Q1 2024 Talos Energy Inc Earnings Call

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Good morning, ladies and gentlemen, and welcome to you to tell US energy first quarter 2024 earnings call. At this time all lines are in listen only mode. Following the presentation. We will conduct a question and answer session. If at any time during this call Julie.

Immediate assistance. Please press star zero for the operator this call is being recorded and she'll stay may seven 2024, and I would now like to turn the conference over to claims you'll understand. Thank you. Please go ahead.

Unknown Executive: Thank you, operator. Good morning, everyone.

Thank you operator, good morning, everyone and welcome to our first quarter 2024 earnings Conference call.

Unknown Executive: And welcome to our first quarter 2024 earnings conference call. Joining me today to discuss our results are Tim Duncan, President and Chief Executive Officer; and Sergio Maiworm, Executive Vice President and Chief Financial Officer. For our prepared remarks, we will refer to our first quarter 2024 earnings slide presentation, which is available for viewing and downloading on Talos's website. Starting on slide two, Cautionary Statements, I'd like to remind you that our remarks will include forward-looking statements.

Unknown Executive: Joining me today to discuss our results are Tim Duncan President and Chief Executive Officer.

Unknown Executive: Sergio My word executive Vice President and Chief Financial Officer.

Unknown Executive: For our prepared remarks, we will refer to our first quarter 2024 earnings slide presentation, which is available for viewing and downloading on Telus is website.

Unknown Executive: Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in yesterday's press release and our Form 10-Q for the period ending March 31, 2024, filed yesterday with the SEC. Forward-looking statements are based on assumptions as of today, and we undertake no obligations to update these statements as a result of new information or future events. During this call, we may present GAAP and non-GAAP financial measures. A reconciliation of gap to non-gap measures is included in yesterday's press release, which was filed with the SEC and is available on our website. Now, I'd like to turn the call over to Tim.

Unknown Executive: Starting on slide two cautionary statements I'd like to remind you that our remarks will include forward looking statements actual results may differ from materially from those contemplated by these forward looking statements.

Tim: That could cause these yourself to differ materially are set forth in yesterday's press release, and our Form 10-Q for the period ending March 31, 2024 filed yesterday with the SEC.

Tim: Forward looking statements are based on assumptions as of today and we undertake no obligations to update these statements as a result of new information or future events.

Tim: During this call we may present, GAAP and non-GAAP financial measures.

Tim: A reconciliation of GAAP to non-GAAP measures is included in yesterday's press release, which was filed with the SEC and is available on our website.

Unknown Executive: And now I'd like to turn the call over to Tim.

Timothy S. Duncan: Thank you, Clay, and welcome aboard. We're going to start this presentation on slide three. We're going to discuss how we've repositioned ourselves over the last year with the last two M&A deals. We're the fourth largest acreage holder in the Gulf of Mexico, and we're the fifth largest operator in the Gulf of Mexico. And we have two tenets to our strategy that we think are important.

Tim: Thank you Claire and welcome aboard let's start this presentation on slide three.

Timothy S. Duncan: That's how we've repositioned ourselves over the last year with the last two M&A deals are the fourth largest acreage holder in the Gulf of Mexico, and we're the fifth largest operator in the Gulf of Mexico, We have two tenants to our strategy that we think are important one we're focused on oil weighted assets.

Timothy S. Duncan: One, we focus on oil-weighted assets. And two, we think it's critically important that we operate our deepwater infrastructure. It allows us to focus our prospect inventory around this infrastructure and allows us to shorten our cycle times when we think about drilling these wells and getting them in first oil. Now, let's go to slide four and talk about what might have been one of our busiest quarters in the company's history. We ended the year by bringing on Venice and Line Rock ahead of schedule and with sustained rates at over 18,000 barrels per day.

Timothy S. Duncan: And we think it's critically important that we operate our deepwater infrastructure. It allows us to focus our prospect inventory around as infrastructure. It allows us to shorten our cycle times, when we think about drilling these wells and getting the first oil.

Timothy S. Duncan: Let's go to slide four and talk about what might've been one of our busiest quarters in the company's history.

Timothy S. Duncan: We ended the year by bringing on Venison line rock ahead of schedule. It was sustained rates at over 18000 barrels equivalent a day.

Timothy S. Duncan: And in January, we announced a quarter north transaction, our second transaction of over a billion dollars in the last year, adding important scale to our. Immediately after that transaction, we announced a couple capital markets transactions, including lowering the cost cap of our debt by refinancing our high yield. We were able to close the Cordon Roar transaction within 45 days, which helps us accelerate our synergies.

Timothy S. Duncan: In January we announced the quarter North transaction, our second transaction of over $1 billion in the last year, adding important scale to our business immediately after that transaction, we announced a couple of capital markets transactions, including lowering its cost of capital of our debt by refinancing our high yield notes.

Timothy S. Duncan: We were able to close the Cordillera transaction within 45 days, which helps us accelerate our synergies you're also able to update our financial guidance, increasing our production guidance.

Timothy S. Duncan: We were also able to update our financial guidance, increasing our production guidance. And then later, we also updated our debt guidance from $400 to $550 million in debt repayments for the year. Also, during the quarter, we announced the divestiture of our CCS business to Total Energies. I'll speak more about the importance of that transaction on... So on page five, we went through a lot of these highlights on page four, but let me focus on a couple bullets on each side of this page.

Timothy S. Duncan: And later, we also updated our debt guidance from $400 million to $550 million of debt repayments for the year also within the quarter, we announced the divestiture of our Ccs business to total energies I'll speak more about the importance of that transactions on the next slide.

Timothy S. Duncan: So on page five we went through a lot of these highlights on page four let me focus on a couple a couple of bullets on each side of this page. So first on the left side of the page we had record production in the first quarter at the high end of our guidance and Youre going to see this go up tremendously in the second quarter and Sergio talked about that later in the presentation.

Timothy S. Duncan: So first on the left side of the page, we had record production in the first quarter at the high end of our guide. And you're going to see this go up tremendously in the second quarter, and Sergio will talk about that later in the presentation. Some of these other bullets I just discussed, but let me focus a little bit on the sale at TLCS.

Timothy S. Duncan: Out of bullets, I, just discussed, but let me focus a little bit on the sale of T. Lcs business, we're bullish about what Ccs can be long term, but we did notice that emissions reductions were slowing down within these facilities and their capital requirements are going up so we thought the right move for US was to transact on this business, we got a solid return at over two times our money in.

Timothy S. Duncan: We're bullish about what CCS can be in the long term, but we did notice that emissions reductions were slowing down within these facilities and that capital requirements were going up. So we thought the right move for us was to transact in this business. We got a solid return of two times our money and immediately took those proceeds and accelerated our debt repayment. As we get to the right side of the page and focus on what we're trying to do from here, we think it's important to continue to remind the market that even though we're projecting 35 to 40 percent year-over-year increases to our total corporate production base, we're doing that with a lower capital program relative to our Talos legacy

Timothy S. Duncan: Immediately take those proceeds and accelerate our debt repayment.

Timothy S. Duncan: As we get to the right side of the page and focus on what we're trying to do from here. We think it's important to continue to remind the market that even though we're projecting 35% to 40% year over year increases to our total corporate production base, we're doing that with a lower capital program relative to our <unk> legacy business last year I was just going to talk about later in the presentation.

Timothy S. Duncan: And what Sergio is going to talk about later in the presentation is how that impacts the free cash flow yield of our business. I'm also going to talk about in this presentation why we're so excited to get this drilling program going, particularly in the catmite field, as we think it's an enormous catalyst for our business. So as we turn to page six, let's hit some of the highlights of the quarter. We have over 79.6 thousand barrels of equivalent a day, again, on the high end of our expectations for the quarter. And you'll see that number continue to go up as we own these quarter north assets in full now for the rest of the year. We're very much oil and liquids weighted.

Timothy S. Duncan: How that impacts to free cash flow yield of our business.

Timothy S. Duncan: I'm also talking about in this presentation why we're so excited to get this drilling program going particularly in the Cat. My feel is we think it's an enormous catalyst for our business.

Timothy S. Duncan: So as we turn to page six let's hit some of the highlights of the quarter we.

Timothy S. Duncan: Over $79 6000 barrels equivalent a day again on the high end of our expectations for the quarter and Youll see that number continue to go up as we own these quarter north assets and full now for the rest of the year.

Timothy S. Duncan: We're very much oil liquids weighted we had upstream EBITDA $268 million for the quarter, which has a netback margin of $42 per BOE now that doesn't include Workovers, which are heavy in the first quarter, but will taper off through the rest of the year upstream capex was $112 million.

Timothy S. Duncan: We had upstream EBITDA of $268 million for the quarter, which has a net back margin of $42 per BOE. Now, that doesn't include workovers, which are heavy in the first quarter but will taper off through the rest of the quarter. Upstream CapEx was $112 million, and Upstream Adjusted Free Cash Flow, non-inclusive of some expenses that we still had in the first quarter related to TLCS, was $78 million. Now, the sale of that TLCS business that I mentioned earlier allowed us to accelerate our debt reduction. And so we had debt repayments of $225 million for the quarter.

Timothy S. Duncan: Upstream adjusted free cash flow not inclusive of some expenses that we still had in the first quarter related to TLC, yes was $78 million now.

Timothy S. Duncan: The sale of that TLC is a business that I mentioned earlier allowed us to accelerate our debt reduction.

Timothy S. Duncan: We had debt repayments of $225 million for the quarter that also allowed us to reach our leverage goal of one times within the quarter and so we should lower that continually throughout the year.

Timothy S. Duncan: That also allowed us to reach our leverage goal of one times within the quarter. And so we should lower that continually throughout. As we move to slide seven, one of the important things about closing the quarter north transaction as quickly as we were able to is that it allows us to control two things. One, we can control the assets operationally, which is important as we plan to cap my wealth, and I'm going to discuss that later in the slide deck. The other thing is that we can get to the work of the synergies. And in the first quarter, we were immediately able to work on synergies related to GNA, including personnel and IT.

Timothy S. Duncan: As we move to slide seven one of the important things about closing the quarter North transaction as quickly as we were able to because it allows us to control to things we can control the assets operationally, which is important as we plan to katmai, well then I'm going to discuss later in the slide deck.

Timothy S. Duncan: Thing is we can get you to work at the synergies and then the first quarter. We immediately were able to work on synergies related to G&A, including personnel in it.

Timothy S. Duncan: In the second quarter, we're going to work on the insurance-related synergies, and then you'll also see some synergies that flow through operating costs. But even so far since we closed the transaction, we have been able to realize what amounts to $20 million of run-rate synergies in the first quarter on our way to achieving $30 million by the end of the year and $55 million as we get into 2020. As we go on to page eight and talk a little bit about the second quarter, it also relates to the first quarter.

Timothy S. Duncan: In the second quarter, we're going to work on the insurance related synergies.

Timothy S. Duncan: Synergies and then you'll also see some synergies that flowed through operating cost, but even so far since we closed the transaction, we were able to realize what will amount to $20 million of run rate synergies in the first quarter on our way to achieving $30 million by the end of the year at $55 million as we get into 2025.

