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Talos Energy (TALO)
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Talos Energy (TALO) AI Stock Analysis

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TALO

Talos Energy

(NYSE:TALO)

Rating:67Neutral
Price Target:
$9.00
▲(7.91% Upside)
Talos Energy's overall score is driven by strong financial performance and positive earnings call insights, highlighting strategic growth initiatives and operational efficiency. However, technical indicators and valuation concerns, such as a negative P/E ratio, weigh down the score.
Positive Factors
Capital Efficiency
High drilling efficiencies from the Seadrill West Vela rig resulted in significant capital savings and ahead-of-schedule completions, contributing to a lower-than-expected 2025 capital guide.
Operational Performance
Continued execution strength in operations and efficiencies with the West Vela rig can drive increased investor confidence in the stock.
Negative Factors
Oil Market Fundamentals
A cautious view of oil fundamentals and a less attractive free cash flow profile at current strip prices keep the recommendation at Neutral.
Operational Challenges
The company's schedule results in a one-rig program in 2025 due to a heavier maintenance year.

Talos Energy (TALO) vs. SPDR S&P 500 ETF (SPY)

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 crude oil and natural gas. The company's revenue model is based on the extraction of hydrocarbons from its operated and non-operated properties, where it sells the produced oil and gas to various buyers, including refiners and marketers. Key revenue streams include the sale of crude oil, natural gas liquids, and natural gas. Additionally, Talos may engage in joint ventures and partnerships, sharing resources and costs with other energy companies, which can further enhance profitability. Market dynamics, such as global oil prices and demand for natural gas, significantly impact the company’s earnings, as fluctuating commodity prices directly affect revenue levels.

Talos Energy Earnings Call Summary

Earnings Call Date:Aug 06, 2025
(Q2-2025)
|
% Change Since: 7.06%|
Next Earnings Date:Nov 11, 2025
Earnings Call Sentiment Positive
Talos Energy demonstrated strong financial and operational performance in the second quarter, with significant progress on strategic initiatives and a strengthened balance sheet. However, the company faced challenges including a significant noncash impairment and a temporary operational setback at the Sunspear well. Despite these lowlights, the company's achievements and strategic focus provide a positive outlook.
Q2-2025 Updates
Positive Updates
Strong Second Quarter Results
Talos Energy outperformed consensus estimates for adjusted EBITDA with $294 million, driven by cost savings initiatives and strong operational execution.
Production and Cash Flow Improvements
Second quarter production averaged 93,300 barrels of oil equivalent per day, with oil making up 69% of the total. Adjusted free cash flow for the quarter was $99 million.
Strategic Initiatives for Future Growth
Talos identified initiatives to generate $100 million of additional free cash flow annually starting in 2026. Approximately $25 million in contributions are anticipated by the end of 2025.
Balance Sheet Strengthening
Talos reduced its leverage ratio to 0.7x and increased its cash balance by 75% from the first quarter to $357 million, maintaining $1 billion in liquidity.
Operational Excellence and Safety
Significant operational milestones were achieved, including successful projects at Katmai West and Sunspear, highlighting strong safety and environmental performance.
Negative Updates
Noncash Impairment
A noncash impairment of $224 million was recorded related to the full cost ceiling test driven by historical nonproductive capital expenditures.
Sunspear Well Temporary Shut-In
A subsurface safety valve failure at the Sunspear well resulted in a temporary shut-in, affecting annual production guidance by approximately 800 barrels of oil equivalent per day.
Declining Commodity Price Environment
Talos achieved improvements in a volatile and declining commodity price environment, impacting financial results and strategic planning.
Company Guidance
In the Talos Energy second quarter 2025 earnings conference call, the company provided guidance on several key metrics, highlighting a strategic plan to enhance financial performance. Talos aims to generate an additional $100 million in annual free cash flow starting in 2026, with $25 million in contributions anticipated by the end of 2025. Second quarter production averaged 93,300 barrels of oil equivalent per day, with adjusted EBITDA reaching $294 million, translating to an adjusted EBITDA netback margin of approximately $35 per barrel of oil equivalent. Capital expenditures for the quarter were $126 million, alongside $29 million spent on plugging and abandonment activities, resulting in an adjusted free cash flow of $99 million. Additionally, Talos repurchased 3.8 million shares for $33 million, with total repurchases under the program reaching $100 million. The company's leverage ratio was reduced to 0.7x, and liquidity increased to $1 billion. Talos revised its 2025 capital expenditure guidance to a range of $590 million to $650 million, reflecting better-than-expected drilling efficiencies and a reduction in operating expense guidance by $25 million due to early savings initiatives. The company expects full-year production to range between 91,000 and 95,000 barrels of oil equivalent per day, with third-quarter production anticipated between 86,000 and 90,000 barrels per day.

