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Talos Energy Inc (TALO)
NYSE:TALO

Talos Energy (TALO) AI Stock Analysis

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Talos Energy

(NYSE:TALO)

Rating:73Outperform
Price Target:
$10.00
▲(13.77%Upside)
Talos Energy's overall stock score is driven by strong financial performance, with significant contributions from robust cash flows and strategic corporate events that enhance its market position. Technical indicators and valuation metrics present some caution, but recent corporate strategies and earnings performance suggest positive future potential.
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.
Shareholder Returns
An increase in cash return via the buyback is expected as the company has reached its debt target, suggesting a positive outlook for shareholder returns.
Negative Factors
Cash Flow Expectations
Quarterly free cash flow is expected to be slightly below consensus.
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.
Oil Market Sentiment
A cautious view of oil fundamentals and a less attractive free cash flow profile at current strip prices keep the recommendation at Neutral.

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

Talos Energy Business Overview & Revenue Model

Company DescriptionTalos Energy Inc. (TALO) is an independent energy company focused on the exploration, development, and production of oil and natural gas properties. Headquartered in Houston, Texas, the company operates primarily in the United States Gulf of Mexico and offshore Mexico, leveraging its expertise in geological and geophysical analysis to discover and develop significant energy resources. Talos is committed to delivering value through strategic acquisitions, efficient operations, and innovative exploration techniques.
How the Company Makes MoneyTalos Energy generates revenue primarily through the sale of oil, natural gas, and natural gas liquids that it extracts from its properties. The company's revenue model centers around the exploration and production of hydrocarbon resources, which are sold to refineries, utilities, and other market participants. Key revenue streams include income from the sale of oil and gas extracted from both their developed and undeveloped reserves. Talos Energy also engages in strategic partnerships and joint ventures to enhance its operational capabilities and expand its resource base, which can contribute to its earnings by sharing costs and leveraging combined expertise. Additionally, the company may engage in hedging activities to manage market risks and stabilize cash flows.

Talos Energy Earnings Call Summary

Earnings Call Date:May 05, 2025
(Q1-2025)
|
% Change Since: 24.33%|
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 Financial Statement Overview

Summary
Talos Energy has shown strong revenue growth and impressive cash flow management with a high free cash flow growth rate. However, challenges exist in net profitability and return on equity, indicating room for improvement in converting revenue into net income and generating earnings from shareholders' equity.
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
Positive
Last Price8.79
Price Trends
50DMA
8.19
Positive
100DMA
8.39
Positive
200DMA
9.44
Negative
Market Momentum
MACD
0.11
Positive
RSI
53.94
Neutral
STOCH
21.29
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 8.79 is above the 20-day moving average (MA) of 8.75, above the 50-day MA of 8.19, and below the 200-day MA of 9.44, indicating a neutral trend. The MACD of 0.11 indicates Positive momentum. The RSI at 53.94 is Neutral, neither overbought nor oversold. The STOCH value of 21.29 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 (52)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
BTBTU
77
Outperform
$1.79B5.5010.33%2.04%-7.42%-26.06%
73
Outperform
$1.57B61.600.95%31.40%92.89%
HPHPK
72
Outperform
$1.30B11.747.09%1.55%-11.59%-28.62%
HLHLX
71
Outperform
$995.55M11.975.64%0.34%
67
Neutral
$1.77B46.602.90%6.98%77.72%-75.78%
BKBKV
56
Neutral
$1.95B-13.36%2.24%-918.36%
52
Neutral
C$2.91B-0.93-3.26%6.13%2.20%-43.43%
* Energy Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TALO
Talos Energy
8.79
-2.86
-24.55%
HLX
Helix Energy
6.57
-5.34
-44.84%
BTU
Peabody Energy Comm
14.68
-8.24
-35.95%
HPK
HighPeak Energy
10.32
-4.24
-29.12%
AESI
Atlas Energy Solutions
14.32
-5.07
-26.15%
BKV
BKV Corporation
22.75
4.70
26.04%

Talos Energy Corporate Events

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.

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.

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: Jul 03, 2025