Timothy S. Duncan: As we go on to page eight and talk a little bit about the second quarter. It also relates to the first quarter. The second quarters, where it will have the HP one dry dock in our Phoenix deal, which includes our tornado asset we thought there would be a couple of days late in the first quarter, but ultimately that got delayed sort of kind of be a clean 55 days within the second quarter.

Timothy S. Duncan: The second quarter is when we'll have the HP1 dry dock in our Phoenix field, which includes our Tornado asset. We thought there would be a couple of days late in the first quarter, but ultimately, that got delayed.

Timothy S. Duncan: So it'll kind of be a clean 55 days within the second quarter. It'll have an impact on the quarter of 5,000 to 6,000 barrels equivalent a day. Sergio will talk about broader guidance for the second quarter.

Timothy S. Duncan: It will have an impact of the quarter of five to 6000 barrels equivalent a day Sergio talked about broader guidance for the second quarter. Just a reminder, is a dynamically positioned vessel that host several production from Phoenix and tornado. So it has to go into Drydock every two and a half years.

Timothy S. Duncan: Just a reminder, this is a dynamically positioned vessel that hosts several productions from Phoenix and Tornado, so it has to go into dry dock every two and a half days. Now, let's go to page 9 and talk about the recent lease sale. Now, the sale occurred in the fourth quarter of 2023, but ultimately, you were awarded these blocks in the first quarter of 2024. And we were able to secure 17 blocks with high bids. All were awarded prizes.

Timothy S. Duncan: Let's go to page nine talking about the recent lease sale net of sale occurred in the fourth quarter of 2023, but ultimately you're awarded these blocks in the first quarter of 2024, and we were able to achieve 17 blocks with high bids all were awarded it adds up to 95000 acres, but I think if I focus you on the map it's important to play through.

Timothy S. Duncan: It adds up to 95,000 acres. But I think if I focus you on the map, it's important to play through how this fits our strategy that I referred to back on page 3. So light blue is our seismic. Again, it covers most of the Gulf of Mexico. Dark blue is our acreage, as I mentioned earlier.

Timothy S. Duncan: How this fits our strategy that I referred to back on page three so light blue is our seismic again covers most of the Gulf of Mexico Dark Blue is our acreage I mentioned earlier, one of the biggest acreage positions in the Gulf of Mexico, and then Theres likely Dodge is our facilities that we control and operate and if you look at the gold Callout box as these are the leases that we pick.

Timothy S. Duncan: It's one of the biggest acreage positions in the Gulf of Mexico. And then those light blue dots are our facilities that we control and operate. And if you look at the gold call-out boxes, these are the leases that we picked up in the lease sale. Notice how they're peppered around those facilities.

Timothy S. Duncan: Up in the lease sale notice, how they're peppered around those facilities by owning and controlling at operating these facilities. It focuses our team and where we can develop inventory around these facilities, which notices we think we've added 12 to 15 potential locations just in this last lease sale growing our overall location count for the company.

Timothy S. Duncan: By owning and controlling and operating these facilities, it focuses our team and where we can develop inventory around these facilities. And what you notice is we think we've added 12 to 15 potential locations just in this last lease sale, growing our overall location count. All right, let's go to page 10 and talk about the trilling program for the year and how things are going.

Timothy S. Duncan: Let's go to page 10, I'm talking about the drilling program for the year and how things are going I mentioned visits in line rack at the beginning of the presentation. If you read the earnings release, you might have seen a reference to the lobster waterflood project that was successful in the first quarter and we expect to see that rates start to hit us in the third quarter. It throughout 2024 and 2025.

Timothy S. Duncan: I mentioned Venice and Lime Rock at the beginning of the presentation. If you read the earnings release, you might have seen our reference to the Lobster Water Flood Project. That was successful in the first quarter, and we expect to see that rate start to hit us in the third quarter and throughout 2024 and 2025. We had a stimulus campaign and waited in the first quarter, then we'll take a break and have another project in the third quarter.

Timothy S. Duncan: Stimulation campaign weighted in the first quarter and then we'll take a break and have another project in the third quarter.

Timothy S. Duncan: The Claiborne sidetrack, which is not off, was successful. We'll see that rate increase in the second quarter and really get full rates in the third quarter. And then we start our drilling campaign with the Katmai Project. I'm going to talk about that. And then the Daenerys Project, which is a high-impact sub-salt well that, ultimately, we're going to try to get into this year. It could work into next year as well.

Timothy S. Duncan: Claiborne Sidetrack, which is not off was successful we'll see that rate increase in the second quarter and really get full rate in the third quarter and then we start our drilling campaign, but the Katmai project I'm going to talk about that and then the generic <unk> project, which is a high impacts of salt well, but ultimately we're going to try to get into this year. It could work into next year as well and then again.

Timothy S. Duncan: And then again, we have the Sunspear completion, which is important. So we can see that production from that discovery of last year will be available to us in the first half of next year. As I mentioned on page 11, we give you a little update on Venice and Lime Rock, and you can see it here. Again, the Rampal facility is a facility that we bought in 2018. We own 100% of that facility, and it's an important host facility, not only for our drilling campaign, but it can be a host facility for third-party discoveries that might need to utilize the asset. But what Lime Rock and Venice have always shown is really good execution on our strategy.

Timothy S. Duncan: We have the stratosphere completion, which is important so we can see that production from that discovery of last year the available to us in the first half of next year.

Timothy S. Duncan: As I mentioned on page 11, we give you a little update on visits and lime rock and you can see it here again the ramp how facility is a facility that we bought in 2018, we owned 100% of that facility and its an important host facility not only for our drilling campaign, but it can be a host facility for third party discoveries that might need to utilize the asset.

Timothy S. Duncan: These are locations that we identified after we bought the asset. You can see the impact on the right side of the page, and then you can see that we brought those wells online, and they're relatively flat still, you know, as we think about this 90 days later. Let's go to page 12 and talk about the greater Katmai area. I think it's important to note that this is a sub-salt discovery at 27,000 feet below the surface. The initial reservoir pressures were over 20,000 pounds.

Timothy S. Duncan: What lime rock in Venice has always shown really good execution on our strategy. These are locations that we identified after we bought the asset you can see the impact on the right side of the page and then you can see that we brought those wells online and they're relatively flat still as we think about this 90 days later.

Timothy S. Duncan: Let's go to page 12, and talk about the greater Katmai area I think it's important to note that this is a discovery of sub salt discovery at 27000 feet below the surface. The initial reservoir pressures are over 20000 pounds.

Timothy S. Duncan: It's a big geological complex that we're still learning about today. It could have as many resources as 180 to 200 million barrels. And although it's a fairly recent discovery, it's already produced 17 million barrels, and it's doing so at a facility constraint of 27 to 28,000 barrels equivalent a day, as you can see on the right side of the chart. Now, you'll notice in the first quarter we had some planned downtime.

Timothy S. Duncan: As a big geological complex that we're still learning about today. It could have as many resources is 180 to 200 million barrels and although it is a fairly recent discovery. It's already produced 17 million barrels and it's doing so at a facility constraint of 27 to 28000 barrels a day that you can see on the right side of the chart now Youll notice it.

Timothy S. Duncan: And although that's frustrating, it's an important planned downtime because it lets us work on the facility. It also lets us collect critical information on the pressures that we see downhole. And that's causing us to have more confidence in how we think this field will be developed. So let's continue the conversation around Katmai and talk about Katmai West No.

Timothy S. Duncan: In the first quarter, we had some planned downtime and although thats frustrating, it's an important plant downtime because it lets us work on the facility. It also lets us collect critical information on the pressures that we see downhole and thats, causing us to have more confidence in how we think this field will get developed.

Timothy S. Duncan: 2 well, and why we think it's so important. And there's a lot going on in the slide, but it helps to understand how we think about better defining and expanding the resource when you have a deepwater discovery like Katmai. So you go to the graphic on the left.

Timothy S. Duncan: So let's continue the conversation about cat <unk> talked about cat My West number two well and why we think itself important and there's a lot going on in the slide but help us understand how we think about better defining and expanding the resource when you have a deepwater discovery like cat lines. So if you go onto graphic on the left what we're showing you visually is where the cat my west number one well, which Joe.

Timothy S. Duncan: What we're showing you visually is where the Katmai West No. 1 well was drilled geologically in the structure. And then on the right, we're trying to help you understand how that better defines the lowest known oil, which defines our approved reserves. And so you have a 400-foot pay column.

Timothy S. Duncan: <unk> drilled geologically and the structure.

Timothy S. Duncan: And then on the right. We're trying to help you understand how that how that better defines lowest known oil which defines our proved reserves and so you have a 400 foot pay column that helps define proved reserves and then to better expand what the resource could be you have to have a combination of good production data good pressure data and then ultimately another geological test.

Timothy S. Duncan: That helps define approved reserves. And then to better expand what the resource could be, you have to have a combination of good production data, good pressure data, and then ultimately another geological test. That next geological test is the Katmai West No. 2 well.

Timothy S. Duncan: That next geological test is cat my West number two well, we're going to extend the geological column and with that information and the pressure data ended production data, we're going to have a better understanding on whether the potential of a 100 million barrels is available to us. We think this is a very important well, it's a great use of capital allocation and Brian to talk more about <unk>.

Timothy S. Duncan: We're going to extend the geological column. And with that information and the pressure data and the production data, we're going to have a better understanding of whether the potential of 100 million barrels is available to us. We think this is a very important well. It's a great use of capital allocation. And to talk more about capital allocation outside our drilling program, I'm going to hand it over to Serge.

Serge: Allegation outside our drilling program I'm going to hand, it over to Sergio.

Sergio L. Maiworm: Thank you, Tim, and good morning, everyone. Thank you for joining us on our call today. As Tim mentioned earlier in the call, we have increased our debt reduction target from $400 million to $550 million by the end of the year. Also, a couple of months ago in our last earnings call, we guided the market to expect a leverage target at the end of the year of one times or below. And we're actually able to achieve it once at the end of the first quarter.

Serge: Thank you, Tim and good morning, everyone and thank you for joining our call today.

Sergio L. Maiworm: So we're way ahead of our target there, and I expect that number to continue to go down as we make additional debt reductions throughout the year. At the closing of the quarter north transaction, our debt stood at $1.8 billion, and that was a combination of $550 million drawn on our RBL and one and a quarter billion dollars in bonds. In the first quarter, a combination of cash flow generated by the business and its sale of TLCS allowed us to pay $225 million to achieve a debt balance at the end of the first quarter of $1.575 billion. We expect to continue to pay down debt throughout the year, and at year-end, we expect the revolver to be fully paid down.

Sergio L. Maiworm: As Tim mentioned earlier in the call we have increased our debt reduction target from $400 million to $550 million by the end of the year.

Sergio L. Maiworm: Also a couple of months ago in our last earnings call.

Sergio L. Maiworm: We guided the market to expect a leverage target at the end of the year of one times or below and we're actually able to achieve one times at the end of the first quarter. So we're way ahead on our on our target there and I expect that number to continue to go down as we make additional debt reductions throughout the year.

Sergio L. Maiworm: At the closing of the quarter North transaction, our debt stood at $1 8 billion and that was a combination of $550 million drawn on our RVO and one in a quarter billion dollars in bonds.

Sergio L. Maiworm: In the first quarter, a combination of cash flow generated by the business and the sale of <unk> allowed us to pay $225 million to achieve a debt balance at the end of the first quarter of $1 $5 75 billion.

