'll always entertain other options to further strengthen that. Operator: There are no further questions. I'll turn the call back over to Paul for closing remarks. Paul Goodfellow: Thank you, Vincent. And thank you all for joining today and your continued interest in Talos. To close, the second quarter demonstrated the strength of our base business, the quality of our team and the durability of the strategy. We delivered exceptional operational execution, generated record free cash flow and advanced each of our 3 strategic pillars, all whilst maintaining the discipline that underpins our capital allocation framework. We enter the second half of the year with strong momentum, a high-quality oil-weighted portfolio, enhanced financial flexibility and a clear path to continue building the foundation to be a leading pureplay offshore E&P. And we look forward to updating you on our progress in the months and quarters ahead. Thank you all. Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Before you buy stock in Talos Energy, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Talos Energy wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $411,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 11, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Talos Energy (TALO) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Talos Energy Inc.? Here are five stocks we like better. Record quarterly performance: Talos Energy generated approximately $232 million in adjusted free cash flow and $402 million in adjusted EBITDA in Q2 2026, as oil and total production exceeded guidance. Raised 2026 outlook and strengthened finances: The company increased its standalone production guidance, ended the quarter with about $1.2 billion in liquidity and reduced leverage to 0.5 times. It also refinanced debt and continues to target leverage below one times by year-end 2027. Expanding offshore portfolio: Talos expects to close its Gulf of America bolt-on acquisition later in Q3, while advancing Gulf of Mexico projects and international opportunities in Mexico and Honduras, including planned seismic and exploration work. Talos Energy: Time to Take a Plunge Ahead of New CEO Appointment? Talos Energy (NYSE:TALO) reported record adjusted free cash flow in the second quarter of 2026 as production exceeded guidance, while the offshore exploration and production company raised its full-year standalone production outlook and outlined progress on acquisitions, development projects and international expansion. President and Chief Executive Officer Paul Goodfellow said oil production averaged about 69,000 barrels per day during the quarter, while total production averaged nearly 94,000 barrels of oil equivalent per day. Both figures exceeded the company’s guidance expectations. Goodfellow said production optimization efforts, higher operational uptime and continued outperformance from the Cardona well supported the results. → No Hangover: Revisiting Microsoft One Week After Earnings Top 4 Stocks With Notable Insider Buying “The second quarter was characterized by solid execution across our base business,” Goodfellow said, adding that Talos had achieved more than two-thirds of its 2026 target under its Optimal Performance Plan during the first half of the year. Executive Vice President and Chief Financial Officer Zach Dailey said Talos generated approximately $402 million of adjusted EBITDA and a record approximately $232 million of adjusted free cash flow in the second quarter. The results were driven by production above guidance and crude-oil realizations that were stronger relative to WTI, he said. → MarketBeat Week in Review – 08/03 - 08/07 The company increased its full-year 2026 standalone guidance to: 64,000 to 68,000 barrels of oil per day 87,000 to 91,000 barrels of oil equivalent per day The updated outlook excludes Talos’ pending Gulf of America bolt-on acquisition and includes the impact of a non-core, gas-weighted shelf divestment that closed early in the third quarter. Dailey said the base business was performing well enough to more than offset the production effect of the divestiture. → Why the Landlord of the AI Boom Could Outlast the Chipmakers For the third quarter, Talos expects oil production of 61,000 to 65,000 barrels per day and total production of 81,000 to 85,000 BOE per day, also excluding the pending bolt-on transaction. The company expects to provide updated guidance after the acquisition closes, which it anticipates will occur later in the third quarter. Cash on hand rose to about $578 million at the end of the second quarter, while total liquidity reached about $1.2 billion and the leverage ratio declined to 0.5 times, Dailey said. Talos issued $800 million of 8% senior notes due 2034. The proceeds were used to redeem its $625 million of 9% notes due 2029 and fund a portion of the pending acquisition. The company also secured $150 million in incremental commitments from its bank group, increasing its credit-facility borrowing base to $850 million from $700 million upon the acquisition’s closing. Dailey said Talos continues to expect pro forma year-end 2027 leverage below one times, in line with its long-term target. The company’s shareholder-return framework remains unchanged, with up to 50% of annual free cash flow targeted for share repurchases. Talos did not repurchase shares during the second quarter because of an acquisition-related corporate blackout period. Since announcing the framework in the second quarter of 2025, the company has returned about $135 million through buybacks and reduced its share count by about 7%. Goodfellow highlighted the completion of the Genovesa workover, which returned the well to production ahead of schedule late in the second quarter and performed in line with expectations. During planning, Talos identified additional work that could support future access to a secondary zone, he said. The company’s drilling and completion program has operated with approximately 50% lower nonproductive time than the Gulf of Mexico basin average year to date, according to Goodfellow. At Monument, the first development well has been drilled and the operator is moving to the second well. Talos expects production from the project near the end of the year. The company also expects the first Brutus well to spud in the third quarter following rig reactivation activities. Its Daenerys appraisal program has begun, with results from the first appraisal well expected before year-end. Talos contracted the West Vela rig for 12 months, with options beyond that term. Executive Vice President of Exploration and Development Bill Langin said the company expects to receive the rig around the middle of 2027, depending on the rig’s current operations. He said Talos kept pricing relatively close to previous levels by leveraging its existing relationship with Seadrill. Follow-on activity at Daenerys could be included in the rig program, although the contract is not dependent on that project alone. On its pending Gulf of America acquisition, Goodfellow said BP elected not to exercise its preferential right. Talos will operate the Coulomb field and become a partner in the Na Kika platform and associated fields. The acquired assets produced approximately 18,000 BOE per day in the second quarter, according to Goodfellow, and are expected to be accretive to Talos’ average oil cut, unit operating expense and EBITDA margin. Talos is evaluating an operated Coulomb drilling opportunity that could compete for capital in 2027. Goodfellow said the company aims to apply its strategy of pursuing lower-unit-cost, short-cycle tiebacks around acquired infrastructure. Talos also discussed its offshore Mexico farm-in and newly established offshore Honduras acreage position. In Mexico’s Block 29, the company and Repsol are the sole partners. The development-led opportunity is anchored by the existing Polok and Chinwol oil discoveries, and Talos is working toward submission of a field development plan to CNOOC and a targeted final investment decision in 2027. Langin said the Block 29 partners are preparing for a potential exploration well late next year. The company sees the project as a Miocene-sand development opportunity similar to producing intervals on the U.S. side of the Gulf of Mexico. Talos said it has sufficiently high-quality seismic data and does not expect to add to