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Talos Energy Inc (TALO)
NYSE:TALO
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Talos Energy
(NYSE:TALO)
66Neutral
Positive Factors
Operational Strength
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.
Strategic Leadership
The new CEO, Paul R. Goodfellow, brings over 34 years of experience from Shell, which is expected to provide strategic clarity to the company.
Negative Factors
Free Cash Flow Concerns
A cautious view of oil fundamentals and a less attractive free cash flow profile at current strip prices keep the recommendation at Neutral.
Leadership Concerns
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
$1.45B
Dividend YieldN/A
Average Volume (3M)2.15M
Price to Earnings (P/E)56.8
Beta (1Y)0.98
Revenue Growth31.40%
EPS Growth92.89%
CountryUS
Employees700
SectorEnergy
Sector Strength51
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)0.06
Shares Outstanding178,455,140
10 Day Avg. Volume2,133,675
30 Day Avg. Volume2,152,661
Financial Highlights & Ratios
PEG Ratio0.19
Price to Book (P/B)0.62
Price to Sales (P/S)0.00
P/FCF Ratio1.78
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$12.33Price Target Upside52.22% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
Talos Energy Business Overview & Revenue Model
Company DescriptionTalos Energy Inc., an independent exploration and production company, focuses on the exploration and production of oil and natural gas properties in the United States Gulf of Mexico and offshore Mexico. As of December 31, 2021, the company had proved reserves of 161.59 million barrels of oil equivalent, consisting of 107,764 thousand barrels of crude oil, 236,353 million cubic feet of natural gas, and 14,435 thousand barrels of crude oil. The company was founded in 2011 and is based in Houston, Texas.
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
Positive
8.10
Price Trends
8.07
Positive
8.90
Negative
9.95
Negative
Market Momentum
-0.10
Negative
57.17
Neutral
59.06
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TALO, the sentiment is Positive. The current price of 8.1 is above the 20-day moving average (MA) of 7.29, above the 50-day MA of 8.07, and below the 200-day MA of 9.95, indicating a neutral trend. The MACD of -0.10 indicates Negative momentum. The RSI at 57.17 is Neutral, neither overbought nor oversold. The STOCH value of 59.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TALO.
Talos Energy Peers Comparison
Overall Rating
UnderperformOutperform
Sector (56)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $1.74B | 5.36 | 10.33% | 2.10% | -7.42% | -26.06% | |
68 Neutral | $1.15B | 13.73 | 5.44% | 1.75% | -3.77% | -57.93% | |
66 Neutral | $1.45B | 56.76 | 0.95% | ― | 31.40% | 92.89% | |
66 Neutral | $991.01M | 11.91 | 5.64% | ― | 0.34% | ― | |
60 Neutral | $1.55B | 40.90 | 2.90% | 7.00% | 77.72% | -75.78% | |
56 Neutral | $7.06B | 3.68 | -4.87% | 5.83% | 0.28% | -51.94% | |
51 Neutral | $1.73B | ― | -13.36% | ― | 2.24% | -919.48% |
* Energy Sector Average
Performance Comparison
TALO
Talos Energy
8.10
-4.31
-34.73%
HLX
Helix Energy
6.54
-4.82
-42.43%
BTU
Peabody Energy Comm
14.29
-7.70
-35.02%
HPK
HighPeak Energy
9.14
-4.69
-33.91%
AESI
Atlas Energy Solutions
12.57
-9.03
-41.81%
BKV
BKV Corporation
20.47
2.42
13.41%
Talos Energy Earnings Call Summary
Earnings Call Date:May 05, 2025
(Q1-2025)
| % Change Since: 14.57%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Positive
Talos Energy reported a strong financial and operational performance with record production, free cash flow, and increased share repurchase authorization. However, there are concerns about potential impacts from planned maintenance, tieback operations, and lower oil prices. The company remains well-positioned with robust hedging and liquidity strategies.Q1-2025 Updates
Positive Updates
Record Production and Free Cash Flow
Talos Energy achieved record production of 100.9 thousand barrels of oil equivalent per day and a record free cash flow of $195 million for the first quarter of 2025.
Strong Financial Performance
Reported a record EBITDA of $363 million with an EBITDA netback margin of about $40 per barrel of oil equivalent.
Increased Stock Repurchase Authorization
Board approved an increase in stock repurchase authorization to $200 million, with plans to allocate up to 50% of annual free cash flow to share buybacks.
Operational Progress in Drilling Program
Completion operations concluded successfully at Sunspear discovery and near completion at Katmai West number 2, with first production expected in late Q2 2025.
Strong Cash and Liquidity Position
Maintained leverage ratio of 0.8, built cash balance to approximately $203 million, and improved liquidity to approximately $960 million.
Effective Hedging Strategy
Approximately 42% of 2025 oil production hedged at prices over $72 per barrel, supporting cash flow stability.
Negative Updates
Planned Maintenance and Downtime
Scheduled maintenance and tieback operations expected to impact production, with a projected production range of 90,000 to 95,000 barrels of oil equivalent per day for 2025.
Potential Impact of Lower Oil Prices
Flexibility to postpone certain projects if oil prices decline further, although projects remain economic at approximately $35 per barrel of oil.
Company Guidance
During the Talos Energy First Quarter 2025 Earnings Conference Call, the company provided robust financial guidance, highlighting several key metrics. Talos achieved record production of 100.9 thousand barrels of oil equivalent per day, marking their fifth consecutive quarter of record output. This production was composed primarily of 68% oil, with liquids, including NGLs, making up 78%. Financially, the company reported a record EBITDA of $363 million, translating to an EBITDA netback margin of approximately $40 per barrel. Capital expenditures for the quarter totaled $118 million, with an additional $10 million allocated to plugging and abandonment activities. The quarter's free cash flow reached a record $195 million. Talos also maintained a leverage ratio of 0.8 and improved its liquidity to approximately $960 million, with a cash balance of $203 million. The Board approved an increase in stock repurchase authorization to $200 million, with plans to allocate up to 50% of annual free cash flow to share buybacks. Guidance for 2025 reaffirms production expectations of between 90,000 and 95,000 barrels of oil equivalent per day, with 69% anticipated to be oil. Capital expenditures for the year are projected to be between $500 million and $540 million, alongside $100 million to $120 million for plugging and abandonment activities.Talos Energy Corporate Events
Business Operations and StrategyFinancial Disclosures
Talos Energy Reports Q1 2025 Results, Net Loss $9.9M
Neutral
May 6, 2025
On May 5, 2025, Talos Energy announced its first quarter 2025 operational and financial results, reporting a production rate of 100.9 MBoe/d and a net loss of $9.9 million. The company completed well operations on the Sunspear discovery and initiated operations on the Katmai West #2 well, with both expected to begin production by late second quarter 2025. Talos maintained a strong balance sheet with significant cash reserves and an undrawn credit facility, allowing flexibility in capital budgeting and share repurchase plans. The company also increased its interest in the Monument discovery and plans to commence drilling on the Daenerys prospect, highlighting its strategic focus on expanding resource potential.
Spark’s Take on TALO Stock
According to Spark, TipRanks’ AI Analyst, TALO is a Neutral.
Talos Energy’s overall stock score reflects strong revenue and cash flow generation but is tempered by profitability challenges. The technical analysis indicates bearish trends, although the earnings call was positive with operational and strategic strengths highlighted. The company’s valuation metrics suggest a need for improved profitability, and recent corporate events like the CEO transition introduce potential strategic changes. Overall, the stock reflects moderate potential with key areas to watch for improvement.
To see Spark’s full report on TALO stock, click here.
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.
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.