Sergio L. Maiworm: We expect to continue to pay down debt throughout the year and.

Sergio L. Maiworm: At year end, we expect the revolver to be fully paid down so.

Sergio L. Maiworm: So another $325 million of debt reduction this year is expected. On page 15, I wanted to highlight three metrics that show how compelling of a value opportunity Talos is to invest in. First, we have one of the highest oil contents or highest oil exposures in the entirety of the E&P sector in the United States. And as a continuation of that, we also have one of the top margins in the business. And that allows us to generate a tremendous amount of free cash flow that we don't believe is being recognized in our market cap now, which shows itself to have one of the highest free cash flow yields in the entirety of the E&P space.

Sergio L. Maiworm: Another $325 million of debt reduction this year as expected.

Sergio L. Maiworm: On page 15, I wanted to highlight three metrics that show how compelling of a value opportunity analysis to investors.

Sergio L. Maiworm: We have one of the highest oil content or highest oil exposures in the entirety of the E&P sector in the United States and.

Sergio L. Maiworm: The continuation of that we also have one of the top margins.

Sergio L. Maiworm: The business and that allows us to generate a tremendous amount of free cash flow that we don't believe is being recognized in our market cap now which shows itself had been one of the highest free cash flow yields and being tired of E&P space. This includes every single E&P company above a $1 billion of market cap, excluding the major so.

Sergio L. Maiworm: This includes every single E&P company above a billion dollars in market cap, excluding the majors. So this includes all of the very large E&P companies as well. And Talos is consistently a top decile performer on all of these measures.

Sergio L. Maiworm: This includes all of the.

Sergio L. Maiworm: Very large E&P companies as well in palaces consistently a top decile performer on all of these metrics.

Sergio L. Maiworm: On page 16, I want to talk about our priorities for maximizing free gas flow and how we're going to utilize our free gas. First and foremost, we're laser focused on delivering and executing our business plan. That is the main focus for 2020.

Sergio L. Maiworm: On page 16, I wanted to talk about our priorities for maximizing free cash flow and how we're going to utilize our free cash flow first and foremost we're laser focused on delivering and executing our business plan that is the main focus for 2024 and as Tim mentioned the quarter North integration is well underway and go.

Sergio L. Maiworm: And as Tim mentioned, the Quarter North integration is well underway and going very well. We believe the Quarter North acquisition adds a significant amount of scale to the business, as well as high-margin oil-weighted production for our portfolio, which, combined with our industry-leading NETVEC margins that we talked about earlier, and our streamlined capital program for 2024, puts us on a great path to deliver on the business plan this year. Regarding our full-year guidance, we're reiterating our operational and financial guidance, and we continue to expect an average production for the year between 89 and 95,000 barrels of oil equivalent per day.

Sergio L. Maiworm: Very well, we believe the quarter North acquisition adds a significant amount of scale to the business as well as high margin oil weighted production to our portfolio with which combined with our industry, leading netback margins that we talked about earlier and our streamlined capital program for 2024.

Sergio L. Maiworm: Puts us.

Sergio L. Maiworm: Great path to deliver on that on the business plan this year.

Sergio L. Maiworm: Regarding our full year guidance, we're reiterating our operational and financial guidance and we continue to expect an average production for the year between 89, and 95000 barrels of oil equivalent per day and that is about 71% oil and about 80% liquids.

Sergio L. Maiworm: And that is about 71% oil and about 80% liquid. As I mentioned previously, this includes a little less than 10 months of contribution from the quarter north assets, as well as expected downtime estimates for the HP1 dry dock and CATMI facilities work, among others, and unplanned downtime for weather-related events and potential downstream events from others. The second quarter production, we expect 93,000 to 96,000 barrels of oil equivalent per day and about 70% oil.

Sergio L. Maiworm: As I mentioned previously this includes a little less than 10 months of contribution from the quarter north assets as well as expected downtime estimates for the HP, one dry dock and <unk> facilities work, among others and unplanned downtime for weather related events and potential downstream events from us as well.

Sergio L. Maiworm: In the second quarter production.

Sergio L. Maiworm: We expect 93 to 96000 barrels of oil equivalent per day, and about 70% oil and that includes the expected planned downtime for DXP, one, which as we said earlier is roughly six 5% to 6000 barrels of oil equivalent per day.

Sergio L. Maiworm: And that includes the expected planned downtime for DHP1, which, as we said earlier, is roughly 5,000 to 6,000 barrels of oil equivalent per day. We also remain steadfast in our debt reduction goals, as we mentioned earlier, and we have increased that goal from $400 million to $550 million. In our capital investments for 2024, we have a mix of development and exploration, and we believe that is the right mix to create the most value for shareholders over the long term. Lastly, M&A continues to be a pillar of our strategy, and we continue to actively seek further accretive M&A opportunities to accelerate our growth trajectory, deliver on our strategy, and create further value for shareholders. And now I'd like to turn the call back to Tim to wrap up with our key takeaways for the quarter.

Tim: We also remain steadfast in our debt reduction goals as we mentioned earlier and we have increased that goal from 400 million to $550 million.

Tim: And our capital investments for 2024, we have a mix of development and exploration and we believe that is the right mix to create the most value for shareholders in the long run.

Tim: Lastly, M&A continues to be a pillar of our strategy and we continue to actively seek further accretive M&A opportunities to accelerate our growth trajectory deliver on our strategy and create further value for shareholders.

Sergio L. Maiworm: And now I'd like to turn the call back to Tim to wrap up with our key takeaways for the quarter.

Timothy S. Duncan: Thanks, Sergio. Let's move to page 17.

Tim: Thanks, <unk>, let's move to page 17, so I think it's a great wrap up slide.

Timothy S. Duncan: I think it's a great wrap-up slide. You know, we think we're one of the most important counterparties in the Gulf of Mexico. And Sergio mentioned how we're thinking about M&A and certainly an important part of our strategy, but really, as I think about us as a counterparty, that includes business development activities such as the JV we announced in the fourth quarter with Repsol, the other JV we announced with BP and Chevron, our prospect swaps, and we have partnerships with critical private companies in the Gulf of Mexico. It's important that we take on this leadership position for a strategy that's focused on offshore infrastructure.

Tim: We think we're one of the most important counterparties in the Gulf of Mexico, and Sergio mentioned, how we are thinking about M&A and certainly an important part of our strategy, but really as I think about us as a counterparty that includes business development activities such as the JV, we announced in the fourth quarter with Repsol. The other JV, we announced with BP and Chevron are prospects swaps we have.

Timothy S. Duncan: Partnerships with critical private companies in the Gulf of Mexico. It is important that we take on this leadership position for a strategy that's focused on offshore infrastructure, you've got a high quality and stable asset base. When we have these deepwater discoveries and they come online and we bring on those new wells. It helps us better manage our base decline, which is around 20%. When these assets are flowing at four <unk>.

Timothy S. Duncan: We've got a high quality and stable asset base. When we have these deep water discoveries and they come online, and we bring on those new wells, it helps us better manage our base decline, which is around 20%. When these assets are flowing at full rate, they're flowing at over 105,000 barrels equivalent a day.

Timothy S. Duncan: Rates are flowing at over 105000 barrels equivalent a day, we model through the downtime, but the capacity of these assets are great.

Timothy S. Duncan: We've modeled through the downtime, but the capacity of these assets is great. We think we, as Sergio talked about just in the last couple slides, we think we have one of the highest EBITDA margins in the E&P space based on our oil exposure, and we think it's underappreciated to deliver the feed cash flow yield that we're generating right now. We're committed to low leverage, and we've accelerated our debt reduction program, and we anticipate getting as high as $550 million, and that's important because it fully pays off the RBL, which gives us flexibility for the future.

Timothy S. Duncan: I think we as Sergio talked about just in the last couple of slides. We think we have one of the highest EBITDA margins in the E&P space based on our oil exposure and we think it's underappreciated the levered free cash flow yield that we're generating right now we're committed to low leverage and we've accelerated our debt reduction program and we anticipate getting as high as $550 million and Thats important because it is <unk>.

Timothy S. Duncan: Really pays off the RVO, which gives us flexibility for the future. We believe in the growth potential that we have talked about in this presentation. The good work we did in the last lease sale Julien Jbs, we have actively ongoing into drilling program. We have ongoing so a lot of catalysts in the system that we're very proud of and we're doing all of this while we continue to be committed to safe.

Timothy S. Duncan: We believe in the growth potential that we have. We talked about in this presentation the good work we did in the last lease sale, the drilling JVs we have actively ongoing, and the drilling program we have ongoing, so there are a lot of catalysts in the system that we're very proud of. And we're doing all this while we continue to be committed to safety and sustainability. You know, we've been putting out our ESG reports as one of the leaders in the Gulf of Mexico on how we think about sustainability, and we'll continue to do that. Even though we don't own TLCS, we're committed to the idea of the ecosystem that we're involved in, and we're proud of our efforts to date. So with that, I'll hand it over to you for questions.

Timothy S. Duncan: The sustainability, we've been putting out our ESG reports as one of the leaders in the Gulf of Mexico on how we think about sustainability will continue to do that even though we don't know dlcs, we're committed to the idea of the ecosystem that we're involved in and we are proud of our efforts to date.

Speaker Change: So with that I'll hand, it over for questions.

Unknown Executive: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the 1 on your telephone keypad. And should you wish to cancel your request, please press star followed by 2. If you are using a speakerphone, please lift the handset before pressing any keys.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session.

Unknown Executive: I have a question. Please press star followed by one on your telephone keypad and should you wish to cancel your request. Please press star followed later to you.

Speaker Change: Using a speaker phone. Please go ahead, Sir just one question one.

Unknown Executive: One moment, please, for your first question. Your first question comes from the line of Tim Rezvan from KeyBank Capital Market. Please go ahead.

Unknown Executive: One moment. Please for your first question.

Unknown Executive: Okay.

Unknown Executive: Your first question comes from the line of Ross <unk> from Keybanc capital markets. Please go ahead.

Timothy A. Rezvan: Good morning, folks. Thank you for taking my question. Unknown Speaker. Good morning, sir. I want to start with Sergio's comments for Jan to prepare. [inaudible] I think so.

Timothy A. Rezvan: Hey, good morning folks. Thank you for taking my question.

Timothy A. Rezvan: Hey, Jim I wanted to talk about.

Speaker Change: I will start and Sergio his comments.

Timothy A. Rezvan: Towards the end of my parents.

Timothy A. Rezvan: Script about actively seeking further.

Timothy A. Rezvan: M&A opportunities.

Timothy A. Rezvan: The integration has gone pretty well here.

Timothy A. Rezvan: Tim can you kind of gifts.

Timothy A. Rezvan: Any thoughts on what Youre seeing in the M&A landscape.

Timothy A. Rezvan: Kind of within the golf and outside it.

Timothy A. Rezvan: Think about it you know oils run here, but there's a lot of backwardation on the strip. So just curious kind of what you're seeing out there.

Timothy S. Duncan: I think it's maybe a little slower than where we were a year ago. We knew, you know, in the Gulf of Mexico, particularly, there were a couple key privates, and ultimately, those were Inven and Quarter North that we were focused on, and we knew they could bolster the business, and so we're proud of how we executed those. You know, there aren't those obvious candidates today, and so I think our focus has been really, you know, execution, which we're proud of for the first quarter. We're excited about the rest of the year.