its seismic inventory in the near term. Goodfellow said the discoveries are entirely within the block, distinguishing the project from Talos’ Zama experience, where unitization resulted from a discovery extending onto a Pemex block. In Honduras, Talos holds about 4 million acres of deepwater acreage and plans to begin the area’s first 3D seismic program in the second half of 2026. Langin said the company sees four to five exploration plays and expects to obtain an environmental permit to drill by year-end. Once received, the permit would start a two-year clock, giving Talos time to evaluate seismic results and decide whether to drill. Goodfellow said Talos will continue to prioritize disciplined execution, investment in its base business, balance-sheet strength and shareholder returns while evaluating selective growth opportunities across its offshore portfolio. Talos Energy Inc is an independent oil and gas exploration and production company headquartered in Houston, Texas. Founded in 2012 by industry veterans Tim Duncan and Jeremy Rights, the firm completed its initial public offering in 2021 and trades on the New York Stock Exchange under the ticker symbol TALO. The company's core operations focus on the acquisition, exploration, development and production of offshore hydrocarbon reserves, with a primary emphasis on the U.S. Gulf of Mexico basin. Talos Energy's asset portfolio spans deepwater and shelf opportunities in the Gulf of Mexico, where it holds interests in several producing fields and exploration blocks. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Talos Energy Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

This article first appeared on GuruFocus. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Talos Energy Inc (NYSE:TALO) delivered record free cash flow of approximately $232 million in Q2 2026, driven by production that exceeded guidance and stronger crude oil realizations. The company increased its full-year 2026 standalone production guidance to 64,000-68,000 barrels of oil per day, despite the impact of a non-core shelf divestment, reflecting strong base business performance. Talos Energy Inc (NYSE:TALO) successfully issued $800 million of new 8% senior notes due 2034, using proceeds to redeem higher-cost 9% notes and extend its debt maturity profile, enhancing financial flexibility. The company is executing on its strategic pillars with the Gulf of America bolt-on acquisition, which is expected to add approximately 18,000 barrels of oil equivalent per day and be accretive to key financial metrics. Talos Energy Inc (NYSE:TALO) achieved greater than two-thirds of its 2026 optimal performance plan target in the first half of the year, resulting in improved production, uptime, and operational efficiency. The company's drilling and completion program has operated with approximately 50% lower non-productive time than the Gulf of America basin average, showcasing strong technical execution. Talos Energy Inc (NYSE:TALO) strengthened its balance sheet with total liquidity increasing to approximately $1.2 billion and leverage declining to 0.5 times, providing ample financial flexibility. The company is advancing high-impact growth projects, including the Daenerys appraisal program and the Monument development, with results expected before year-end 2026. Talos Energy Inc (NYSE:TALO) eliminated approximately $54 million of future abandonment obligations through the non-core shelf divestment, improving portfolio quality and oil weighting. The company established a large-scale position in Honduras with approximately 4 million acres in an underexplored basin at an extremely low entry cost, providing long-term exploration optionality. Talos Energy Inc (NYSE:TALO) did not repurchase shares during Q2 2026 due to an acquisition-related corporate blackout period, temporarily pausing its shareholder return program. The company's Q3 2026 production guidance of 61,000-65,000 barrels of oil per day is lower than Q2 actuals, reflecting the impact of the shelf divestment and seasonal factors. Talos Energy Inc (NYSE:TALO) faces execution risk on multiple new international ventures, including the Mexico Block 29 development and the Honduras exploration program, which are at early stages. The company's Gulf of America bolt-on acquisition is subject to closing conditions and is not yet reflected in guidance, creating uncertainty around near-term production growth. Talos Energy Inc (NYSE:TALO) is exposed to potential cost overruns and delays in its Brutus rig reactivation program, with the first well now expected to spud in Q3 2026. The company's leverage is expected to increase following the Gulf of America acquisition, although it remains below 1 times on a pro forma 2027 basis. Talos Energy Inc (NYSE:TALO) faces geopolitical and regulatory risks in Mexico and Honduras, including permitting and partner alignment issues that could delay project timelines. The company's exploration activities, such as the Daenerys appraisal well, carry inherent geological and operational risks that could result in disappointing results. Talos Energy Inc (NYSE:TALO) is increasing its rig commitment to a full 12-month contract plus options, which could limit flexibility if market conditions deteriorate. The company's strategic shift toward international opportunities may dilute its focus from its core Gulf of America operations, where it has a proven track record. Warning! GuruFocus has detected 5 Warning Signs with TALO. Is TALO fairly valued? Test your thesis with our free DCF calculator. Q: Can you walk us through the overall strategy behind the low upfront commitment ventures into Mexico and Honduras, and expand on the exploration and development opportunities you're seeing in each? A: Paul Goodfellow (CEO) explained that the quality of the Gulf of America operations allowed Talos to pursue opportunities in the second and third pillars of its strategic framework. The Mexico Block 29 opportunity is a greenfield development pre-FID, anchored by two existing oil discoveries with a high-quality partner (Repsol), plus exploration upside. Honduras provides long-term exploration optionality at an incredibly low cost, with a significant 4 million-acre position and a proven oil system. Bill Langen (EVP, Exploration & Development) added that Block 29's FID will be anchored by the Pollock and Chinwol discoveries, with potential for an exploration well late next year to derisk additional prospects. In Honduras, the company will commence a 3D seismic program before year-end to evaluate 4-5 exploration prospects. Q: With the pending Gulf of America bolt-on, can you talk through the Coolong development opportunity and what makes it compete for capital in 2027? A: Paul Goodfellow (CEO) stated that Talos has historically been strong at acquiring assets and finding near-field tie-back opportunities. The Coolong opportunity is the most mature to bring forward for the 2027 capital plan. The company will continue extensive work in the vicinity to understand the totality of the potential, which could be significant, and will take the project down the same path as Brutus and Ram Powellextending life through low unit cost, short-cycle tie-backs to build production. Q: Would you expect to include much of the 300 million barrel unrisked resource from the December lease sale in next year's program, and what's your level of excitement around the upcoming lease sale? A: Paul Goodfellow (CEO) said at least 2-3 of those opportunities would be under consideration for investment in 2027, provided they meet the same return profile criteria as other Gulf opportunities. Bill Langen (EVP, Exploration & Development) added that while there aren't many first-time open blocks, the company will selectively look to add where opportunities meet high technical and commercial thresholds, with final decisions on the most attractive blocks expected next week. Q: Given the strong balance sheet and numerous opportunities, what signals might the board look for to lean into growth as you exit the year around 110,000 barrels per day? A: Paul Goodfellow (CEO) emphasized that the board and management are aligned on the strategic framework, and "leaning in" means disciplined execution across all pillars. The key factor driving appetite to push the strategic frame forward is continued disciplined execution in