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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Talos Energy Inc | NYSE:TALO | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.26 | -2.12% | 11.99 | 12.269 | 11.96 | 12.18 | 958,119 | 22:03:47 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
(Address of principal executive offices, including zip code)
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01. Regulation FD Disclosure
On January 23, 2024, Talos Production Inc. (the “Issuer”), a Delaware corporation and a wholly owned subsidiary of Talos Energy Inc., a Delaware corporation (the “Company”), commenced an offering for the sale of $1,000 million in aggregate principal amount of second-priority senior secured notes, consisting of second-priority senior secured notes due 2029 and second-priority senior secured notes due 2031, in a private offering to eligible purchasers that is exempt from registration under the Securities Act of 1933, as amended (the “Securities Act,” and such offering, the “Offering”).
In connection with the Offering, the Company disclosed certain information relating to the Company, the Issuer and its pending acquisition of QuarterNorth Energy Inc. to prospective investors in a preliminary offering memorandum, dated January 23, 2024 (the “Preliminary Offering Memorandum”), excerpts of which are furnished herewith pursuant to Regulation FD, in the general form presented in the Preliminary Offering Memorandum, as Exhibit 99.1 to this Current Report on Form 8-K and are incorporated herein by reference.
The information above is being furnished pursuant to this Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act, or the Exchange Act, unless specifically identified therein as being incorporated therein by reference.
Item 8.01. Other Events.
On January 23, 2024, the Company issued a press release announcing the Offering in accordance with Rule 135c under the Securities Act.
A copy of the press release is attached as Exhibit 99.2 to this report and incorporated by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
Description | |
99.1 | Excerpts from Preliminary Offering Memorandum of the Company, dated January 23, 2024. | |
99.2 | Press Release, dated January 23, 2024. | |
104 | Cover Page Interactive Data File (embedded within Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: January 23, 2024 | ||||||
TALOS ENERGY INC. | ||||||
By: | /s/ William S. Moss III | |||||
Name: | William S. Moss III | |||||
Title: | Executive Vice President, General Counsel and Secretary |
Exhibit 99.1
EXCERPTS FROM THE PRELIMINARY OFFERING MEMORANDUM,
DATED JANUARY 23, 2024
As used in this Exhibit 99.1, the terms we, us and our refer to Talos Energy Inc. and its consolidated subsidiaries, and not to QuarterNorth and its subsidiaries, unless context suggests otherwise. The term QuarterNorth refers to QuarterNorth Energy Inc., and the term QuarterNorth Acquisition refers to the transactions contemplated by the definitive agreement that we entered into on January 13, 2024 to acquire QuarterNorth. The term EnVen Acquisition refers to the business combination whereby, among other things, EnVen Energy Corporation merged with and into Talos Production Inc., with Talos Production Inc. surviving the merger.
Our Competitive Strengths
Oil-Weighted, Predominantly Operated Production Base. Our reserves and production are primarily oil-weighted, and we operate approximately 75% of our production for the quarter ended September 30, 2023. For the quarter ended September 30, 2023, our production was approximately 76% oil.
Non-GAAP Financial Measures
QuarterNorth Historical (in thousands) | Three Months Ended September 30, 2023 |
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Net income (loss) |
$ | 29,968 | ||
Interest expense |
3,574 | |||
Income tax expense (benefit) |
7,430 | |||
Depreciation, depletion and amortization |
56,343 | |||
Accretion expense |
127 | |||
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EBITDA |
97,442 | |||
Write-down of oil and natural gas properties |
| |||
Transaction and other (income) expense(1) |
(2,774 | ) | ||
Decommissioning obligations |
| |||
Derivative fair value (gain) loss(2) |
67,347 | |||
Net cash received (paid) on settled derivative instruments(2) |
(8,896 | ) | ||
(Gain) loss on debt extinguishment |
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Non-cash write-down of other well equipment inventory |
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Non-cash equity-based compensation expense |
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Adjusted EBITDA |
$ | 153,119 | ||
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(1) | Other income (expense) includes restructuring expenses, cost saving initiatives and other miscellaneous income and expenses that we do not view as a meaningful indicator of our operating performance. For the three months ended September 30, 2023, transaction expenses include $3.3 million in costs related to the QuarterNorth Acquisition incurred by QuarterNorth. |
(2) | The adjustments for the derivative fair value (gains) losses and net cash receipts (payments) on settled commodity derivative instruments have the effect of adjusting net loss for changes in the fair value of derivative instruments, which are recognized at the end of each accounting period because we do not designate commodity derivative instruments as accounting hedges. This results in reflecting commodity derivative gains and losses within Adjusted EBITDA on an unrealized basis during the period the derivatives settled. |
Summary Reserve and Operating Data
The following tables summarize our historical and pro forma production and operating data for the periods ended on the dates indicated below.
