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Talos Energy Inc (TALO)
NYSE:TALO
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Talos Energy
(NYSE:TALO)
64Neutral
Positive Factors
Operational Performance
Continued execution strength in operations and efficiencies with the West Vela rig can drive increased investor confidence in the stock.
Resource Potential
TALO management noted 25-35 MMboe of additional potential resource in the Wilcox trend from a prospective drilling.
Negative Factors
Cash Flow
A cautious view of oil fundamentals and a less attractive free cash flow profile at current strip prices keep the recommendation at Neutral.
Leadership Changes
The recent departure of interim CEO Mr. Mills that followed the exit of founder-CEO Mr. Duncan in August 2024 has increased investor concerns about the strategic outlook for the company.
Talos Energy (TALO) vs. S&P 500 (SPY)
Market Cap
$1.65B
Dividend YieldN/A
Average Volume (3M)1.82M
Price to Earnings (P/E)16.9
Beta (1Y)0.80
Revenue Growth35.37%
EPS Growth-131.25%
CountryUS
Employees600
SectorEnergy
Sector Strength85
IndustryFossil Fuels
Share Statistics
EPS (TTM)-0.51
Shares Outstanding180,059,520
10 Day Avg. Volume1,717,068
30 Day Avg. Volume1,815,254
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.84
Price to Cash Flow (P/CF)1.20
P/FCF Ratio1.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$15.50Price Target Upside69.21% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
Talos Energy Business Overview & Revenue Model
Company DescriptionTalos Energy (TALO) is a Houston-based independent energy company focused on the exploration, development, and production of oil and natural gas properties. Operating primarily in the United States Gulf of Mexico and offshore Mexico, Talos Energy leverages proprietary seismic data and advanced drilling technologies to identify and exploit hydrocarbon reserves. The company is committed to efficient operations and sustainable practices, integrating environmental and safety considerations into its business model.
How the Company Makes MoneyTalos Energy generates revenue primarily through the production and sale of oil and natural gas. The company's key revenue streams come from the sale of extracted hydrocarbons to refineries and other processing facilities. Talos Energy utilizes advanced geological and geophysical technologies to identify potential drilling sites, and it engages in both exploratory and developmental drilling to expand its reserve base. Additionally, Talos Energy may enter into strategic partnerships and joint ventures to enhance its operational capabilities and access new resources. Market prices for crude oil and natural gas significantly influence the company's earnings, alongside its ability to manage production costs and optimize resource extraction.
Talos Energy Financial Statement Overview
Summary
Talos Energy shows strong revenue growth and cash flow generation, crucial for sustaining operations and funding future growth. However, challenges with profitability and return on equity may impact long-term value creation. Maintaining revenue growth while improving cost controls and profitability will be key to enhancing financial health.Income Statement
Talos Energy has shown a robust revenue growth rate of 35.3% from 2023 to 2024, indicating a strong upward trajectory in its revenue generation. However, the net profit margin is negative at -3.87%, reflecting a current struggle with profitability despite a high gross profit margin of 100%. This suggests efficiency in production but challenges in controlling other expenses.65
Positive
Balance Sheet
The balance sheet highlights a stable equity position with a debt-to-equity ratio of 0.45, indicating manageable leverage. The equity ratio stands at 44.57%, suggesting a strong equity base relative to total assets. However, the company's return on equity is negative at -2.77%, pointing toward inefficiencies in generating returns for shareholders.70
Positive
Cash Flow
Talos Energy has achieved significant free cash flow growth, moving from negative free cash flow in 2023 to a positive $962 million in 2024, indicating improved cash management. The operating cash flow to net income ratio is high at 12.60, reflecting strong cash generation relative to accounting profits.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.97B | 1.46B | 1.65B | 1.24B | 575.94M | Gross Profit |
| 382.59M | 402.28M | 925.77M | 561.58M | -36.03M | EBIT |
| 172.93M | 209.79M | 736.12M | 374.62M | -150.38M | EBITDA |
| 1.26B | 1.05B | 966.11M | 402.67M | 83.48M | Net Income Common Stockholders |
| -76.39M | 187.33M | 381.92M | -182.95M | -465.61M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 108.17M | 33.64M | 44.15M | 69.85M | 34.23M | Total Assets |
| 6.19B | 4.82B | 3.06B | 2.77B | 2.83B | Total Debt |
| 1.24B | 1.20B | 602.14M | 980.77M | 1.01B | Net Debt |
| 1.13B | 1.16B | 557.99M | 910.92M | 971.63M | Total Liabilities |
| 3.43B | 2.66B | 1.89B | 2.01B | 1.91B | Stockholders Equity |
| 2.76B | 2.16B | 1.17B | 760.65M | 926.60M |
| Cash Flow | Free Cash Flow | |||
| 962.59M | -54.73M | 386.57M | 118.06M | -61.02M | Operating Cash Flow |
| 962.59M | 519.07M | 709.74M | 411.39M | 301.92M | Investing Cash Flow |
| -1.32B | -512.63M | -311.98M | -293.75M | -678.90M | Financing Cash Flow |
| 436.12M | 85.41M | -423.47M | -82.02M | 324.19M |
Talos Energy Technical Analysis
Neutral
9.16
Price Trends
9.43
Negative
9.97
Negative
10.57
Negative
Market Momentum
-0.09
Negative
54.20
Neutral
92.64
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TALO, the sentiment is Neutral. The current price of 9.16 is above the 20-day moving average (MA) of 8.70, below the 50-day MA of 9.43, and below the 200-day MA of 10.57, indicating a neutral trend. The MACD of -0.09 indicates Negative momentum. The RSI at 54.20 is Neutral, neither overbought nor oversold. The STOCH value of 92.64 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TALO.