every opportunity, whether restoring production, drilling Daenerys, or exploring new frontier opportunities. Zach Daley (CFO) added that the 2027 program is about growing profitability and investing for the long-term, not just production growth. Q: Can you give an update on the milestones for the back half of the year for Monument and Daenerys, and is the West Vela rig being brought back for incremental work at Daenerys? A: Paul Goodfellow (CEO) outlined key milestones: finalizing Brutus rig reactivation and starting that program, executing the Monument field program with production at year-end, successfully getting Daenerys to TD, and progressing Mexico and Honduras activities. On the West Vela rig, the company contracted it for a full 12 months plus options due to the depth of opportunities in the portfolio. While follow-on activity at Daenerys could be part of the rig's work, the commitment is not dependent on Daenerys alone. Q: On the West Vela rig, can you give some idea of timing for operations in 2027 and any notable directional move on pricing versus the prior run? A: Bill Langen (EVP, Exploration & Development) said the rig should be received around mid-year 2027, depending on current contract operations. The company leveraged its existing relationship with Seadrill to secure pricing relatively close to previous levels. The longer-term contract allows Talos to embed its systems and ways of working, deepening the strategic relationship and driving even better performance. Q: Given the blackout period in Q2, how should we expect the cadence of share buybacks through the second half of the year? A: Zach Daley (CFO) confirmed the disciplined capital allocation framework is unchanged. Buybacks were temporarily paused due to M&A-related blackouts, but shareholder returns remain an important part of capital allocation, and the company expects to be back in the market. The balance sheet provides flexibility to invest in the business, pursue accretive bolt-ons, and return capital while keeping long-term leverage under 1x. Q: On Honduras, how long do you have to evaluate the acreage, and would you look to bring in a partner before drilling or even before shooting seismic? A: Bill Langen (EVP, Exploration & Development) said the company will commence 3D seismic and is maturing an environmental permit to drill by year-end, which starts a 2-year clock. Seismic evaluation should be complete by approximately mid-next year, leaving another 1.5 years to make a drill decision. The company is framing partnership opportunities now and will evaluate potential dilution pre-seismic or after acquisition, choosing the path that creates the most value for Talos. Q: On the shelf divestiture, was there any compensation, and does this open up other opportunities for similar non-core divestitures? A: Paul Goodfellow (CEO) explained the divested assets were primarily non-operated, gas-weighted activities that didn't fit the portfolio strategy. The most critical element was structuring the deal to eliminate the likelihood of liability return, which was achieved, eliminating approximately $54 million of future abandonment obligations. The company is always looking to high-grade the portfolio, and if opportunities arise to create more value, it will pursue them, though the quarter was dominated by acquisition-side portfolio management. Q: On Mexico's Block 29, does the additional 200 million barrels of equivalent resource potential increase your confidence in the prospectivity of the original two discoveries, and what exploration or seismic plans does the operator have? A: Bill Langen (EVP, Exploration & Development) confirmed the two discoveries are robust, and the company will progress exploration opportunities in parallel with the development of Chinwol and Pollock. The prospects have clear seismic responses similar to the existing discoveries, and the For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by production optimization initiatives and higher operational uptime, resulting in production exceeding guidance at 94,000 BOE per day. The 'Optimal Performance Plan' achieved over two-thirds of its 2026 target in the first half of the year, directly translating into record free cash flow generation. Management highlighted a culture of 'thinking outside the box' to create incremental value, exemplified by the Genovesa workover which included proactive planning for future secondary zone access. Strategic positioning was significantly enhanced by a series of actions: a Gulf of America bolt-on acquisition, an offshore Mexico farm-in, and establishing a large-scale position in Honduras. The divestment of non-core gas-weighted shelf assets improved the portfolio's oil weighting while eliminating approximately $54 million in future abandonment obligations. Drilling and completion activities operated with approximately 50% lower non-productive time than the Gulf of America basin average, reinforcing a technical competitive advantage. Full-year 2026 production guidance for the standalone business was increased to 87,000-91,000 BOE per day, more than offsetting the impact of the shelf divestiture. Management expects to close the Gulf of America bolt-on acquisition in the third quarter, which is anticipated to be accretive to unit operating expense and EBITDA margins. Strategic focus in Mexico is centered on submitting a field development plan for Block 29, targeting a Final Investment Decision (FID) in 2027. In Honduras, the company plans to commence the first-ever 3D seismic program across its deepwater acreage in the second half of 2026 to evaluate basin potential. The 2027 capital program will prioritize high-return projects like the Coulomb drilling opportunity, which will compete for capital based on its short-cycle tieback potential. Executed an $800 million senior notes offering at 8% to redeem 9% notes due 2029, extending the debt maturity profile to 2034 and reducing interest costs. Secured $150 million in incremental bank commitments, increasing the credit facility borrowing base to $850 million effective upon the pending acquisition close. The shelf divestment was structured specifically to eliminate the risk of future ARO liability returning to the company, utilizing a counterparty management deemed reliable. Maintained a long-term leverage target of below 1x, ending the quarter with a leverage ratio of 0.5x and total liquidity of approximately $1.2 billion. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management explained that these entries are 'geology-led,' focusing on areas where they understand the rock and can apply technical skills from the U.S. Gulf. Mexico provides a development-led greenfield opportunity with existing discoveries, while Honduras offers long-term exploration optionality at an extremely low entry cost. Talos is moving toward a more strategic rig contracting model, securing the West Vela for a full 12 months plus options starting around mid-year 2027. The commitment is not dependent on a single prospect like Daenerys but is supported by the depth of the broader portfolio to drive better performance through continuity. Management confirmed the capital allocation framework is unchanged and they expect to be back in the market for share repurchases in the second half of the year. The pause in the second quarter was strictly due to corporate blackout periods related to M&A activity, not a shift in methodology. Management clarified that Block 29 discoveries are entirely on-block, eliminating the unitization risks faced at Zama where resources crossed into Pemex acreage. The project is partner-operated by Repsol, and the current political environment in Mexico is viewed as trending in a more positive direction for these developments.