Timothy A. Rezvan: I think it's maybe a little slower than where we were a year ago. We knew you know in the Gulf of Mexico, particularly there was a couple of key privates and ultimately that was invented in quarter North that we were focused on and we knew they could bolster the business and so we're proud of how we executed those you know theres not those obvious candidates today and so I think our focus has been really execution.

Timothy S. Duncan: Which we're proud of the first quarter. We're excited about the rest of the year Theres. Some tactical small things that we're thinking about when we think about our infrastructure and how to do things that are accretive to what we currently own tactically in the golf and certainly you know there might be some activity outside of the Gulf, but I would tell you that that's a slower churn and it's not where our focus is today.

Timothy S. Duncan: There are some tactical small things that we're thinking about when we think about our infrastructure and how to do things that are accretive to what we currently own tactically in the Gulf. And certainly, you know, there might be some activity outside the Gulf, but I would tell you that's a slower churn and it's not, you know, where our focus is today. And so, probably a little slower on that front than maybe in the last couple years, where we knew, you know, kind of what was coming.

Timothy S. Duncan: Probably a little slower on that front and maybe in the last couple of years, where we knew you know kind of what was coming theres a little less knowing of what is coming in Thats fine. We've got a team that's focused on it but I think it's more tactical it's more business execution, if I'm thinking about the near term.

Timothy S. Duncan: There's a little less knowledge of what is coming, and that's fine. We've got a team that's focused on it, but I think, you know, it's more tactical. It's more business execution if I'm thinking about the near term.

Unknown Executive: Okay. Okay.

Speaker Change: Okay. Okay I appreciate that.

Speaker Change: And then as my follow up.

Speaker Change: You partially answered my question in your prepared comments.

Unknown Executive: I appreciate that. And then, as my follow-up question, you partially answered my question in your prepared comments by saying that your goal is to have the credit facility paid off by the end of the year. So I'll follow up with something I asked last quarter. When you see leverage potentially getting below a billion, or excuse me, net debt below a billion, how do you think about maybe repurchases kind of reentering the equation or kind of what are the board's thoughts? I know you don't want to put the cart in front of the horse.

Unknown Executive: Your goal is to have the credit facility paid off by the end of the year. So I'll follow up with something I asked last quarter.

Unknown Executive: When you see leverage potentially getting below a $1 billion or excuse me net debt below 1 billion.

Unknown Executive: How do you think about maybe repurchases kind of reentering the equation or kind of what are the board's thoughts I know you want to put the cart in front of the horse.

Unknown Executive: But you have line of sight on these leverage reduction targets. How are you thinking about using incremental free cash flow after that? I can tell you the board's thoughts and our thoughts today are to get that RBL paid off, just because I think it provides maximum liquidity and flexibility.

Unknown Executive: But you have line of sight on these leverage reduction targets. How are you thinking about using incremental free cash flow. After that thanks, Yes, you look at it. It's a good question and I can tell you the board's thoughts in our thoughts today are kids get that our Vale paid off it just because I think it provides maximum liquidity and flexibility.

Timothy S. Duncan: You know, look, we still have a 50 million dollar authorization on the stock repurchases, and we can think about that. But I do think, you know, we're hyper focused on getting through the year and making sure that the revolvers are paid off. You can build up a little cash, you know, kind of for some of these tactical ideas we have. And I wouldn't hold back.

Unknown Executive: Look we still have a $50 million authorization on the stock repurchases and we could think about that but I do think you know we're hyper focused on getting through the year and make sure that revolvers paid off you can build up a little cash.

Timothy S. Duncan: For some of these tactical ideas, we have in and I Wouldnt hold back you know right now it's harder to restart your own operated capital program, but we do see a lot of opportunities out there as people are thinking about high grading their exploration and they're in their drilling joint ventures in your drilling inventory and I don't think we would lose side of if an opportunity came our way and we had cash available to invest in it.

Timothy S. Duncan: You know, right now, it's harder to restart your own operating capital program, but we do see a lot of opportunities out there as people are thinking about upgrading their exploration and their drilling joint ventures and their drilling inventory. And I don't think we would lose sight of that if an opportunity came our way and we had cash available to invest in a new opportunity. We would think about that. So I think we're going to have multiple board meetings throughout the course of the year.

Timothy S. Duncan: A new opportunity, we would think about that so I think we you know we're going to have multiple board meetings throughout the course of the year, we're going to think about where are we on the schedule. How do we think about some of those capital return policies against the opportunity set and really what's the best decision that creates long term value and sometimes you know if you have 25 million to deploy honest.

Timothy S. Duncan: We're going to think about where we are on the schedule. How do we think about, you know, some of those capital return policies against the opportunity set? And really, what's the best decision that creates long-term value? And sometimes, you know, if you have 25 million to deploy on a stock purchase versus an opportunity that comes your way to generate, you know, a 30, 40, 50 percent rate of return, you've got to think about each of those opportunities individually. So, you know, the near-term focus, again, is getting the RBL paid off. I think everything can be on the table once we accomplish that.

Timothy S. Duncan: Purchase versus an opportunity that comes your way that can generate you know 830 40, 50% rate of return you've got to think about each of those opportunities individually. So.

Timothy S. Duncan: Near term focus again getting the RVO paid off I think everything can be on the table once we accomplish that goal.

Speaker Change: Okay. Thank you.

Timothy S. Duncan: Yes.

Unknown Executive: Thank you. And your next question comes from the line of Subhasish Chandra from Benchmark. Please go ahead.

Timothy S. Duncan: Thank you and your next question comes from the line of <unk> Chandra from benchmark. Please go ahead.

Unknown Executive: Yeah.

Subhasish Chandra: Yeah. Hey, Tim, could you kind of talk about the production trajectory from, you know, now till year-end? And I think, you know, in your March presentation, you sort of had a slide talking about 105 to 110. You referenced 105, I think, in your comments, but 105 to 110 sort of being... It was a pro forma, but is that the baseline that we return to? And if you can kind of talk through that and what we should be expecting, say, as an exit rate for the year? Yeah,

Subhasish Chandra: Yes, Hey, Tim.

Subhasish Chandra: Could you kind of.

Tim: Talk to the production trajectory.

Subhasish Chandra: Now till year end.

Subhasish Chandra: And I think in.

Subhasish Chandra: March presentation sort of got a slide talking about 105 to one you referenced 105 I think in your comments, but 105 to 110 sort of being it.

Subhasish Chandra: It was the pro forma but is that.

Subhasish Chandra: This line that we returned to and if you can kind of talk through that.

Subhasish Chandra: What we should be expecting as an exit rate for the year.

Timothy S. Duncan: Yeah. Thanks, Subhas.

Subhasish Chandra: Yep.

Tim: Thanks, you Bosch Yeah, you know look I think it is an important slide because what we're trying to talk about there is kind of unencumbered production. So when everything is running right. How do you start the concept around where you get to ultimately where we landed on guidance and so even when I talked about I think in the last call. The first month the assets together, even before we close averaging one six and before Drydock.

Timothy S. Duncan: Yeah, you know, look, I think it's an important slide because what we're trying to talk about there is kind of unencumbered production. So when everything's running right, how do you start the concept around where you get to, ultimately, where we landed on guidance? And so even when I talked about, I think in the last call, the first month, the assets together, even before we closed at 106 and before Dry Dock at 105, there was a little downtime in there.

Timothy S. Duncan: Grabbing what a five theres a little downtime in there theres always some downtime into system as we're doing you know rotating equipment.

Timothy S. Duncan: There's always some downtime in the system as we're doing, you know, rotating equipment, doing some kind of other construction projects around these assets. From there, you know, then you're trying to plan out when this downtime can occur, what's in your control, and what's out of your control. Obviously, for example, HP1, the timing of when that vessel gets to Dry Dock is not within our control when we're waiting on something like thrusters that they have to replace.

Timothy S. Duncan: Doing some kind of other construction projects around these assets from there you know you're then you're trying to play it out when this downtime can occur what's in your control what's out of your control. Obviously for example, HP one the timing of when that vessel gets to dry dock is not within our control and we're waiting on something like clusters did they have to replace.

Timothy S. Duncan: So we had, you know, some downtime as soon as we owned the assets in the quarter north around Katmai. We knew that downtime was important to help us set up what we're excited about and drill that well. Now we're in the second quarter; we're going to have downtime in HP1, some third-party downtime downstream of our Pompano facility, and these aren't small downtimes. You know, you've got a facility like the HP1 where, net to us, we're close to 9,000 barrels equivalent a day or the Pompano facility where it's over 10,000 barrels equivalent a day.

Timothy S. Duncan: So we had some downtime as soon as we owned the assets in quarter North about Katmai, we knew that downtime was important to help us set up while we're excited about and drilling that well now were in the second quarter, we're going to have downtime and the HP. One some third party downtime downstream of our Pompano facility and these are small downtowns you know you've got a facility like the HP one were net to us.

Timothy S. Duncan: US we're close to 9000 barrels equivalent a day or are the pompano facility, where it's over 10000 barrels equivalent a day, so they're chunky downtime, but that's why we wanted to kind of walk through that in that deck. That's on the on the site as we laid out our guidance. So everything's on track I think even the quarter north assets for the quarter had been averaging well over 30000 barrels equivalent of <unk>.

Timothy S. Duncan: So they're chunky downtimes, but that's why we wanted to kind of walk through that on that deck that's on the site as we laid out our guidance. So everything's on track. I think even the quarter north assets for the quarter have been averaging well over 30,000 barrels equivalent a day, which we talked about when we bought the assets. So again, all the assets are performing very well. This is really around the cadence of that downtime.

Timothy S. Duncan: Day, which we talked about when we bought the assets. So again all the assets are performing very well. This is really around the cadence of that downtime some of that in your control some of that could slip we will try to make sure. We got that every quarter, but if we're not changing anything relative to the annual guidance you can expect that to kind of tick up as we go throughout the year again some of Thats weather.

Timothy S. Duncan: Some of that is in your control; some of that could slip. We'll try to make sure we guide that every quarter, but if we're not changing anything relative to the annual guidance, you can expect that to kind of tick up as we go throughout the year. Again, some of that's weather-dependent as well. So look, I think if that ticks up, you can expect operating costs as a unit of production to go down.

Timothy S. Duncan: Dependent as well so.

Timothy S. Duncan: Look I think it's that ticks up you can expect operating cost as a unit of production to go down and so I think you know.

Timothy S. Duncan: And so I think, you know, I'm really happy with the first quarter. We had beats in production and EBITDA and CAPEX and free cash flow. And you would expect that, we would expect that to continue as we go throughout the year.

Timothy S. Duncan: Really happy with the first quarter, we had beats in production and EBITDA and Capex and free cash flow you expect that we would expect that to continue as we go throughout the year.

Unknown Executive: Okay, got it. So, is it fair to say the downtime is mostly or maybe entirely due to legacy assets, and that we should be thinking...

Speaker Change: Okay got it so.

Unknown Executive: It looks like is it fair to say the downtime is.

Unknown Executive: Mostly or maybe entirely legacy assets and that we.