Talos Energy Financial Statement Overview

Summary
Talos Energy shows strong revenue growth and robust cash flow management, with impressive operating cash flow and free cash flow growth. However, challenges in net profitability and low return on equity slightly dampen the overall financial performance.
Income Statement
75
Positive
Talos Energy has shown strong revenue growth with a significant increase from previous years, indicating a positive growth trajectory. The gross profit margin for TTM is approximately 16.89%, with a net profit margin of 1.27%, reflecting challenges in converting revenue into net income. However, the EBIT and EBITDA margins are relatively strong at 7.22% and 70.07% respectively, highlighting operational efficiency.
Balance Sheet
68
Positive
The company's debt-to-equity ratio stands at 0.45, suggesting a balanced approach to leverage. The return on equity (ROE) for TTM is relatively low at 0.96%, indicating challenges in generating earnings from shareholders' equity. The equity ratio is 44.54%, showing a strong equity base relative to total assets, which indicates financial stability.
Cash Flow
80
Positive
Talos Energy demonstrates robust cash flow management, with a significant increase in operating cash flow. The free cash flow growth rate is notably high, indicating improved cash generation capabilities. The operating cash flow to net income ratio is very strong, highlighting efficient cash conversion from operations despite occasional net losses.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue2.06B1.97B1.46B1.65B1.24B575.94M
Gross Profit347.19M382.59M402.28M925.77M561.58M-36.03M
EBITDA1.44B1.26B1.05B966.11M402.67M83.48M
Net Income26.18M-76.39M187.33M381.92M-182.95M-465.61M
Balance Sheet
Total Assets6.13B6.19B4.82B3.06B2.77B2.83B
Cash, Cash Equivalents and Short-Term Investments202.95M108.17M33.64M44.15M69.85M34.23M
Total Debt1.24B1.24B1.20B602.14M980.77M1.01B
Total Liabilities3.40B3.43B2.66B1.89B2.01B1.91B
Stockholders Equity2.73B2.76B2.16B1.17B760.65M926.60M
Cash Flow
Free Cash Flow1.28B962.59M-54.73M386.57M118.06M-61.02M
Operating Cash Flow1.13B962.59M519.07M709.74M411.39M301.92M
Investing Cash Flow-525.94M-1.32B-512.63M-311.98M-293.75M-678.90M
Financing Cash Flow-422.86M436.12M85.41M-423.47M-82.02M324.19M

Talos Energy Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price8.34
Price Trends
50DMA
8.58
Negative
100DMA
8.25
Positive
200DMA
9.11
Negative
Market Momentum
MACD
-0.15
Positive
RSI
50.05
Neutral
STOCH
69.83
Neutral
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 8.34 is below the 20-day moving average (MA) of 8.35, below the 50-day MA of 8.58, and below the 200-day MA of 9.11, indicating a bearish trend. The MACD of -0.15 indicates Positive momentum. The RSI at 50.05 is Neutral, neither overbought nor oversold. The STOCH value of 69.83 is Neutral, 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 (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$1.72B7.4916.84%19.24%11.56%
68
Neutral
$1.77B45.094.52%11.76%-2.89%-107.61%
67
Neutral
$1.46B54.59-6.56%10.59%-3044.85%
65
Neutral
$14.84B8.642.77%5.45%4.51%-62.52%
63
Neutral
$948.51M8.756.80%2.13%-20.30%-27.90%
61
Neutral
$1.82B-1.36%13.20%55.44%
51
Neutral
$832.16M4.03-14.81%-21.77%-160.32%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TALO
Talos Energy
8.34
-3.58
-30.03%
KOS
Kosmos Energy
1.74
-3.12
-64.20%
KRP
Kimbell Royalty Partners
14.45
-0.15
-1.03%
HPK
HighPeak Energy
7.52
-7.61
-50.30%
MNR
Mach Natural Resources LP
14.50
-2.59
-15.16%
BKV
BKV Corporation
21.41
3.36
18.61%

Talos Energy Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Talos Energy Announces Key Executive Appointments
Positive
Aug 14, 2025

Talos Energy announced key executive appointments to support its corporate strategy and enhance its offshore leadership. Zachary B. Dailey was appointed as Executive Vice President and Chief Financial Officer, effective August 18, 2025, bringing over 17 years of oil and gas experience. William R. Langin will join as Executive Vice President – Exploration and Development on September 29, 2025, with over 20 years of experience in the industry. Megan Dick was promoted to Executive Vice President and Chief Human Resources Officer, effective August 1, 2025. These appointments are expected to strengthen Talos Energy’s strategic leadership and contribute to its long-term success.