HOUSTON, Aug. 4, 2026 /PRNewswire/ -- Talos Energy Inc. ("Talos" or the "Company") (NYSE: TALO) today announced its operational and financial results for the three months ended June 30, 2026. Talos also provided third quarter 2026 production guidance and revised full-year 2026 guidance. Second Quarter Operational and Financial Highlights Produced 68.6 thousand barrels of oil per day ("MBo/d") and 93.7 thousand barrels of oil equivalent per day ("MBoe/d"); oil and total equivalent production exceeded guidance ranges driven by strong uptime and well performance. Reported net cash provided by operating activities of $300.6 million. Generated Adjusted Free Cash Flow(1)(2) of $231.6 million. Recorded Net Income(2) of $149.7 million or $0.88 Net Income(2) per diluted share; Adjusted Net Income(1)(2) of $97.8 million or $0.57 Adjusted Net Income per diluted share(1)(2). Generated Adjusted EBITDA(1)(2) of $402.4 million. Invested $112.5 million of capital expenditures, excluding plugging and abandonment and settled decommissioning obligations. Strengthened balance sheet with $577.6 million of cash, an undrawn credit facility, a Net Debt to Last Twelve Months ("LTM") Adjusted EBITDA(1)(2) of 0.5x, as of June 30, 2026. Completed the Genovesa workover and returned the well to production late in the second quarter. Finished drilling operations at Monument #3 and encountered approximately 250 feet of net pay, in-line with pre-drill expectations. Commenced the Daenerys appraisal well program; results from the first appraisal well expected by year-end 2026. Key Strategic Highlights Increased midpoint of full-year 2026 production guidance to 66 MBo/d and 89 MBoe/d; excluding the announced Gulf of America bolt-on acquisition and after adjusting for the closed non-core shelf divestment. Achieved greater than 65% of the Optimal Performance Plan 2026 target; on track to fully achieve by year-end 2026. Announced acquisition of Gulf of America deepwater oil assets from Shell; BP elected not to exercise its preferential right, with the transaction expected to close in the third quarter of 2026. Announced strategic development farm-in transaction with Repsol in offshore Mexico Block 29. Signed agreements to acquire an 80% operated interest in an offshore Honduras block spanning more than 4 million gross acres through a seismic commitment, providing access to a large-scale exploration position within a working petroleum system. Closed non-core shelf divestment of non-operated gas assets on July 15th; eliminates approximately $54 million of ARO and decommissioning obligations. Enhanced financial flexibility through issuance of $800 million of 8.000% notes due 2034; proceeds used to fully redeem $625 million of 9.000% notes due 2029 and fund a portion of the previously announced Gulf of America bolt-on acquisition. Upsized credit facility to $850 million from $700 million, effective upon closing of the Gulf of America bolt-on acquisition. Executed a rig contract for the West Vela drillship commencing in mid-2027; primary term of one year with extension options. "The second quarter marked another meaningful step forward in the execution of our strategy and reinforces our confidence in the long-term value creation opportunities ahead," said Paul Goodfellow, President and Chief Executive Officer of Talos. "We advanced all three pillars of our strategic framework as we continue to build a long-lived, scaled portfolio by expanding our deepwater scale, enhancing our development inventory through greenfield opportunities, and adding large-scale exploration potential at low entry cost. At the same time, our teams continued delivering on the Optimal Performance Plan, achieving more than 65% of the 2026 target in the first half of the year and demonstrating our relentless focus on operational excellence, cost discipline and value creation. These strategic achievements were complemented by strong execution across our base business. We exceeded the high end of our production guidance ranges, increased our full-year production outlook and generated record Free Cash Flow. We also commenced the Daenerys appraisal program, which has the potential to further enhance the longevity of our deepwater portfolio. Taken together, these accomplishments demonstrate our ability to successfully execute on both fronts – advancing our Three Strategic Pillars while continuing to deliver exceptional operational and financial results from our base business. With strong momentum across the organization, we remain focused on building the foundation to be a leading pure-play offshore E&P and look forward to closing the previously announced Gulf of America bolt-on acquisition later in the third quarter." RECENT DEVELOPMENTS AND OPERATIONS UPDATE Operations Update: Production Update: During the second quarter, oil and total equivalent production exceeded second quarter guidance ranges, primarily driven by production optimization initiatives, strong base asset performance, high facility uptime, and continued outperformance from the new Cardona well. Additionally, the Company successfully completed the Genovesa workover and returned the well to production late in the quarter, with performance in line with expectations. Lease operating expense totaled $18.25 per Boe, including approximately $1.75 per Boe associated with one-time well intervention work performed during the quarter. Monument: The first Monument development well was successfully drilled to its total measured depth of 32,250 feet and encountered approximately 250 feet of net pay, confirming pre-drill expectations. Drilling is set to commence on the second development well followed by completion operations on both wells. First production is expected by year-end 2026 and to be between 20–30 MBoe/d gross. Monument is a large Wilcox oil discovery in Walker Ridge blocks 271, 272, 315, and 316. Monument is being developed as a subsea tie-back to the Shenandoah production facility in Walker Ridge with committed firm capacity of 20 MBbl/d. There is a prospective drilling location that could extend the resource beyond the base development case. Beacon Offshore Energy LLC as operator, holds a 41.7% W.I., Talos holds 29.7% W.I. and Navitas Petroleum LP holds a 28.6% W.I. Non-Core Shelf Divestment: On July 15, 2026, the Company closed the sale of non-operated, gas Shelf and Gulf Coast properties through the divestiture of a legal subsidiary to a counterparty. The divestment eliminates approximately $54 million of ARO liabilities and decommissioning obligations. Production for the second quarter 2026 was approximately 700 Bo/d / 3.5 MBoe/d, ~20% oil. Exploration and Appraisal Update: Daenerys: The Daenerys appraisal well was spud on July 1, 2026, and operations are progressing according to plan. Results are expected by year-end 2026. Offshore Honduras: Talos executed definitive agreements to acquire an 80% operated working interest in an offshore Honduras block spanning more than 4 million gross acres, with CaribX retaining the remaining 20% working interest. Talos has closed on a 45% working interest and assumed operatorship. The acquisition of the remaining 35% working interest is subject to approval by Honduras's Secretaría de Energía (SEN), which is expected within approximately 90 days. The acreage provides exposure to both shallow and deepwater exploration opportunities, including untested deepwater Miocene prospects within a working petroleum system. The transaction is structured as a seismic carry and minimal sunk-cost reimbursement, providing access to large-scale exploration potential at a low entry cost. Talos has the option to participate in an exploration well, subject to the results of the seismic program. An initial 3D seismic campaign is planned for the second half of 2026. Share Repurchase Program: During the second quarter of 2026, Talos did not repurchase any shares due to the Company's corporate blackout period associated with the previously announced Gulf of America acquisition. Since announcing its current return of capital framework in the second quarter 2025, Talos has returned approximately $135 million to shareholders through share repurchases resulting in a reduction to outstanding share count by approximately 7%. The Company's Board of Directors recently authorized an increase in total share repurchase authorization back up to $200 million. The remaining share repurchase authorization as of August 1, 2026, is $200 million. Under Talos's capital allocation framework, management expects to allocate up to 50% of annual free cash flow to share repurchases. The timing and amount of any repurchases under the Company's share repurchase program will depend on market conditions, share price, legal requirements, and other factors, and may be made from time to time in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, as amended. Credit Facility Update: In connection with the previously announced Gulf of America bolt-on acquisition, Talos has secured $150 million of incremental commitments from its existing lenders, increasing the Company's borrowing base from the current $700 million to $850 million, subject to and effective upon closing the acquisition. Production Production for the second quarter 2026 was 93.7 MBoe/d (73% oil, 81% liquids). Lease Operating & General and Administrative Expenses Total lease operating expenses for the second quarter 2026, including workover, maintenance and insurance costs, were $155.7 million, or $18.25 per Boe. Adjusted General and Administrative expenses for the second quarter 2026, adjusted to exclude one-time transaction-related costs, and non-cash equity-based compensation, were $36.9 million, or $4.32 per Boe. Capital Expenditures Capital expenditures for the second quarter 2026, excluding plugging and abandonment and settled decommissioning obligations, totaled $112.5 million. Plugging & Abandonment Expenditures Capital expenditures for plugging and abandonment and settled decommissioning obligations for the second quarter 2026 totaled $18.9 million. Liquidity and Leverage At June 30, 2026, Talos had a borrowing base of $700.0 million under its Bank Credit Facility with approximately $95.7 million in outstanding letters of credit. Letters of credit that are outstanding reduce the available revolving credit commitments. Cash was $577.6 million, providing Talos approximately $1,181.9 million of liquidity at quarter end. On June 30, 2026, Talos had $1,250.0 million in total debt. Net Debt(1) was $672.4 million, Net Debt to Last Twelve Months ("LTM") Adjusted EBITDA attributable to Talos Energy Inc.(1) was 0.5x. OPERATIONAL & FINANCIAL GUIDANCE UPDATES For the third quarter 2026, Talos expects production to be in the range from 61 to 65 MBo/d and 81 to 85 MBoe/d. Talos has increased its full-year 2026 production guidance and now expects production to range from 64 to 68 MBo/d and 87 to 91 MBoe/d. This guidance excludes the previously announced Gulf of America bolt-on acquisition and reflects the impact of the closed non-core shelf divestment. The Company expects to update its 2026 operating and financial guidance following the close of the acquisition. The following table summarizes Talos's revised full-year 2026 operational and production guidance. HEDGES The following table reflects contracted volumes and weighted average prices the Company will receive under the terms of its derivative contracts as of July 31, 2026. CONFERENCE CALL AND WEBCAST INFORMATION Talos will host a conference call, broadcast live over the internet, on Wednesday, August 5, 2026, at 10:00 AM Eastern Time (9:00 AM Central Time). Listeners can access the conference call through a webcast link on the Company's website at: Talos Second Quarter 2026 Webcast. Alternatively, the conference call can be accessed by dialing (800) 836-8184 (North American toll-free) or (646) 357-8785 (international). Please dial in approximately 15 minutes before the teleconference is scheduled to begin and ask to be joined into the Talos Energy call. A replay of the call will be available one hour after the conclusion of the conference until August 12, 2026 and can be accessed by dialing (888) 660-6345 and using access code 99686#. For more information, please refer to the Second Quarter 2026 Earnings Presentation available under Presentations and Webcasts on the Investor Relations section of Talos's website. ABOUT TALOS ENERGY Talos Energy (NYSE: TALO) is a technically driven, innovative, independent energy company focused on safely maximizing long-term value through its Exploration & Production business in the United States Gulf of America and offshore Mexico. We leverage decades of technical and offshore operational expertise to acquire, explore, and produce assets in key geological trends while maintaining a focus on safe and efficient operations, environmental responsibility, and community impact. For more information, visit www.talosenergy.com. INVESTOR RELATIONS CONTACT Kyle Sahni [email protected] CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS The information in this communication includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements, other than statements of historical fact included in this communication regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this communication, the words "will," "could," "believe," "anticipate," "intend," "estimate," "expect," "project," "forecast," "may," "objective," "plan" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Forward-looking statements are based on management's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. These forward-looking statements are based on our current beliefs, based on currently available information, as to the outcome and timing of future events. Forward-looking statements may include statements about: business strategy; estimated, potential or recoverable resources, reserves and production; drilling prospects, inventories, projects and programs, including operating cost efficiencies, and non-operated assets; our ability to replace the reserves that we produce through drilling, acquisitions, recompletions or enhanced recovery; financial strategy, borrowing base under our bank credit facility, availability of financing sources, including project financing options, liquidity position and capital required for our development program, acquisitions and other capital expenditures; anticipated levels of stock repurchases and leverage ratio; realized oil and natural gas prices; changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements and the impact of such policies on us, our customers and suppliers, and the global economic environment; our ability to obtain financial assurance instruments, including surety bonds, on commercially reasonable terms; expected collateral requirements under existing or future acquisitions, surety agreements, hedging transactions, letters of credit and other secured debt; volatility in the political, legal and regulatory environments where we currently or in the future may operate; risks related to future mergers and acquisitions, including the risk we may not close when expected or at all, and may fail to realize the expected benefits of any such transaction; timing, restrictions and amount of future production of oil, natural gas and NGLs, including changes in supply caused by OPEC or the war in Iran, and any related impact on global oil prices, available resources, and domestic oil production; our hedging strategy and results; future drilling plans; availability of pipeline connections and other infrastructure on economic terms; competition, government regulations, including financial assurance requirements, and legislative and political developments; our ability to obtain permits and governmental approvals; pending legal, governmental or environmental matters; our marketing of oil, natural gas and NGLs; our integration of acquisitions and the anticipated post-acquisition performance of the Company; our ability to identify and acquire future leases, reserves, exploration projects and or business acquisitions on desired terms; costs of exploring, developing, acquiring or abandoning properties; general economic conditions, including the impact of continued inflation and associated changes in monetary policy; political and economic conditions and events in foreign oil, natural gas and NGL producing countries and acts of terrorism or sabotage; credit markets and availability of financial instruments on reasonable terms; estimates of future income taxes; our estimates and forecasts of the timing, number, profitability and other results of wells we expect to drill and other exploration activities; our strategy with respect to our minority investment in the Zama asset; uncertainty regarding our future operating results and our future revenues and expenses; anticipated capital efficiency, margin enhancement and organizational improvements and additional cash flow; impact of new accounting pronouncements on earnings in future periods; and plans, objectives, expectations and intentions contained in this communication that are not historical. Additionally, forward-looking statements may include statements regarding pending acquisitions which are based on management's current expectations and assumptions such as: future exploration and development opportunities; financing options; estimates