Historical | Pro Forma(1) | |||||||||||||||||||||||||||
Year Ended December 31, |
Nine Months Ended September 30, |
Year Ended December 31, |
Nine Months Ended September 30, |
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2022 | 2021 | 2020 | 2023 | 2022 | 2022 | 2023 | ||||||||||||||||||||||
Production Volumes: |
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Oil (MBbl) |
14,561 | 16,159 | 13,665 | 13,358 | 11,020 | 29,169 | 19,870 | |||||||||||||||||||||
Natural gas (MMcf) |
32,215 | 32,795 | 28,652 | 19,769 | 24,746 | 49,825 | 29,237 | |||||||||||||||||||||
NGLs (MBbl) |
1,793 | 1,875 | 1,559 | 1,318 | 1,372 | 2,787 | 1,872 | |||||||||||||||||||||
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Total production volume (MBoe) |
21,723 | 23,500 | 19,999 | 17,971 | 16,516 | 40,261 | 26,615 | |||||||||||||||||||||
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Average Net Daily Production Volumes: |
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Oil (MBbl/d) |
39.9 | 44.3 | 37.3 | 48.9 | 40.4 | 79.9 | 72.8 | |||||||||||||||||||||
Natural gas (MMcf/d) |
88.3 | 89.8 | 78.3 | 72.4 | 90.6 | 136.5 | 107.1 | |||||||||||||||||||||
NGLs (MBbl/d) |
4.9 | 5.1 | 4.3 | 4.8 | 5.0 | 7.6 | 6.9 | |||||||||||||||||||||
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Total average net daily (MBoe/d) |
59.5 | 64.4 | 54.7 | 65.8 | 60.5 | 110.3 | 97.5 | |||||||||||||||||||||
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Average Sales Price (excluding commodity derivatives)(2): |
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Oil ($/Bbl) |
93.75 | 65.86 | 37.09 | 74.49 | 97.89 | 93.15 | 75.08 | |||||||||||||||||||||
Natural gas ($/Mcf) |
7.06 | 3.98 | 1.87 | 2.70 | 7.34 | 7.18 | 2.75 | |||||||||||||||||||||
NGLs ($/Bbl) |
33.20 | 26.54 | 9.90 | 18.56 | 35.88 | 35.89 | 20.71 | |||||||||||||||||||||
Average realized price ($/Boe) |
76.05 | 52.96 | 28.80 | 59.70 | 79.30 | 78.86 | 60.53 | |||||||||||||||||||||
Revenues (in thousands): |
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Oil |
$ | 1,365,148 | $ | 1,064,161 | $ | 506,788 | $ | 995,081 | $ | 1,078,800 | $ | 2,717,174 | $ | 1,491,839 | ||||||||||||||
Natural gas |
227,306 | 130,616 | 53,714 | 53,383 | 181,747 | 357,700 | 80,304 | |||||||||||||||||||||
NGLs |
59,526 | 49,763 | 15,434 | 24,463 | 49,232 | 100,018 | 38,764 | |||||||||||||||||||||
Other |
| | | | | 22,787 | 18,005 | |||||||||||||||||||||
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Total revenue |
$ | 1,651,980 | $ | 1,244,540 | $ | 575,936 | $ | 1,072,927 | $ | 1,309,779 | $ | 3,197,679 | $ | 1,628,912 | ||||||||||||||
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Operating Expenses (in thousands): |
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Lease operating expense |
$ | 308,092 | $ | 283,601 | $ | 246,564 | $ | 286,075 | $ | 229,156 | 566,920 | $ | 426,360 | |||||||||||||||
Production taxes |
3,488 | 3,363 | 1,054 | 1,813 | 2,670 | 3,488 | 1,813 | |||||||||||||||||||||
Depreciation, depletion and amortization |
414,630 | 395,994 | 364,346 | 480,476 | 295,174 | 917,825 | 656,339 | |||||||||||||||||||||
Write-down of oil and natural gas properties |
| 18,123 | 267,916 | | | | | |||||||||||||||||||||
Accretion expense |
55,995 | 58,129 | 49,741 | 63,430 | 42,400 | 95,470 | 74,732 | |||||||||||||||||||||
General and administrative expense |
99,754 | 78,677 | 79,175 | 121,257 | 70,742 | 221,676 | 190,732 | |||||||||||||||||||||
Other operating (income) expense |
33,902 | 32,037 | (11,550 | ) | (55,172 | ) | 12,142 | 40,728 | (43,744 | ) | ||||||||||||||||||
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Total operating expenses |
$ | 915,861 | $ | 869,924 | $ | 997,246 | $ | 897,879 | $ | 652,284 | $ | 1,846,107 | $ | 1,306,232 | ||||||||||||||
