Talos Energy Swings to Q1 Adjusted Earnings, Revenue Rises

Houston, TX — May 2025 — Talos Energy (NYSE: TALO) has delivered a compelling first quarter performance, marking a significant turnaround in its financial trajectory. The company reported adjusted earnings of $10.5 million, a stark reversal from a $90.2 million adjusted net loss in Q1 2024, while revenue surged 19.3% year-over-year to $513.1 million. This momentum underscores Talos’s transition to a financially resilient exploration and production (E&P) firm, driven by operational execution, cost discipline, and strategic capital allocation.

Operational Strength Fuels the Turnaround

Talos’s record production of 100.9 thousand barrels of oil equivalent per day (MBoe/d), with 68% oil and 78% liquids, highlights its focus on high-margin assets. Key projects are set to bolster output further:
- The Sunspear discovery and Katmai West #2 well, both expected online by late Q2, could add 8–10 MBoe/d and up to 50 MMBoe of proved reserves, respectively.
- The Daenerys prospect, targeting 100–300 MMBoe, will begin drilling late this quarter, leveraging the West Vela drillship.
- The Monument discovery, where Talos increased its stake to 29.76%, is poised to produce 20–30 MBoe/d by late 2026, with potential extensions.

These initiatives align with full-year production guidance of 90.0–95.0 MBoe/d, underpinning Talos’s growth trajectory.

Financial Resilience and Liquidity

Despite a reported net loss of $9.9 million (vs. $112.4 million in Q1 2024), Talos’s Adjusted EBITDA of $363 million and Adjusted Free Cash Flow of $194.5 million reveal robust cash generation. Key financial metrics:
- Liquidity: $960.2 million, including $203 million in cash and a fully undrawn $800 million credit facility.
- Leverage: Net Debt to LTM Adjusted EBITDA of 0.8x, signaling financial flexibility.
- Hedging: 42% of 2025 oil production is hedged at a $72/ barrel floor, with a mark-to-market value of $120 million as of April 30.

This hedging strategy ensures Talos can maintain positive free cash flow even at $40/barrel oil prices, a critical buffer in volatile markets.

Strategic Capital Allocation and Shareholder Returns

Talos has prioritized disciplined capital spending, reaffirming its $500–540 million 2025 CapEx budget, excluding acquisitions. Management emphasized allocating up to 50% of annual free cash flow to share repurchases, with a $200 million authorization (remaining balance: $178 million). In Q1 alone, the company repurchased 2.3 million shares for $22 million, signaling confidence in its valuation.

Risks and Considerations

• Commodity Prices: While hedges provide downside protection, prolonged sub-$70 oil could strain margins.
• Operational Execution: Timely startup of key projects like Daenerys and Monument is critical to meeting guidance.
• Regulatory and Environmental: Ongoing compliance costs and hurricane risks in the Gulf of Mexico remain headwinds.

Conclusion: A Firm Foundation for Growth

Talos Energy’s Q1 results mark a decisive shift toward financial sustainability. With production at record levels, a fortress balance sheet, and a hedging strategy that insulates against price swings, the company is well-positioned to capitalize on its high-potential Gulf of Mexico assets. The 19.3% revenue growth, 91% reduction in net loss, and $960 million liquidity collectively signal a maturing E&P player capable of delivering shareholder value even in challenging conditions.

Investors should monitor execution of the Daenerys and Monument projects, which could unlock up to 300 MMBoe of additional resources, and the company’s ability to sustain $40/barrel resilience. Talos’s focus on cost discipline, exploration upside, and shareholder returns positions it as a compelling play in the energy sector, particularly for those seeking exposure to a financially resilient operator with growth catalysts on the horizon.

TALO’s performance reflects not just a recovery, but a strategic evolution—one that could redefine its role in the U.S. deepwater landscape.