of recoverable resources and resource potential; timing of final investment decisions; anticipated costs and expected production commencement and volumes; the timing, closing and benefits of the pending acquisitions; the anticipated impact on our financial position, growth opportunities and competitive position; and projected prospects, plans and objectives related to these assets. All of the forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, commodity price volatility; global demand for oil and natural gas; the ability or willingness of OPEC and other state-controlled oil companies to set and maintain oil production levels and the impact of any such actions; foreign wars and conflicts, including the lack of a resolution to the war in Ukraine and ongoing hostilities in Israel and the Middle East, such as the war in Iran and their impact on commodity markets; the impact of any pandemic, and governmental measures related thereto; lack of necessary infrastructure, transportation and storage capacity as a result of oversupply, government and regulations; political risks, including a global trade war or the impact of a prolonged federal government shutdown or lapse in federal appropriations that could disrupt our operations and future drilling plans and opportunities; lack of availability of drilling and production equipment and services or skilled personnel; adverse weather events, including tropical storms, hurricanes, winter storms and loop currents; cybersecurity threats and incidents; elevated inflation and the impact of central bank policy in response thereto; environmental risks; failure to find, acquire or gain access to other discoveries and prospects or to successfully develop and produce from our current discoveries and prospects; geologic risk; drilling and other operating risks; well control risk; regulatory changes, including the impact of financial assurance requirements; changes in U.S. trade and labor policies, including the imposition of increased tariffs and resulting consequences; the uncertainty inherent in estimating reserves and in projecting future reservoir performance, recoverable resources, resource potential and rates of production; cash flow and access to capital; the timing of development expenditures; risks to our industry and business operations associated with legal challenges by non-governmental organizations and other groups; market factors impacting the availability of surety bonds; and the other risks discussed in "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2025 and our subsequent Quarterly Reports on Form 10-Qs, each as filed with the SEC. In addition, risks related to the pending acquisitions include, but are not limited to, our ability to obtain regulatory approval and to consummate the acquisitions; our ability to realize the anticipated benefits of our acquisitions; availability of future project financing; whether the parties elect to proceed with a FID and our ability to reach FID and/or production on the timeline currently contemplated or at all; risks associated with reliance on third-party operators; or risks relating to operations in foreign jurisdictions due to changes in applicable laws, regulations and policies affecting our projects. Should any risks or uncertainties occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this communication. PRODUCTION ESTIMATES Estimates of our future production volumes are based on assumptions of capital expenditure levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products. The production, transportation, marketing and storage of oil and gas are subject to disruption due to infrastructure constraints, transportation, processing and storage availability, mechanical failure, human error, adverse weather conditions such as hurricanes, global political and macroeconomic events and numerous other factors. Our estimates are based on certain other assumptions, such as well performance and estimated resource potential and ultimate recovery, which may vary significantly from those assumed. Therefore, we can give no assurance that our future production volumes will be as estimated. RESERVE INFORMATION Reserve engineering is a process of estimating underground accumulations of oil, natural gas and NGLs that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions used by reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions upward or downward of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil, natural gas and NGLs that are ultimately recovered. We may use the terms "estimated resource potential," "gross reserves," "estimated resource," "total recoverable resource potential" and "estimated ultimate recovery" or "EUR" which are not measures of "reserves" prepared in accordance with SEC guidelines or permitted to be included in SEC filings. These types of estimates do not represent, and are not intended to represent, any category of reserves based on SEC definitions, are inherently by their nature more speculative than estimates of proved or other reserves prepared in accordance with SEC guidelines and do not constitute "reserves" within the meaning of the SEC's rules. These types of resource estimates are subject to greater uncertainties, and accordingly, are subject to a substantially greater risk of actually being realized. Investors are urged to consider closely the disclosures and risk factors in the reports we file with the SEC. USE OF NON-GAAP FINANCIAL MEASURES This release may include the use of various measures that have not been calculated in accordance with U.S. generally acceptable accounting principles (GAAP) such as, but not limited to, EBITDA, Adjusted EBITDA, Adjusted EBITDA attributable to Talos Energy Inc., LTM Adjusted EBITDA attributable to Talos Energy Inc., Net Debt, Net Debt to LTM Adjusted EBITDA attributable to Talos Energy Inc., Adjusted Free Cash Flow attributable to Talos Energy Inc. and Leverage, Adjusted EBITDA attributable to Talos Energy Inc. excluding hedges, Adjusted Net Income (Loss) attributable to Talos Energy Inc. per diluted share, Adjusted Earnings Per Share, Cash Operating Expenses and Workovers, Adjusted General & Administrative Expense and PV-10. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Reconciliations for non-GAAP measures to GAAP measures are included at the end of this release. USE OF PROJECTIONS This release may contain projections, such as, but not limited to, production volumes: cash expenses, including operating expenses, G&A and interest expense; capital expenditures; P&A and decommissioning expenditures; and collateral obligations. Our independent auditors have not audited, reviewed, compiled, or performed any procedures with respect to the projections for the purpose of their inclusion in this release. The assumptions and estimates underlying the projected information are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projected information. Even if our assumptions and estimates are correct, projections are inherently uncertain due to a number of factors outside our control. Accordingly, there can be no assurance that the projected results are indicative of our future performance or that actual results will not differ materially from those presented in the projected information. 74,045 Other operating (income) expense902(3,851)12,249(8,387)Total operating expenses466,591698,3131,058,3271,167,921Operating income (expense)198,222(273,592)78,796(230,141)Interest expense(39,162)(40,811)(78,340)(81,738)Price risk management activities income (expense)30,54986,855(142,998)71,002Equity method investment income (expense)(113)(186)6,557(676)Other income (expense)5,2305,3719,4159,231Net income (loss) before income taxes194,726(222,363)(126,570)(232,322)Income tax benefit (expense)(44,837)36,42620,45536,517Net income (loss)$149,889$(185,937)$(106,115)$(195,805)Net income (loss) attributable to noncontrolling interest222—383—Net income (loss) attributable to Talos Energy Inc.