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(1) | The summary pro forma production and operating data gives effect to the EnVen Acquisition and the QuarterNorth Acquisition as if they had been completed on January 1, 2022. |
(2) | Average realized prices are net of certain gathering, transportation, quality differentials and other costs. |
QuarterNorth Historical | Three Months Ended September 30, 2023 |
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Production Volumes: |
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Oil (MBbl) |
2,213 | |||
Natural gas (MMcf) |
3,344 | |||
NGLs (MBbl) |
194 | |||
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Total production volume (MBoe) |
2,874 | |||
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Average Net Daily Production Volumes: |
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Oil (MBbl/d) |
23.1 | |||
Natural gas (MMcf/d) |
36.3 | |||
NGLs (MBbl/d) |
2.1 | |||
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Total average net daily (MBoe/d) |
31.2 | |||
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Average Sales Price (excluding commodity derivatives)(1): |
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Oil ($/Bbl) |
83.86 | |||
Natural gas ($/Mcf) |
2.95 | |||
NGLs ($/Bbl) |
26.46 | |||
Average realized price ($/Boe) |
67.17 | |||
Revenues (in thousands): |
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Oil |
$ | 178,041 | ||
Natural gas |
9,859 | |||
NGLs |
5,134 | |||
Turkey revenue |
63,179 | |||
Other |
7,815 | |||
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Total revenue |
$ | 264,028 | ||
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Operating Expenses (in thousands): |
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Lease operating expense |
$ | 38,750 | ||
Decommissioning cost of goods sold |
40,544 | |||
Depreciation, depletion and amortization |
56,343 | |||
Accretion expense |
127 | |||
General and administrative expense |
11,810 | |||
Insurance expense |
5,585 | |||
Other operating (income) expense |
8,593 | |||
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Total operating expenses |
$ | 161,752 | ||
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(1) | Average realized prices are net of certain gathering, transportation, quality differentials and other costs. |
Capitalization
As of September 30, 2023 and December 31, 2023, QuarterNorth had long-term debt of $185.0 million and $85.0 million, respectively, and cash on hand of $387.7 million and $394.0 million, respectively.
Exhibit 99.2
Talos Energy Announces Proposed Offering of $1,000 Million of Second-Priority Senior Secured Notes
HOUSTON, January 23, 2024 Talos Energy Inc. (Talos) (NYSE: TALO) today announced that Talos Production Inc. (the Company), a wholly owned subsidiary of Talos, has commenced an offering (the Offering) of $1,000 million in aggregate principal amount of new Second-Priority Senior Secured Notes, consisting of Second-Priority Senior Secured Notes due 2029 and Second-Priority Senior Secured Notes due 2031 (collectively, the New Notes). The Company intends to use the net proceeds from the Offering to (i) fund a portion of the cash consideration for the Companys recently announced pending acquisition of QuarterNorth Energy, Inc. (QuarterNorth, and such acquisition, the Acquisition), (ii) fund the redemption (the Redemption) of all of the outstanding 12.00% Second-Priority Senior Secured Notes due 2026 issued by the Company (the 2026 Notes), and (iii) pay any premiums, fees and expenses related to the Redemption and the issuance of the New Notes. The Company intends to use any remaining net proceeds for general corporate purposes, which may include the repayment of a portion of the outstanding borrowings under its senior reserves-based revolving credit facility (the Credit Facility).