Speaker Change: We should be thinking.

Unknown Executive: Yeah, no, well, look, Katmai was the big piece of the downtime in the first quarter, you know, and I think I showed that in the graph. And look, we couldn't be more excited about that asset. And honestly, you know, there were some repairs and maintenance that we did during that downtime, which was actually a third-party pipeline downtime. We actually did a couple things that actually raised production by 1000 barrels a day on that facility as a result of doing some repairs during that downtime.

Speaker Change: Yeah, No we'll look at them I was the big piece of that downtime in the first quarter.

Unknown Executive: I showed that on the graph and look we couldnt be more excited about that asset and I honestly.

Unknown Executive: Is there was some repairs and maintenance that we did during that downtime, which is actually a third party pipeline downtime. We actually did a couple of things that actually raise production 1000 barrels a day on that facility as a result of doing some repairs during that downtime. So you know this downtime is for the benefit of these assets, let's be clear about that now in the second quarter, Yeah, that's gonna be more tell us legacy.

Unknown Executive: So, you know, this downtime is for the benefit of these assets. Let's be clear about that. Now, in the second quarter, yeah, that's going to be more Talos legacy, but as we go into the third quarter, it could be a mix of both assets. So, you know, it's not, I don't want to say we're pinning it on either of these asset sets, because it's just part of the aggregate pro forma business. I think what we're trying to do is be more transparent to you guys and more transparent to the market on how we think about production and offshore assets relative to onshore assets and how you should try to think about modeling downtime and modeling weather, starting with a clean run rate. And I think that was the purpose of the slide we had on the last deck, and we'll continue to have that slide in our future decks. Okay.

Unknown Executive: As we go into the third quarter it could be a mix of both assets. So it's not I'd say, we're pinning it on either of these assets. That's because it's just part of the aggregate pro forma business I think what we're trying to do is be more transparent to you guys a more transparent to the market on how we think about production and offshore assets relative to onshore assets and how you should try to think about modeling.

Unknown Executive: Downtime them up modeling, whether starting with a clean run rate and I think that was the purpose of this slide we had in the last.

Unknown Executive: The last deck and we'll continue to have that slide in our future decks.

Unknown Executive: Okay, I got it. All right. Thanks.

Speaker Change: Okay got it.

Unknown Executive: Thanks.

Unknown Executive: Okay.

Unknown Executive: Thank you. And your next question comes from the line of Leo Mariani from Roth MKM. Please go ahead.

Unknown Executive: Thank you and your next question comes from the line of Neil Mcgee from Roth MTN. Please go ahead.

Leo Paul Mariani: Hi, I wanted to talk a little bit more about CATMI, number two. How do you kind of think about the potential risk, you know, associated with that? Well, I mean, you guys basically certainly expect it to kind of be incremental to production. Is it maybe just a matter of how much production and reserves it's going to potentially add? Maybe just to give us a little more color on that.

Leo Paul Mariani: Hi, I wanted to talk a bit about more about cat my number two how do you kind of think about the potential risk.

Leo Paul Mariani: Associated with that well.

Leo Paul Mariani: I mean, you guys basically certainly expect it to kind of be incremental to production is it may be just a matter.

Leo Paul Mariani: How much production and reserves its going to potentially add maybe just can you give us little more color on that.

Timothy S. Duncan: Well, you know, look, when you've got kind of what I'd call operational risk, and then you've got broadly what's happening from the subsurface perspective, Leo. Now, operationally, the one thing that we tried to harp on here without getting too nerdy about it is we've got these bottom hole pressure gauges right there at the perforations.

Speaker Change: Well you know look when you're you've got kind of what I'd call operational risk and then you've got broadly whats happening from the subsurface perspective Leo no.

Timothy S. Duncan: Operationally, but one thing that we tried to harp on here without getting too nerdy about it is we've got these bottom hole pressure gauges right. There at the perforations and so we know exactly what's happening when we flow well, we know how that wells declining and when we shut in a well we know how that pressure is building up that helps us with the planning of a well we kind of know exactly what we're entering into.

Timothy S. Duncan: And so we know exactly what's happening when we flow a well; we know how that well is declining. And when we shut in a well, we know how that pressure is building up. That helps us with the planning of a well. We kind of know exactly what we're entering into. And then we've got better seismic data, and we're going through a lot of reprocessing that you know, Leo, we do all the

Timothy S. Duncan: We've got better seismic data, we're going through a lot of reprocessing the Juno Leah we do all the time. So we think we've got a good picture of the structure geologically you have got a good handle on what's happening from a pressure environment. The team can design the well the purpose of the world. Though is just to try to go see what this feature looks like as we get further away from the current well it's certainly.

Timothy S. Duncan: So we think we've got a good picture of the structure geologically, you've got a good handle on what's happening from a pressure environment, the team can design the well. The purpose of the well, though, is just to try to see what this feature looks like as we get further away from the current well. And certainly, nothing's guaranteed.

Timothy S. Duncan: Nothing's guaranteed I mean, you could go down there and learned something different than what you anticipate for what we hope is that we're going to expand the geological column, but we're going to open up that geological structure and by doing so we have a chance to add significant amount of reserves and Thats, where you get into the full upside picture. So if you can imagine as we worked with an auditor like nonetheless.

Timothy S. Duncan: I mean, you could go down there and learn something different than what you anticipate. But what we hope is that we're going to expand the geological column, and we're going to open up that geological structure. And by doing so, we have a chance to add a significant amount of reserves. And that's where you get into the full upside picture.

Timothy S. Duncan: So if you can imagine, you know, as we work with auditors like Nothel and Sewell, we're working with them to try to say, hey, look, how do we think about proved, which is just the column that you found in the first well? How do we think about probables and possibles? All of that gets into that broader resource. And just based on the data we have so far, there could be a meaningful resource there.

Timothy S. Duncan: Well, we're working with them to try to say Hey look how do we think about proved which is just the column that you found in the first well how do we think about probable and possible is all of that gets into that broader resource and just based on the data we have so far there could be a meaningful resource there Hugh.

Timothy S. Duncan: You can wait and produce it, and it's going to take you a while to convince everybody that that resource has its full potential. Or you can do a combination of producing, analyzing, and drilling for it. And I think it makes sense for us to drill for it. So we look, and we think that, you know, this kind of fits in that combination of probable and possible categories. And so, kind of, more than 50% more likely than not, but, you know, we are at 27,000 feet. And so, you know, I think we're going to have to go find out. But I think we're very optimistic about what we're doing this year.

Timothy S. Duncan: Can wait and produce it and it's going to take you a while to convince everybody that that resource has that full potential or you can do a combination of producing analyzing and drilling for it and I think it makes sense for us to drill for it. So look we think that this.

Timothy S. Duncan: Kind of fits in that combination of probable and possible categories, and so kind of in that more than 50% more likely than not but we are.

Timothy S. Duncan: Our 27000 feet and so I think we're going to have to go find out but I think we're very optimistic about what we're what we're doing this year on cat litter.

Unknown Executive: Okay, now that was great, very thorough there. And I just wanted to follow up on Quarter North in the synergies. I think you mentioned that you thought you'd get to kind of a 30 million kind of run rate by the end of the year, kind of at 20 million now, and you get the full 55 next year. Is the 30 million this year primarily just the kind of the G&A savings and maybe some of the interest that you might have got, and is the operations stuff kind of the extra 25, you know, next year? I know you're talking about potentially being able to lower some of the operating costs as the year goes on, but I just want to get a little more color around.

Speaker Change: Okay that was great very thorough there.

Unknown Executive: And then just wanted to follow up on quarter north in the synergies.

Unknown Executive: I think you mentioned that you thought you would get to kind of $30 million kind of run rate by the end of the year kind of a $20 million now and you get the full 55 next year.

Unknown Executive: Is the $30 million. This year, primarily just the kind of the G&A savings and maybe some of the interests that you might have gone in as the op stuff kind of the extra 25 next year. I know you are talking about potentially being able to lower some of the op cost as the year goes on just want to get a little more color around the numbers.

Sergio L. Maiworm: Hey Leo, this is Sergio. Happy to answer that. Yeah, I would say in 2024, the majority of those synergies are going to come through G&A savings. We do expect some of that to be from insurance cost reduction as well as as we put the two portfolios together. We have meaningful savings there. As the year progresses, we do expect to start realizing some of those operational synergies. But most of those operational synergies should materialize in 2025, but we should start seeing some of that as the year progresses as well.

Unknown Executive: Hey, Leo this is Sergio I'm happy to answer that yeah, I would say in 2020 for the majority of those those synergies are going to come through G&A savings. We do expect some of that to be from insurance cost reduction as well as we put the two portfolios together, we have meaningful savings there.

Sergio L. Maiworm: And.

Sergio L. Maiworm: As the year progresses, we do expect to start realizing some of those operational synergies.

Sergio L. Maiworm: But most of those operational synergies should materialize in 2025, but we should start seeing some of that as the year progresses as well.

Unknown Executive: And I guess just on the operational synergies, is that largely going to show through in LOE and maybe some in CapEx as well? Just trying to make sure I understand how that impacts the financials.

Sergio L. Maiworm: Okay, and I guess just on the op synergies is that largely going to show through.

Unknown Executive: And then maybe some in Capex as well just trying to make sure I understand how that hits the financials, yeah, youre going to see it in both.

Sergio L. Maiworm: Yeah, you're going to see it in both. I think we can optimize some of the logistics with helicopters and vessels, and some with the supply chain. There are some yards and how we manage spare parts and things of that nature. That is going to be the majority of those savings on the LOE side of things. And on the capital side, obviously, we can optimize rig lines; we can better manage how we drill wells and the sequence of those wells, etc.

Sergio L. Maiworm: Think we can optimize some of the some of the logistics with helicopters and vessel somewhat supply chain.

Sergio L. Maiworm: There are some yards and how we manage spare parts and things of that nature of that is going to that is going to be the majority of those are are those savings on the LOE side of things and then on the capital side. Obviously, we can optimize rig lines, we can better manage how we drill wells and how big the sequence of those wells et cetera.

Speaker Change: Right so.

Sergio L. Maiworm: So most of the operational synergies that I talked about just a minute ago, I was referring more to LOE. I think as we plan for 2025 and beyond, you should start seeing more and more of that in capital as well. Yeah, I would say, Leo, a little different than onshore where we might have somebody with assets in Eagle for multiple rig lines, multiple track lines, and then they just figure out how to bring those together.

Sergio L. Maiworm: Most of the operational synergies that I talked about just a minute ago I was referring more to low I think as we plan for 2025 and beyond you should start seeing more and more of that in capital as well.

Sergio L. Maiworm: I would say a little different than onshore, where we might have somebody has assets in eagle Ford with multiple rig lines multiple frac lines and then they just figure out how to bring those together you see a little less of that offshore because how we pull these rigs and can be unique to any one budget year.

Sergio L. Maiworm: You see a little less of that offshore because how we pull these rigs in can be unique to any one budget year. So, like Sergio said, a little more on LOE, but ultimately, it hits both sides.

Sergio L. Maiworm: Led searches that are little more on L O, but ultimately it hits both sides.

Unknown Executive: Okay, I appreciate it. Thanks. All right. Thanks, Leo.