$149,667$(185,937)$(106,498)$(195,805)Net income (loss) per share attributable to common stockholders:Basic$0.90$(1.05)$(0.64)$(1.10)Diluted$0.88$(1.05)$(0.64)$(1.10)Weighted average common shares outstanding:Basic166,980177,404167,677178,791Diluted170,085177,404167,677178,791 SUPPLEMENTAL NON-GAAP INFORMATION Certain financial information included in our financial results are not measures of financial performance recognized by accounting principles generally accepted in the United States, or GAAP. These non-GAAP financial measures may not be viewed as a substitute for results determined in accordance with GAAP and are not necessarily comparable to non-GAAP measures which may be reported by other companies. Reconciliation of General and Administrative Expenses to Adjusted General and Administrative Expenses We believe the presentation of Adjusted General and Administrative Expenses provides management and investors with (i) important supplemental indicators of the operational performance of our business, (ii) additional criteria for evaluating our performance relative to our peers and (iii) supplemental information to investors about certain material non-cash and/or other items that may not continue at the same level in the future. Adjusted General & Administrative Expenses has limitations as an analytical tool and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP or as alternatives to net income (loss), operating income (loss) or any other measure of financial performance presented in accordance with GAAP. We define these as the following: General and Administrative Expenses. General and Administrative Expenses generally consist of costs incurred for overhead, including payroll and benefits for our corporate staff, costs of maintaining our headquarters, costs of managing our production operations, bad debt expense, equity-based compensation expense, audit and other fees for professional services and legal compliance. Reconciliation of Net Income (Loss) attributable to Talos Energy Inc. to EBITDA, Adjusted EBITDA and Adjusted EBITDA attributable to Talos Energy Inc. "EBITDA," "Adjusted EBITDA" and "Adjusted EBITDA attributable to Talos Energy Inc." provide management and investors with (i) additional information to evaluate, with certain adjustments, items required or permitted in calculating covenant compliance under our debt agreements, (ii) important supplemental indicators of the operational performance of our business, (iii) additional criteria for evaluating our performance relative to our peers and (iv) supplemental information to investors about certain material non-cash and/or other items that may not continue at the same level in the future. EBITDA, Adjusted EBITDA and Adjusted EBITDA attributable to Talos Energy Inc. have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP or as alternatives to net income (loss), net income (loss) attributable to Talos Energy Inc., operating income (loss) or any other measure of financial performance presented in accordance with GAAP. We define these as the following: EBITDA. Net income (loss) plus interest expense; income tax expense (benefit); depreciation, depletion and amortization; and accretion expense. Adjusted EBITDA. EBITDA plus non-cash impairment of oil and natural gas properties, transaction and other (income) expenses, decommissioning obligations, the net change in fair value of derivatives (mark-to-market effect, net of cash settlements and premiums related to these derivatives), (gain) loss on debt extinguishment, non-cash write-down of other well equipment and non-cash equity-based compensation expense. Adjusted EBITDA attributable to Talos Energy Inc. Adjusted EBITDA, less adjustments for noncontrolling interest. Adjusted EBITDA attributable to Talos Energy Inc. excluding hedges. We have historically provided as a supplement to—rather than in lieu of—Adjusted EBITDA including hedges, provides useful information regarding our results of operations and profitability by illustrating the operating results of our oil and natural gas properties without the benefit or detriment, as applicable, of our financial oil and natural gas hedges. By excluding our oil and natural gas hedges, we are able to convey actual operating results using realized market prices during the period, thereby providing analysts and investors with additional information they can use to evaluate the impacts of our hedging strategies over time. The following tables present a reconciliation of the GAAP financial measure of Net Income (loss) attributable to Talos Energy Inc. to EBITDA, Adjusted EBITDA, Adjusted EBITDA attributable to Talos Energy Inc., Adjusted EBITDA attributable to Talos Energy Inc. excluding hedges for each of the periods indicated (in thousands): Reconciliation of Adjusted EBITDA attributable to Talos Energy Inc. to Adjusted Free Cash Flow attributable to Talos Energy Inc. and Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow attributable to Talos Energy Inc. "Adjusted Free Cash Flow attributable to Talos Energy Inc." before changes in working capital provides management and investors with (i) important supplemental indicators of the operational performance of our business, (ii) additional criteria for evaluating our performance relative to our peers and (iii) supplemental information to investors about certain material non-cash and/or other items that may not continue at the same level in the future. Adjusted Free Cash Flow attributable to Talos Energy Inc. has limitations as an analytical tool and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP or as alternatives to net income (loss), net income (loss) attributable to Talos Energy Inc., operating income (loss) or any other measure of financial performance presented in accordance with GAAP. We define these as the following: Capital Expenditures and Plugging & Abandonment. Actual capital expenditures and plugging & abandonment recognized in the quarter, inclusive of accruals. Interest Expense. Actual interest expense per the income statement. Talos did not pay any cash income taxes in the period, therefore cash income taxes have no impact to the reported Adjusted Free Cash Flow attributable to Talos Energy Inc. before changes in working capital number. Reconciliation of Net Income (Loss) attributable to Talos Energy Inc. to Adjusted Net Income (Loss) attributable to Talos Energy Inc. and Adjusted Earnings per Share "Adjusted Net Income (Loss) attributable to Talos Energy Inc." and "Adjusted Earnings per Share" are to provide management and investors with (i) important supplemental indicators of the operational performance of our business, (ii) additional criteria for evaluating our performance relative to our peers and (iii) supplemental information to investors about certain material non-cash and/or other items that may not continue at the same level in the future. Adjusted Net Income (Loss) attributable to Talos Energy Inc. and Adjusted Earnings per Share have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP or as an alternative to net income (loss), net income (loss) attributable to Talos Energy Inc., operating income (loss), earnings per share or any other measure of financial performance presented in accordance with GAAP. Adjusted Net Income (Loss) attributable to Talos Energy Inc. Net income (loss) attributable to Talos Energy Inc. plus impairment of oil and natural gas properties, transaction related costs, derivative fair value (gain) loss, net cash receipts (payments) on settled derivative instruments, income tax expense (benefit) and non-cash equity-based compensation expense. Adjusted Earnings per Share. Adjusted Net Income (Loss) attributable to Talos Energy Inc. divided by the number of common shares. Reconciliation of Total Debt to Net Debt and Net Debt to LTM Adjusted EBITDA attributable to Talos Energy Inc. We believe the presentation of Net Debt, LTM Adjusted EBITDA attributable to Talos Energy Inc. and Net Debt to LTM Adjusted EBITDA attributable to Talos Energy Inc. is important to provide management and investors with additional important information to evaluate our business. These measures are widely used by investors and ratings agencies in the valuation, comparison, rating and investment recommendations of companies. Net Debt. Total Debt principal minus cash and cash equivalents. Net Debt to LTM Adjusted EBITDA attributable to Talos Energy Inc. Net Debt divided by the LTM Adjusted EBITDA attributable to Talos Energy Inc. View original content to download multimedia:https://www.prnewswire.com/news-releases/talos-energy-announces-second-quarter-2026-operational-and-financial-results-302842964.html