The most recent analyst rating on (TALO) stock is a Hold with a $12.00 price target. To see the full list of analyst forecasts on Talos Energy stock, see the TALO Stock Forecast page.

Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Talos Energy Reports Q2 2025 Results and Strategic Moves
Neutral
Aug 6, 2025

On August 6, 2025, Talos Energy announced its second quarter 2025 operational and financial results, highlighting a strategic enhancement to position itself as a leading offshore E&P company. The company reported a net loss of $185.9 million due to non-cash impairment charges, but achieved significant operational milestones, including initiating production from new wells and resuming drilling at the Daenerys prospect. Talos also improved its financial outlook with higher production, lower expenses, and increased cash flow, while repurchasing shares and enhancing its balance sheet. These developments are expected to strengthen Talos’s market position and benefit stakeholders by ensuring flexibility and capital returns.

The most recent analyst rating on (TALO) stock is a Hold with a $12.00 price target. To see the full list of analyst forecasts on Talos Energy stock, see the TALO Stock Forecast page.

Private Placements and FinancingBusiness Operations and Strategy
Talos Energy Amends Credit Agreement, Alters Debt Terms
Negative
Aug 6, 2025

On August 4, 2025, Talos Energy Inc. and its subsidiaries entered into the Twelfth Amendment to their Credit Agreement, reducing the borrowing base and total commitments to $700 million. This amendment also removes the $50 million cap on unrestricted cash deductions in debt calculations, potentially impacting the company’s financial flexibility and stakeholder interests.

The most recent analyst rating on (TALO) stock is a Hold with a $12.00 price target. To see the full list of analyst forecasts on Talos Energy stock, see the TALO Stock Forecast page.

Business Operations and Strategy
Talos Energy Unveils New Offshore Strategy
Positive
Jun 17, 2025

On June 17, 2025, Talos Energy announced an enhanced corporate strategy aimed at positioning itself as a leading pure-play offshore exploration and production company. The strategy focuses on improving daily operations to increase cash flow, investing in high-margin projects, and building a long-lived portfolio in offshore basins. This strategic shift is expected to capitalize on anticipated market trends and enhance shareholder returns.

The most recent analyst rating on (TALO) stock is a Hold with a $12.00 price target. To see the full list of analyst forecasts on Talos Energy stock, see the TALO Stock Forecast page.

Executive/Board ChangesShareholder Meetings
Talos Energy Elects New Board Members at Annual Meeting
Neutral
Jun 2, 2025

At the 2025 Annual Meeting of Stockholders held on May 29, 2025, Talos Energy Inc. successfully elected seven director nominees to its board for a term expiring at the 2026 Annual Meeting. Additionally, the stockholders approved the compensation of the company’s named executive officers for the fiscal year ended December 31, 2024, and decided to hold annual advisory votes on executive compensation. The appointment of Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025, was also ratified. These decisions reflect the company’s ongoing commitment to governance and transparency, potentially impacting its strategic direction and stakeholder confidence.

The most recent analyst rating on (TALO) stock is a Hold with a $12.00 price target. To see the full list of analyst forecasts on Talos Energy stock, see the TALO Stock Forecast page.

Private Placements and FinancingM&A TransactionsBusiness Operations and Strategy
Talos Energy Enhances Market Position with Acquisition
Positive
May 22, 2025

On March 4, 2024, Talos Energy completed the acquisition of QuarterNorth Energy, a privately-held exploration and production company, for a total consideration of $1,247.4 million in cash and 24.3 million shares of Talos’s common stock valued at $322.6 million. The acquisition was financed through a combination of bank credit facility borrowings, an equity offering, and a debt offering, which included the issuance of new senior secured notes. This strategic acquisition is expected to enhance Talos’s operational scale and market position in the Gulf of Mexico, potentially offering significant benefits to stakeholders.

The most recent analyst rating on (TALO) stock is a Hold with a $12.00 price target. To see the full list of analyst forecasts on Talos Energy stock, see the TALO Stock Forecast page.

Executive/Board Changes
Talos Energy Announces CFO Resignation and Replacement
Neutral
May 19, 2025

On May 19, 2025, Talos Energy announced the resignation of Sergio L. Maiworm Jr. as Executive Vice President and CFO, effective June 27, 2025, and the appointment of Gregory M. Babcock as Interim CFO starting June 28, 2025. Babcock, who has been with Talos since 2014, will report directly to the CEO. The leadership change is not related to any financial reporting issues, and the company reaffirms its production and financial guidance for 2025.

The most recent analyst rating on (TALO) stock is a Hold with a $12.00 price target. To see the full list of analyst forecasts on Talos Energy stock, see the TALO Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Aug 15, 2025