Speaker Change: Okay I appreciate it thanks, alright, thanks Leah.

Unknown Executive: Okay.

Unknown Executive: Thank you. And your next question comes from Kev Robertson from Waterloo.

Speaker Change: Thank you and your next question comes from the line of Jeff Robertson.

Jeffrey Woolf Robertson: Colbert Research. Please go ahead.

Unknown Executive: Good morning, Tim. To follow up on your comments around Katmai West, am I right in thinking that the combination of pressure data and the minimal drawdown that you've seen over eight months of production plus reprocess seismic makes you think that the container is bigger, which justifies drilling the number two well to try to test that theory and maybe add reserves and accelerate production.

Jeffrey Woolf Robertson: Thank you good morning, Tim to follow up on your comments around my Western my right in thinking that the combination of.

Unknown Executive: The pressure data and the minimal drawdown that you've seen over eight months of production plus reprocessed seismic makes you think that the container.

Unknown Executive: Figure, which justifies drilling.

Unknown Executive: Number two well to try to test that theory.

Unknown Executive: And maybe add reserves and accelerate.

Unknown Executive: Production.

Timothy S. Duncan: Yeah, look, I don't know if it's the answer that yes, Jeff, but I would say we've always been optimistic about this asset. It's one of the reasons we went and bought the trend, you know, executed on the transaction in the first place. I mean, when we, you know, we've been having our eye on this asset since it was discovered, you know, we had a chance to potentially buy a working interest in it in a transaction in 19. And we waited and got better data, and feel good about adding it to the portfolio. We did the transaction in 2023.

Tim: Yeah look I don't know if it's easy to answer that is yes, yet, but I would say we've always been optimistic about the SaaS. It's one of the reasons, we went and bought the trend executed on the transaction in the first place I mean when we.

Timothy S. Duncan: So we've been we've had our eye on this asset since it was discovered we had a chance to potentially buy a working interest in it and a transaction and 19, and we waited and got better data and feel good about adding it to the portfolio. When we did the transaction in 2023. So we've been bullish about the area, but when you get down to the very details of what Youre allowed to book in proved reserves.

Timothy S. Duncan: So we've been bullish about the area. But when you get down to the very details of what you're allowed to book and prove reserves, you know, you and the auditor you're working with need to see something more than just your intuition, right? And so at some point, you've got to physically expand that geological column into reasonable certainty, either through that information or ultimately getting physical data like drilling a well and getting the data yourself.

Timothy S. Duncan: You add the auditor youre working with need to see something more than just your intuition right at some point you've got to expand physically expand that geological column into reasonable certainty either through that information or ultimately getting physical data like drilling a well in getting the data yourself and so for us to accelerate that value into proved its going to be.

Timothy S. Duncan: And so, you know, for us to accelerate that value and get it approved, it's going to require a well, and so then you have to decide where you are, you know, how you feel about the risk of drilling that well, which is a question I think Leo asked. We feel good about it. So, you know, we've always been bullish about the area; it's time to go put some capital into it. So we can go back to the auditors and show them why we think this feature is as big as we hope it is.

Timothy S. Duncan: <unk> well and so then you have to decide where are you. How do you feel about the risk of drilling that well, which is a question I think Leo ask and we feel good about it. So you know we've always been bullish in the area. It's time to go put some capital to it. So we can go back to the auditors and show why we think this features as big as we hope it is and you're right look there's going to be some pressure declines you want that.

Timothy S. Duncan: And you're right, look, there's going to be some pressure declines; you want that. It's the pace of those declines relative to the volume that gives you confidence as you go design a well.

Timothy S. Duncan: The pace of those declines relative to the volume it might be seeing that gives you the confidence as you go design it well.

Timothy S. Duncan: Tim, do you think it has the potential to add value that might not have been fully quantified when you purchased Quarter North?

Timothy S. Duncan: Tim do you think it has the potential to add value that might not have been fully quantified when you purchase quarter north.

Timothy S. Duncan: It certainly wasn't an underwritten purchase price. I mean, look, we were buying this asset; it was almost proved developed. And so I can tell you right now that just the minimum volumes coming through the current production is what we're able to get into production. It's still a young discovery in that regard.

Tim: Certainly wasn't into underwritten purchase price I mean look we're buying this asset had almost proved developed and so I can tell you right now that you're just the minimum volumes coming through the current production is what we're able to get into proved it's still a young discovery in that regard. So there is no doubt that what we're trying to go execute here is outside the underwritten economics. It's.

Timothy S. Duncan: So there's no doubt that what we're trying to do here is outside the underwritten economics, and it's not reflected in the stock price. As Sergio talked about, we obviously think we have a totally underappreciated valuation on the stock price. So all of this is upside to either how we financed and fundamentally put together the transaction, and certainly all this is a catalyst for the stock.

Timothy S. Duncan: It is torture not reflected in the stock prices Sergio talked about we obviously, we think we have a totally underappreciated valuation on the stock price. So all of this is upside to either how we financed and fundamentally put together to transaction and certainly all of this is a catalyst for the stock.

Timothy S. Duncan: And then just to follow, you talked about infrastructure and the importance of owning infrastructure, and you've seen that at Rampow. With Tarantula, I think you all own or Talos owns a 50% interest in and has an override. Can you talk about the margin impact of adding barrels through owned facilities and the kind of fees you collect and how that enhances Talos' own margins? Yeah.

Timothy S. Duncan: And then just to follow you talked about infrastructure and the importance of owning.

Timothy S. Duncan: Owning infrastructure and you've seen that at Ram Powell.

Speaker Change: <unk>. Thank you all all of our telephones, 50% interest in and it Hasnt override can you talk about the margin impact of adding barrels through owned facilities.

Timothy S. Duncan: And the kind of fees that you collect and how that enhances Thomas is on margins, yeah, well it's interesting.

Timothy S. Duncan: Yeah, well, it's interesting. And, you know, that's another one we're, you know, following on maybe where Leo's question is, is you think about these volumes. So we own that tarantula facility at 100%. And as you referenced Rand Powell, we own that facility at 100%. We drill line rock in Venice at 60%.

Timothy S. Duncan: That's another one we're following on maybe where <unk> question is as you think about these volumes. So we own that tradeshow facility at a 100%. So you referenced Ram Powell, we own that facility at 100%, we drilled lime rock and finished at 60%. So that other 40% was with the private private partner private company a great partner of ours.

Timothy S. Duncan: So that other 40% was with a private, private partner, a private company, a great partner of ours, and they're, we're gonna, they're gonna pay us a handling fee to manage their production. And then, ultimately, that offsets our operating costs. So we get the benefit of the economics of drilling the well; we get a secondary benefit; when we own a facility at a greater working interest than the wells coming to that facility, that means some other party is paying us production handling. This one manifests itself as an override.

Timothy S. Duncan: We're going to they're going to pay us a handling fee to manage their production and that ultimately that offsets our operating cost. So we get the benefit of the economics of drilling the well we get a secondary benefit when we own the facility at a greater working interest than the wells coming to that facility that means some other party is paying us a production handling this.

Timothy S. Duncan: This one it manifests itself in an override so there's different structures on how that works, but ultimately they all contribute to lowering your overall lifting cost setup and increasing your netback per Boe margins, which again Sergio talked about on the call. So that's the benefit of infrastructure not only do they aid in your own break evens and lowering those break evens and <unk>.

Timothy S. Duncan: So there are different structures for how that works, but ultimately, they all contribute to lowering your overall lifting costs, setting up, and increasing your net back per BOE margins, which again, Sergio talked about on the call. So that's the benefit of infrastructure. Not only does it aid in your own break-evens and lower those break-evens and give yourself a chance at more inventory than you may not have in the Gulf of Mexico if you didn't operate this infrastructure, but there's a secondary benefit when you're collecting what we call production handling or PHA revenue or offsetting our operating costs. And so all of that works itself through in CAPMI. The bigger that might be, the more of that secondary benefit. Thank you.

Timothy S. Duncan: Yourself a chance at more inventory than you may not have in the Gulf of Mexico. If you didn't operate this infrastructure, there's a secondary benefit when you're collecting what we call a production handling our PHA revenue are offsetting our operating cost and so all of that works itself through a cat my the bigger that might be the more of that secondary benefit.

Speaker Change: Thank you.

Timothy S. Duncan: Thanks.

Unknown Executive: Thank you. And your next question comes from the line of Nate Pendleton from CIVL. Please go ahead.

Timothy S. Duncan: Thank you and our next question comes from the line of Nathan <unk> from Stifel. Please go ahead.

Nathaniel David Pendleton: Good morning. Thanks for taking my question. My first question regarding future partnership opportunities that some of what you just alluded to there and with offshore back in the spotlight a bit, how should we think about the sweet spot working interest for Talos on a given prospect more from a risk tolerance perspective going forward?

Nathaniel David Pendleton: Good morning, Thanks for taking my questions.

Speaker Change: And one note.

Nathaniel David Pendleton: My first question regarding future partnership opportunities that.

Nathaniel David Pendleton: Some of the what you just alluded to there and with offshore back in the spotlight a bit how should we think about the sweet spot working interest for Telus on a given prospect more from a risk tolerance perspective going forward.

Timothy S. Duncan: Yeah, look, that's a good question. I mean, you know, we do start with, what are the things that can help manage corporate decline over the next 12 to 15 months? And so what can we do on the development side? That might be a little higher working interest; it might not really require some of those joint ventures. So what we're doing in the lobster field is an example of that. And, you know, again, as referenced in the deck, that's a really cool project.

Nathaniel David Pendleton: Yeah look that's a good question I mean, we do start with what are the things that can help manage corporate decline over the next 12 to 15 months and so what can we do on the development side that might be a little higher working interest it might not really require some of those joint ventures. So what we're doing in the lobster field as an example of that and again referenced in the deck, that's a really cool project.

Timothy S. Duncan: And so our first priority is making sure we're identifying a portfolio around those types of opportunities. And then we get to what I would call that middle market, more likely than not, two of every three work, and that's the venison lime rock types, the sun spirit types, those prospects can be 12 to 20 million barrels; they're one well tiebacks. Typically, we don't want to do those at 100%. We'd like a partner for those, but we may lean in and have a 50-60 working interest, again, like you saw with venison lime rock.

Timothy S. Duncan: And so we won our first priority is making sure we're identifying portfolio around those types of opportunities and then we get to what I would call that middle market more likely than not to have every three work and that's the visits and lime rock types. The Sun spirit types. Those prospects can be 12 to 20 million barrels there one well tie backs typically we don't.

Timothy S. Duncan: Do you have those at 100%, we'd like to partner for those but we may lean in and have a 50% 60% working interest again, what you saw in minutes and lime rock and then at least once a year depending on the year, maybe twice a year, we want to kind of put a test out there that could have a really high impact <unk>. As an example of that those are typically sub salt when you look at the landscape of those tie.

Timothy S. Duncan: And then at least once a year, depending on the year, maybe twice a year, we want to kind of, you know, put a test out there that could have a really high impact. And Daenerys is an example of that.

Timothy S. Duncan: Those are typically sub-salt, and when you look at the landscape of those types of risk-reward opportunities, they have a higher well cost, and we should probably have, and they have a, you know, kind of a lower chance of success, but they can be impactful if they work. And they can have a long resource life. And Katmai at some point was that kind of high impact prospect; it's now a high impact discovery, but we're probably gonna have a little less working interest, maybe 25 to 30%, which is where we are at Daenerys at 30%.