Talos Energy (TALO) came out with quarterly earnings of $0.57 per share, beating the Zacks Consensus Estimate of $0.34 per share. This compares to a loss of $0.27 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +67.65%. A quarter ago, it was expected that this independent oil and gas company would post a loss of $0.09 per share when it actually produced a loss of $0.07, delivering a surprise of +22.22%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Talos Energy, which belongs to the Zacks Oil and Gas - Exploration and Production - United States industry, posted revenues of $664.81 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 17.39%. This compares to year-ago revenues of $424.72 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Talos Energy shares have added about 34.9% since the beginning of the year versus the S&P 500's gain of 11%. While Talos Energy has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Talos Energy was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.15 on $532.39 million in revenues for the coming quarter and $0.67 on $2.17 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Oil and Gas - Exploration and Production - United States is currently in the bottom 13% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Chord Energy Corporation (CHRD), another stock in the same industry, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This company is expected to post quarterly earnings of $6.68 per share in its upcoming report, which represents a year-over-year change of +273.2%. The consensus EPS estimate for the quarter has been revised 10.8% lower over the last 30 days to the current level. Chord Energy Corporation's revenues are expected to be $1.43 billion, up 20.8% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Talos Energy Inc. (TALO) : Free Stock Analysis Report Chord Energy Corporation (CHRD) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in TAL Education Group? Here are five stocks we like better. TAL reported strong first-quarter fiscal 2027 results: Revenue rose 25% year over year to RMB5.19 billion, while non-GAAP operating income jumped 492% and the operating margin expanded to 19.6%. Non-GAAP net income reached $420 million, up from $42 million a year earlier. Offline Peiyou programs remained the largest growth driver, delivering double-digit growth with retention above 80%. TAL operates more than 600 learning centers across 44 mainland Chinese cities and select international markets. Learning-device revenue and profitability improved, with weekly active devices exceeding 2 million, though management expects competition, consumer sentiment and higher component costs to keep the market volatile. TAL also extended its share-repurchase program, authorizing up to $393.7 million in buybacks through July 2027. Talos Energy: Time to Take a Plunge Ahead of New CEO Appointment? TAL Education Group (NYSE:TAL) reported first-quarter fiscal 2027 revenue growth and a substantial improvement in profitability, supported by its offline Peiyou learning programs, learning-device business and lower sales and marketing expenses. The company reported revenue of RMB5.19 billion for the quarter, up 25% year over year in RMB terms. Management cited different U.S. dollar revenue figures during the call: President and Chief Financial Officer Alex Peng said net revenue was $758 million, while Deputy Chief Financial Officer Jackson Ding cited $658 million. Both figures were associated with RMB5.19 billion and 32% year-over-year growth in U.S. dollar terms. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now Top 4 Stocks With Notable Insider Buying Non-GAAP income from operations rose 492% year over year to $149 million, while the non-GAAP operating margin increased to 19.6% from 4.4% a year earlier. Net income attributable to TAL was $408 million, compared with $31 million in the prior-year period, and non-GAAP net income attributable to TAL reached $420 million, up from $42 million. Peng said the company’s offline Peiyou learning programs continued to post healthy growth, with the business delivering double-digit year-over-year growth during the quarter. Peiyou remains TAL’s largest revenue contributor, Ding said. → Microsoft Just Flipped the AI Spending Narrative Overnight TAL attributed the performance to steady demand, service quality, user recognition and its network of learning centers. The company operates in 44 cities in mainland China and select international markets, with more than 600 learning centers in total. Peiyou retention remained above 80% in the first quarter, consistent with the prior year, Peng said. The company is continuing to expand its learning-center network at what management described as a measured pace, focusing on local demand, user receptivity, organizational capabilities and business health. → Carrier Earnings Could Send the Stock to a New All-Time High Management said it was strengthening classroom technology, including its dual smart large- and small-screen system. Peng said the smaller screens allow students to participate in interactive learning games, earn points and record performance throughout lessons. Looking ahead, Peng said TAL expects offline Peiyou programs to grow at a healthy pace over the longer term, citing demand for offline learning and a fragmented market. TAL said revenue from learning devices increased year over year, while the business also improved its bottom-line performance. The company launched its T6 series of learning tablets in July, featuring upgrades to AI capabilities, content and hardware. The T6 series includes an AI learning companion for recorded courses that offers pre-class guidance, real-time feedback, post-class summaries, question-and-answer support, diagnostics, study plans and AI-generated notes, according to management. Weekly active learning devices exceeded 2 million during the quarter. The weekly active rate was around 80%, and users averaged about one hour of daily active usage per device, Peng said. Management acknowledged that the learning-device market faces heightened competition, changing consumer sentiment and rising component costs, including higher memory-chip costs. TAL said it has responded by optimizing inventory, streamlining stock-keeping units and refining its product portfolio. The company expects market volatility to persist through fiscal 2027. Cost of revenue rose 23% year over year to $320 million, while gross profit increased 39% to $438 million. Gross margin expanded to 57.8% from 54.9% a year earlier. Selling and marketing expense declined 5% to $172 million, falling to 22% of revenue from 31% in the prior-year period. General and administrative expense increased 7% to $129 million but declined as a share of revenue to 16% from 20%. As of May 31, 2026, TAL held approximately $1.6 billion in cash and cash equivalents, $1.2 billion in short-term investments and $306 million in restricted cash. Deferred revenue totaled approximately $1.2 billion, while operating cash flow was $478 million for the quarter. Ding said increased valuations of some investment holdings were the primary driver of higher other income during the period, cautioning that such gains were driven by market movements and may not recur. The board extended TAL’s share-repurchase program for 12 months in July. The company may repurchase up to approximately $393.7 million of common shares through July 28, 2027. Between April 23 and July 28, TAL repurchased approximately 1.2 million shares for about $41 million. For fiscal 2027, management said it expects revenue growth to moderate as the business scales, while continuing to pursue improved operating margin, disciplined execution and sustainable profitability. TAL Education Group is a leading provider of after-school tutoring services in China, specializing in K-12 academic instruction. The company offers a range of programs designed to help primary and secondary school students strengthen their core competencies in subjects such as mathematics, English, Chinese language and science. TAL leverages both in-person learning centers and digital platforms to deliver its curriculum, aiming to support student progress through interactive lessons and personalized study plans. Founded in 2003 and headquartered in Beijing, TAL Education Group has grown into one of China's largest private education firms. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "TAL Education Group Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.