Talos Energy Q2 Earnings Call Highlights

Record quarterly performance: Talos Energy generated approximately $232 million in adjusted free cash flow and $402 million in adjusted EBITDA in Q2 2026, as oil and total production exceeded guidance. Raised 2026 outlook and strengthened finances: The company increased its standalone production guidance, ended the quarter with about $1.2 billion in liquidity and reduced leverage to 0.5 times. It also refinanced debt and continues to target leverage below one times by year-end 2027. Expanding offshore portfolio: Talos expects to close its Gulf of America bolt-on acquisition later in Q3, while advancing Gulf of Mexico projects and international opportunities in Mexico and Honduras, including planned seismic and exploration work. Talos Energy NYSE: TALO reported record adjusted free cash flow in the second quarter of 2026 as production exceeded guidance, while the offshore exploration and production company raised its full-year standalone production outlook and outlined progress on acquisitions, development projects and international expansion. President and Chief Executive Officer Paul Goodfellow said oil production averaged about 69,000 barrels per day during the quarter, while total production averaged nearly 94,000 barrels of oil equivalent per day. Both figures exceeded the company’s guidance expectations. Goodfellow said production optimization efforts, higher operational uptime and continued outperformance from the Cardona well supported the results. Cash Flow, Guidance and Balance Sheet Executive Vice President and Chief Financial Officer Zach Dailey said Talos generated approximately $402 million of adjusted EBITDA and a record approximately $232 million of adjusted free cash flow in the second quarter. The results were driven by production above guidance and crude-oil realizations that were stronger relative to WTI, he said. The company increased its full-year 2026 standalone guidance to: 64,000 to 68,000 barrels of oil per day 87,000 to 91,000 barrels of oil equivalent per day The updated outlook excludes Talos’ pending Gulf of America bolt-on acquisition and includes the impact of a non-core, gas-weighted shelf divestment that closed early in the third quarter. Dailey said the base business was performing well enough to more than offset the production effect of the divestiture. For the third quarter, Talos expects oil production of 61,000 to 65,000 barrels per day and total production of 81,000 to 85,000 BOE per day, also excluding the pending bolt-on transaction. The company expects to provide updated guidance after the acquisition closes, which it anticipates will occur later in the third quarter. Cash on hand rose to about $578 million at the end of the second quarter, while total liquidity reached about $1.2 billion and the leverage ratio declined to 0.5 times, Dailey said. Talos issued $800 million of 8% senior notes due 2034. The proceeds were used to redeem its $625 million of 9% notes due 2029 and fund a portion of the pending acquisition. The company also secured $150 million in incremental commitments from its bank group, increasing its credit-facility borrowing base to $850 million from $700 million upon the acquisition’s closing. Dailey said Talos continues to expect pro forma year-end 2027 leverage below one times, in line with its long-term target.