Talos Energy Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $6.45B | 7.22 | 19.67% | 1.87% | 23.47% | 0.80% | |
71 Outperform | $3.51B | 4.60 | 19.62% | 2.48% | 13.33% | -2.72% | |
70 Neutral | $2.98B | 5.86 | 23.82% | 5.45% | 29.45% | -48.29% | |
64 Neutral | $1.65B | 16.92 | -3.11% | ― | 35.37% | -131.25% | |
57 Neutral | $8.68B | 5.51 | -6.00% | 7.48% | -0.09% | -74.90% | |
50 Neutral | $5.83B | ― | -9.51% | 0.66% | -22.76% | -199.21% |
* Energy Sector Average
Performance Comparison
TALO
Talos Energy
9.16
-4.43
-32.60%
CRK
Comstock Resources
19.92
11.35
132.44%
MTDR
Matador Resources
51.51
-15.89
-23.58%
NOG
Northern Oil And Gas
30.11
-7.67
-20.30%
SM
SM Energy
30.67
-18.14
-37.16%
Talos Energy Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: 5.53% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Positive
Talos Energy Inc. reported strong financial and operational performance in 2024, with record production and successful debt reduction. The company also demonstrated operational efficiency in its drilling program and maintained a strong safety record. While the 2025 outlook includes planned downtime and potential weather-related risks, the company's financial health and strategic acquisitions position it well for future growth. The leadership transition may bring changes in strategic direction, but the overall sentiment of the call remains positive.Highlights
Strong Financial Performance
Talos Energy Inc. reported record EBITDA of $362 million for the fourth quarter, with an EBITDA netback margin of about $40 per barrel of oil equivalent. The company also achieved record production of 98.7 thousand barrels of oil equivalent per day in Q4 2024.
Debt Reduction and Cash Position
The company fully repaid its credit facility in 2024, reducing its leverage ratio to 0.8 times net debt to EBITDA, and ended the year with a cash position of $108 million.
Successful Drilling Operations
The drilling of the Katmai West number two well was completed 35% under budget and over a month ahead of schedule, demonstrating operational efficiency.
Reserves and Acquisition Impact
Talos Energy Inc.'s proved reserves increased to 194 million barrels of oil equivalent, with a PV-10 value of $4.2 billion. The acquisition of QuarterNorth in 2024 added more scale and infrastructure to the company's portfolio.
Safety and Regulatory Compliance
The company maintained an outstanding safety record with approximately 6.6 million man-hours worked and completed 3 million man-hours since the last reportable incident.
Lowlights
Planned Downtime and Maintenance
Several large maintenance projects are scheduled for 2025, which are expected to reduce production rates for the year.
Weather and Unplanned Downtime Risks
Production guidance for 2025 accounts for potential weather-related downtime such as hurricanes and loop current shut-ins, which could impact production rates.
Leadership Transition
The company is undergoing a leadership transition with the incoming CEO Paul Goodfellow, which may impact strategic priorities and operational focus.
Company Guidance
During the Talos Energy Inc. Fourth Quarter 2024 Earnings Conference Call, the company provided guidance for 2025, expecting to invest between $500 million and $540 million, with a production forecast of 90,000 to 95,000 barrels of oil equivalent per day, comprising approximately 69% oil and 79% liquids. They plan to allocate $100 million to $120 million for plugging and abandonment activities. The company achieved a record EBITDA of $362 million in Q4 2024 and generated a total annual EBITDA of $1.3 billion. Talos Energy Inc. concluded 2024 with a leverage ratio of 0.8 times net debt to EBITDA, having reduced total debt by $550 million over the year. The company anticipates significant free cash flow in 2025, similar to the $511 million recorded in 2024, and ended the year with a cash position of $108 million.Talos Energy Corporate Events
Executive/Board ChangesM&A TransactionsBusiness Operations and StrategyFinancial Disclosures
Talos Energy Reports 2024 Losses and CEO Transition
Negative
Feb 27, 2025
On February 26, 2025, Talos Energy announced its operational and financial results for the fourth quarter and full year of 2024, reporting a net loss of $64.5 million for the quarter and $76.4 million for the year. Despite the losses, the company achieved significant operational milestones, including successful drilling at the Katmai West field and the commencement of completion operations at Sunspear. Talos also announced a leadership transition with Paul Goodfellow set to become the new CEO, and a strategic sale of a 30.1% interest in Talos Mexico to Grupo Carso, expected to close in 2025.
Executive/Board ChangesBusiness Operations and Strategy
Talos Energy Appoints Paul Goodfellow as CEO
Positive
Feb 3, 2025
On February 3, 2025, Talos Energy announced the appointment of Paul Goodfellow as President, Chief Executive Officer, and a member of the Board of Directors, effective March 1, 2025. Goodfellow brings over thirty years of experience in the oil and natural gas industry, having held significant roles at Shell, including leading its global deepwater business. Under his leadership, Talos plans to leverage its strengths in deepwater exploration to enhance shareholder value.
Executive/Board ChangesBusiness Operations and Strategy
Talos Energy CEO Resignation and 2024 Production Guidance
Neutral
Jan 10, 2025
Talos Energy announced the resignation of Joseph Mills as Interim President and CEO, with a permanent CEO expected by the end of the first quarter in 2025. The company reaffirmed its 2024 production guidance, maintaining expectations of 91.0–94.0 thousand barrels of oil equivalent per day, and emphasized that Mills’ departure was not due to operational or accounting issues.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.