An aggregate of $340 million principal amount of the New Notes will be subject to a special mandatory redemption in the event that the transactions contemplated by the definitive agreement to acquire QuarterNorth (the QuarterNorth Merger Agreement) are not consummated on or before May 31, 2024 (or up to September 30, 2024 solely in the event the parties require additional time to satisfy certain requirements under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, pursuant to the terms of the QuarterNorth Merger Agreement), or if the Company notifies the trustee of the New Notes that it will not pursue the consummation of the Acquisition.
It is expected that the New Notes will be guaranteed on a senior basis by Talos and certain of the Companys existing and future subsidiaries and will initially be secured on a second-priority basis by substantially the same collateral as the Companys existing first-priority obligations under its Credit Facility.
The New Notes are being offered in the United States only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the Securities Act), and to persons outside the United States only in compliance with Regulation S under the Securities Act. The New Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any security, nor shall there be any sale of the New Notes or any other security of the Company, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. This press release does not constitute a notice of redemption under the optional redemption provisions of the indenture governing the 2026 Notes.
ABOUT TALOS ENERGY
Talos Energy (NYSE: TALO) is a technically driven, innovative, independent energy company focused on safely and efficiently maximizing long-term value through its Upstream Exploration & Production and Low Carbon Solutions businesses. We currently operate in the United States and offshore Mexico. We leverage decades of technical and offshore operational expertise to acquire, explore, and produce assets in key geological trends while developing opportunities to reduce industrial emissions through carbon capture and storage projects along the U.S. Gulf Coast. For more information, visit www.talosenergy.com.
INVESTOR RELATIONS CONTACT
investor@talosenergy.com
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This communication contains forward-looking statements within the meaning of U.S. Private Securities Litigation Reform Act of 1995. 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. All statements, other than statements of historical fact included in this communication, are forward-looking statements, including, but not limited to, statements regarding the Companys plans to issue the New Notes and the intended use of the net proceeds therefrom, and the pending Acquisition. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events.
TALOS ENERGY INC. |
333 Clay St., Suite 3300, Houston, TX 77002 |
We caution you that these 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, our ability to consummate the Acquisition on the terms currently contemplated, the anticipated future performance of the combined company, risks and uncertainties related to economic, market or business conditions, satisfaction of customary closing conditions related to the Offering, and the other risks discussed in Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (the SEC), our Quarterly Reports on Forms 10-Q filed with the SEC and our other filings with the SEC, all of which can be accessed at the SECs website at www.sec.gov.
Should one or more of the risks or uncertainties described herein 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.
TALOS ENERGY INC. |
333 Clay St., Suite 3300, Houston, TX 77002 |
Document and Entity Information |
Jan. 23, 2024 |
---|---|
Cover [Abstract] | |
Amendment Flag | false |
Entity Central Index Key | 0001724965 |
Document Type | 8-K |
Document Period End Date | Jan. 23, 2024 |
Entity Registrant Name | Talos Energy Inc. |
Entity Incorporation State Country Code | DE |
Entity File Number | 001-38497 |
Entity Tax Identification Number | 82-3532642 |
Entity Address, Address Line One | 333 Clay Street |
Entity Address, Address Line Two | Suite 3300 |
Entity Address, City or Town | Houston |
Entity Address, State or Province | TX |
Entity Address, Postal Zip Code | 77002 |
City Area Code | (713) |
Local Phone Number | 328-3000 |
Written Communications | false |
Soliciting Material | false |
Pre Commencement Tender Offer | false |
Pre Commencement Issuer Tender Offer | false |
Security 12b Title | Common Stock |
Trading Symbol | TALO |
Security Exchange Name | NYSE |
Entity Emerging Growth Company | false |
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