Timothy S. Duncan: A risk reward opportunities they have a higher well cost and we should probably have and they have a kind of a lower chance of success, but they can be impactful if they work and they could have a long resource life and cat might at some point was that kind of high impact prospect is now high impact discovery, but we're probably going up a little less working interest maybe 25% to 30%, which is where we are at the nearest.

Timothy S. Duncan: So it's just a little bit of an education in how we think about that. We want to make sure we've got the right reinvestment rate; we want to make sure we have the right shots on goal. One thing I've talked about in previous calls is that we can have a very busy year, both on the drilling and hookup side one year, and then a lighter year the next year. So you kind of have to think about our portfolio in two-year cycles, depending on, you know, kind of what the success is on the wells we drill. But that gives you an example of the risk-reward mix.

Timothy S. Duncan: At 30%. So that's just a little bit of an education on how we think about that.

Timothy S. Duncan: We want to make sure we've got the right reinvestment rate, we want to make sure. We had the right shots on goal one thing I've talked about in previous calls as we could have a very busy year, both in the drilling and hookup side, one year and then a lighter year. The next year. So you kind of have to think about our portfolio of two year cycles, depending on kind of what the successes on the wells, we drill but that gives you an example to risk risk.

Timothy S. Duncan: Award mix.

Unknown Executive: That's great detail. I appreciate it. And for my follow-up, referencing slide 9 that you touched on in your prepared remarks, it looks like most of the blocks you acquired are in areas that have existing seismic or adjacent to current paperage. With the exception of the blocks at the bottom in Walker Ridge, is there anything you can share about those blocks or blocks in general, where you're kind of stepping out of either your seismic coverage area or the existing footprint? Yeah,

Speaker Change: That's great detail I appreciate it and for my follow up.

Unknown Executive: Slide nine that you touched on in your prepared remarks, but it looks like most of the blocks you acquired are in areas that have existing seismic or adjacent.

Unknown Executive: Acreage with the exception of the blocks at the bottom on Walker Ridge is there anything you can share about those blocks are blocked in general where you're kind of stepping out of either seismic coverage area or the existing footprint.

Timothy S. Duncan: Yeah, so there's a deep play that we think is evolving down in that area. And we've got, you know, there's some ancillary seismic in there that we have that probably should have shown up on this map. And so, you know, that's a longer hold, you know, so a lot of what we do, you know, there are some things that we can identify and say, hey, look, I know exactly what that does. It's geophysically driven, meaning that we think it's got a hydrocarbon indicator or an amplitude depending on, you know, Nate, who you talk to.

Speaker Change: Yeah. So there's a there's a deep play that we think is evolving down in that area.

Timothy S. Duncan: And we've got you know there are some ancillary seismic in there that we have that it probably should have shown up on this map and so.

Timothy S. Duncan: That's a longer hold so a lot of what we do.

Timothy S. Duncan: There are some things that we can identify and say hey look I know exactly what that does is G. It physically driven meaning it we think it's got a hydrocarbon indicator or an amplitude depending on who you talk to and Thats, one that youre going to start permitting and defining and get under drilled calendar in the next three years and then there's other things you're doing where you say hey look there's a big geological play here.

Timothy S. Duncan: And that's one that you're going to start permitting and defining and getting on your drill calendar in the next three years. And then there are other things you're doing where you say, hey, look, there's a big geological play here, we can see why the majors are looking at it. If this takes off, we want to have an acreage position. And these are longer holds; they're 10 year leases.

Timothy S. Duncan: We can see why the majors are looking at it. If this takes off we want to have an acreage position and these are longer holes, there 10 year leases and so you're trying to grab it while you can knowing that it may be something that bears fruit down the road. So there's always a little bit of that every time, we go to a lease sale and I think that's an example of that so deeper play I actually do think we have a little data.

Unknown Executive: And so you're trying to grab it while you can, knowing that it may be something that bears fruit down the road. And so there's always a little bit of that every time we go to a lease sale. And I think that's an example of that. So deeper play, I actually do think we have a little data down there that might be a misprint on our side. But I could just tell you, just by saying the words Walker Ridge, it's going to be a little deeper game, a little longer hold.

Unknown Executive: Down there that might be a misprint on our side, but I can just tell you just by saying the words Walker Ridge [laughter], it's going to be a little deeper play a little longer hold but I mean, this is a basin where the minute you focus too much on one of those risk reward strategies. If you focus too much on development, our focus too much on that middle market prospect and don't think about some of these deep evolving plays you've missed the benefit of.

Unknown Executive: But I mean, this is a basin where the minute you focus too much on one of those risk-reward strategies, if you focus too much on development or focus too much on that middle market prospect and don't think about some of these deep, evolving plays, you've missed the benefit of what the basin has to offer. So we're always thinking about all of those categories when we go to go to the...

Unknown Executive: What the base announced offers so we're always thinking about all of those categories. When we go to go to the Leesville.

Unknown Executive: All right, thanks for taking my questions. All right, thanks.

Speaker Change: Alright, thanks for taking my questions alright. Thanks.

Unknown Executive: Thank you. And your next question comes from the line of Cheryl Kiro from Stevens. Please go ahead.

Unknown Executive: Thank you and your next question comes from the line of Shannon Campbell from Stephens. Please go ahead.

Unknown Attendee: Hey, good morning, guys.

Unknown Executive: Hey, I was just curious about the Daenerys prospect. Tim, in your prepared remarks, you said that you guys could get to it late this year or it could push into early next year. I guess what's the determining factor for a 4Q or an early 2025 spud? And with that post-spud, about how long until you expect first oil? Thanks.

Unknown Attendee: Hey, I was just curious about the nearest prospect.

Speaker Change: Jim in your prepared remarks, you said that you guys could get to it late this year or it could push into early next year I guess, what are what's the determining factor for a <unk> or an early 2025, spud and with that post spud.

Unknown Executive: About how long until you expect first oil.

Timothy S. Duncan: So, you know, I think that is really dependent on rig deliveries as much as anything else. And so will we get the rig kind of right where we want to get it relative to CAPMI and then the execution of CAPMI, and then we go straight to Denarius. And we flipped the order earlier in the year.

Speaker Change: So I think.

Timothy S. Duncan: That is really it depends on rig deliveries as much as anything else and so will we get the right kind of right, where we wanted to get it relative to cat My and then the execution of Cat My and then we go straight to that area and we have flipped the order earlier in the year, we were thinking Helms deep, but I do think the nearest is high impact enough. We have a partnership that's excited about it will probably move that to the.

Timothy S. Duncan: We were thinking Helms Deep, but I do think Denarius is high impact enough. We have a partnership that's excited about it. We'll probably move that to the front of the line, so rig delivery will be a part of that. You know, the rig that we're utilizing there is one of the prospects we announced that had some recent success in Clayboard. They've got to wrap that project up, and then we have a chance to get that rig, hopefully, on time. So, very well, could be on time, but again, rig delivery, rig dependence. Getting that hooked up would take a little longer. That is a deep test that has a tremendous amount of potential.

Timothy S. Duncan: Head of the line so rig delivery will be a part of that the rig that were utilizing there is on one of the prospects we announced it had some recent success in Claiborne, they've got to wrap that project up and then and then we have a chance to get that rig hopefully on time, so very well could be on time, but again rigs every rig dependent.

Timothy S. Duncan: Getting that hooked up would take a little longer that is a deep test that has a tremendous amount of potential what we're designing and there is to try to get to penetration into the structure.

Timothy S. Duncan: What we're designing in there is to try to get two penetrations into the structure and, you know, almost talk about CAPMI. If we can get two penetrations into the geological structure in this first test, we'll learn more, and it'll help us design what the, you know, what the outlook is. There are some host facilities in the area.

Timothy S. Duncan: You know almost to talk about the katmai, if we can get two penetrations into the geological structure. In this first test, we'll learn more and it'll help us design what the what the outlook is there are some host facilities in the area. It could be big enough that people can think about new construction, but let's see what the results are our focus is always on tie backs.

Timothy S. Duncan: It could be big enough that people could think about new construction, but let's see what the results are. Our focus is always on tiebacks, but that one's going to take a little longer. That's more of a two to three year cycle time as opposed to kind of the 18 month type of cycle time that you see with things that are a little closer to infrastructure, where you feel like you know exactly what you have.

Timothy S. Duncan: But that one is going to take a little longer that's more of a two to three year cycle time than opposed to kind of the 18 month type of cycle times that you see with things that are a little closer to infrastructure, where you feel like you know exactly what you have so this is a this is the type of project that has more engineering study more long leads more of an <unk> kind of get to an F. E. At some of the things that we do at our typical.

Timothy S. Duncan: So this is a project that has more engineering study, more long leads, more of an F, you know, kind of get to an FID as opposed to some of the things that we do in our typical portfolio. So a little longer cycle time. I think the big catalyst for next year, if we think about production next year, is the Sunspear discovery that we had last year that we're trying to get online in the first half of the year. And then again, if CAPMI is successful as we anticipate and hope it will be, it will go online in the first half of the year next year.

Timothy S. Duncan: Portfolio, so a little longer cycle time.

Timothy S. Duncan: I think the big catalysts next year, if we think about production next year is the son Spirit discovery that we had last year that we're trying to get a light in the first half of the year and then again, if katmai successful as weak as we anticipate and hope it will be that would get a light in the first half of the year next year as well.

Unknown Executive: That's perfect. Thank you for the color. And then one more. My second question relates to the transactions during the first quarter. Do you expect any more transaction-related costs in the second quarter?

Speaker Change: That's perfect. Thanks for the color.

Speaker Change: One more.

Speaker Change: My second question relates to the transactions during the first quarter do.

Unknown Executive: Do you expect any more transactional transaction related costs during the second quarter.

Unknown Executive: We might have some severance costs and some other minor transaction costs in the second quarter, Jared, but the bulk of them should have already been recognized in the first quarter. So we might see a few things in the second quarter, but not a lot.

Speaker Change: We might have some some severance costs and some other minor transaction costs in the second quarter, Jared, but the bulk of it should have been already recognized in the first quarter. So we might see a few things in the second quarter, but not a lot.

Unknown Executive: Yeah, I think that's right. I think, Nat, I thought you were asking if we should anticipate more transactions. And if we do more than four a quarter, I think, Sergio, if I reach across this desk, it hits me. So, yeah, there could be some lingering one-time costs.

Jared: Yeah, I think perfect I think that I thought you were asking if we should anticipate more transactions and if I. If we do more than four quarter I think Sergio.

Unknown Executive: [laughter] I reach across the sensitivity.

Unknown Executive: Yes, there could be there could be some lingering onetime costs.

Unknown Executive: Perfect. Cool. Thanks for the answers.

Speaker Change: Perfect. Thanks for the answers.

Speaker Change: Got it.

Unknown Executive: Thank you. And your next question comes from the line of Paul Diamond from CT. Please go ahead.

Speaker Change: Thank you and your next question comes from the line of Paul <unk> from Citi. Please go ahead.

Unknown Executive: Thank you. Good morning. Thanks for taking my call.

Paul Michael Diamond: Thank you and good morning, all thanks for taking my call I just wanted to quickly touch on those.

Unknown Executive: I just wanted to quickly touch on those 17 blocks that we talked a little bit about, splitting them between kind of a shorter cycle and a three-year kind of time horizon, those longer cycles. How should we think about the breakdown of those? Is it, you know, 50-50, or is it 70-30? Just how does that, how does it break out? Yeah, yeah, that's a good question.

Paul Michael Diamond: 17 blocks, you talked a little bit about splitting them between kind of shorter cycle.

Unknown Executive: Three year kind of time horizon is longer cycle, how should we think about the breakdown of birds.

Speaker Change: 50, 50 or is it 70 30, just how does that how does it break yeah. Yeah. That's a good question, Paul and it's important that we keep asking those and kind of keep that education, I think I talked about those three buckets kind of that development again.

Timothy S. Duncan: Yeah, that's a good question, Paul, and it's important that, you know, we keep asking those and kind of keep that education. I think I talked about those three buckets, kind of that development, again, what I would call that middle market, you know, one well tie back and then the broader multiple wells, bigger projects. The development stuff typically is pretty quick; I would say six to 12 months. There's infrastructure in place, you know, we're right around our own facility, maybe within two miles of our facility, or maybe we're actually drilling it from our facility. Those turn around quickly.

Timothy S. Duncan: I'd call that middle market.

Timothy S. Duncan: One well tie back and then the broader multiple wells bigger projects. The development stuff typically is pretty quick I would say six to 12 months. There is infrastructure in place you know we're right around our own facility, maybe within two miles of our facility or maybe we're actually drilling it from our facility those turnaround quickly those middle markets finished lime rock SUNS beer I would say those.

Timothy S. Duncan: Those middle markets, Venice, Lime Rock, Sunspear, I would say those are, you know, kind of 18 month turnarounds. If it takes a little longer for new equipment, maybe as much as two years, but more of that 15 to 18 month turnarounds, and we're trying to, you know, that's effectively what we're trying to do in Sunspear. And then again, you've got the longer run; the vast majority of our portfolio is designed for those first two categories.

Timothy S. Duncan: Or you know kind of 18 month turnarounds.

Timothy S. Duncan: If it takes a little longer for new equipment, maybe as much as two years, but more of that 15 to 18 month turnaround. So we're trying to you know is effectively what we're trying to do in Sun spear and then again you've got the local right. The vast majority of our portfolio is designed for those first two categories again, if we were to drill six offshore wells a year and we're not quite doing that this year, we'll probably do that again next year.

Timothy S. Duncan: Again, if we were to drill six offshore wells a year, and we're not quite doing that this year; we'll probably do that again next year, you can expect four or five out of the six of those wells to be in those first two categories, those shorter windows utilizing that infrastructure.

Timothy S. Duncan: Year, you could expect for a five out of six of those wells to be in those first two categories are those shorter windows utilizing that infrastructure.

Speaker Change: Understood. Thanks for the clarity and then just one quick one on <unk> one of the 55 days of downtime.

Timothy S. Duncan: What is that number should we think about the potential of slipped by their quicker or longer or is it pretty much you know.

Timothy S. Duncan: Two five days is where it is.

Unknown Executive: I mean, look, it's it's nothing's worth it. If it's 55 days, it's like, you know, the old Einstein quote.

Timothy S. Duncan: I mean look it's it's it's nothing scary [laughter], if it's 55 days.

Unknown Executive: The old Einstein quote right every good models wrong today, we produce it but.

Unknown Executive: Yeah look I think we feel good about where we are we're into the dry dock period is down to Galveston. So for anyone local that wants to look at peer 21, and you can go visit or at least look at the HP one.

Unknown Executive: Been there for a couple of weeks, it's on schedule and so theres two pieces three pieces. It is leaving the field offshore in arriving at dry dock and Theres a period around that doing dry dock itself and then there's a third period, we do some sea trials before you hook everything back up right now it's on track and you know Theres, maybe a little weather dependency as we get back offshore you know maybe we can.

Unknown Executive: Beat it by a couple of days and get that production back. So I'm optimistic I don't want to guide anything other than it is on track, but I think we feel good about where we are right down the dry dock schedule.

Unknown Executive: Thanks for joining us.

Speaker Change: Understood Thanks for clarity.

Speaker Change: Right you got it.

Unknown Executive: Thank you. And your next question comes from the line of Kevin McCurdy from Big Pring Partners. Please go ahead.

Unknown Executive: Okay.

Unknown Executive: Thank you and your next question comes from the line of Kevin Mcveigh from Fig Partners. Please go ahead.

Unknown Executive: Hey, good morning. It sounds like the quarter north acquisition is going well, and you're pleased so far. When you think about your consolidation strategy, what was different about the quarter north integration versus the Inven acquisition? And what have you learned that you can apply to future M&S?

Kevin McCurdy: Hey, good morning, it sounds like the quarter North acquisition is going well and you are pleased so far.

Kevin McCurdy: When you think about your consolidation strategy, what was different about the quarter North integration versa, and then acquisition and what have you learned that you can apply to future M&A.

Timothy S. Duncan: You know, I think just the fact that we had just been through, I think, the Inven acquisition and the Inven integration. And, you know, we figured out, and look, we've been through a lot of these, we've had 12 transactions, but as you mature, you figure out how to put the organization together quickly. I think the one thing we wanted to do, particularly in quarter north, and one of the reasons you saw us, we thought a 50-50 cash and debt transaction was the right way to do this.

Unknown Executive: I think just the fact that we had just been through I think the advent acquisition and he had been integration and we figure it out and look we've been through a lot of these we've had 12 transactions, but as you mature you figure out how to put the organization together quickly I think the one thing we wanted to do particularly in quarter North and one of the reasons you saw.

Timothy S. Duncan: We thought a 50 50 cash to debt transaction was the right way to do this you you know you don't always have certainty around oil price, we want to make sure that we keep the balance sheet and in good shape.

Timothy S. Duncan: You know, you don't always have certainty around oil prices, so we want to make sure that we keep the balance sheet in good shape, but we also wanted to close it fairly quickly, so we made that choice to do the primary offering to close this acquisition quickly, in part because we had a critical well like Katmai that needed to be designed, and it needed to get executed this year in the first year, so you want to flip into operatorship mode as fast as you So, you know, a couple of things different, a little more experience in kind of how we put together the organization, and then a little more determination on pace to closing, so we could operate the asset sooner, get to the synergies sooner, and get to the well designs on critical budget items sooner. So, I think that was a choice on our part; we're not going to be able to do that every time, but I think it was the right way to structure Quarter North.

Unknown Executive: Great. And as a follow-up, do you have the current production from the assets acquired from Inven? And then what is the current production from the quarter north assets?

Unknown Executive: But we also wanted to close it fairly quickly. So we made that choice to do the primary offering to close this acquisition quickly in part because we had a critical well like katmai that needed to be designed it needed to get executed. This year in the first year. So you want to flip into operator ship mode. As fast as you can so you know a couple of things different a little more experience and kind of how we put together.

Unknown Executive: Organization, and then a little more determination on pace to closing so we can operate the asset sooner get to the synergies sooner and get to the well designs on critical budget items sooner. So I think that was a choice on our part we're not going to be able to do that every time, but I think it was the right right way to structure quarter North.

Speaker Change: Great and as a follow up do you have the current production from the assets acquired from and then and then what is the current production from the quarter North assets.

Timothy S. Duncan: Yeah, well, look, I've owned Inven long enough that I don't know if I can break down the actual number on that. But I would tell you just, you know, as you think about it, those assets. I would tell you a couple things that came up last year. We had some downtime right when we opened up that right when we closed that transaction in the Neptune facility. And we talked about getting it all the way back, and that facility is all the way back. And so, you know, I'm really proud of how we've recovered.

Speaker Change: Yeah, well look I've owned invent enough that.

Timothy S. Duncan: Long enough that I don't know if I can break down the actual number on that but I would tell you just as you think about it those assets I would tell you a couple of things that came up last year that we had some downtime right. When we opened up that right. When we closed that transaction in the Neptune facility and we talked about that getting all the way back in that facility is all the way back and so you know I'm really proud of how we've recovered and in that.

Timothy S. Duncan: And that Neptune facility is producing at the rates it was producing at before we bought the Inven assets. And that's important because we have a Repsol JV around there, largely on the Inven acreage. And so that's, you know, again, we talked about earlier in the call; tell me about some of the things that you pay for him. Did you not pay for him? We certainly didn't underwrite a big JV with Repsol when we did the Inven transaction. So that value that could be created there is outside the underwritten value.

Timothy S. Duncan: Neptune facility is producing at the rate it was producing at before we bought the infant assets and that's important because we have a repsol JV around there largely with the invent acreage and so that's again, we talked about earlier in the call tell me about some of the things that you pay for them did you not pay for them, we certainly didn't underwrite a big JV with Repsol when we did the infant transaction so that.

Timothy S. Duncan: That could be created there is outside the underwritten value and then the <unk> discovery again upside to the infant transaction. So you know that got to a slow off to a little bit of a slower start, but it's had a hell of a recovery, particularly around Neptune at around kind of the upside and the drilling program at Vince off to a great excuse me accordingly.

Timothy S. Duncan: And then the SunSphere discovery, again, upside to the Inven transaction. So, you know, that got off to a little bit of a slower start, but it's had a hell of a recovery, particularly around Neptune and around the kind of upside in the drilling program. Inven's off to a great start; excuse me, quarter north is off to a great start that I'm a little more familiar with because, you know, we just closed it.

Timothy S. Duncan: <unk> is off to a great start that I'm, a little more familiar with because you know we just closed it and I can tell you those assets were producing 32 to 33000 barrels equivalent a day over the last month again, we have some dry dock and that's how it all flows through our guidance in the second quarter, but we like where that assets performing today.

Timothy S. Duncan: And I can tell you those assets were producing 32, 33,000 barrels of equivalent a day over the last month. Again, we have some dry dock, and that's how it all flows through our guidance in the second quarter. But we like where that asset's performing.

Unknown Executive: That's a great color. Thank you. I got it.

Speaker Change: That's great color. Thank you.

Speaker Change: Got it.

Unknown Executive: Thank you. And your next question comes in the line from Noel Parks from Two Way Partners. Please go ahead.

Unknown Executive: Thank you and your next question comes from the line of John Wilcox from Julian Martinez. Please go ahead.

Noel Augustus Parks: Hi, good morning. I just had a couple. I was wondering, on What you're seeing out there in terms of, Focusing on the underused facilities out there in the deep water and are the range of opportunities you see out there, you know, for the Strategy of the Energy Facilities, is that pretty... Is that a larger subset of what might be out there compared to say, maybe things where the attraction would be more just underutilized technology say to an existing but you know, maybe still fairly well used project.

Noel Augustus Parks: Hi, Good morning, just had a couple.

Noel Augustus Parks: I was wondering on.

Noel Augustus Parks: What youre seeing out there in terms of.

Noel Augustus Parks: M&A opportunities.

Noel Augustus Parks: Your model has been so successful.

Noel Augustus Parks: Focusing on the underused facilities.

Noel Augustus Parks: Out there in the deepwater.

Noel Augustus Parks: And.

Noel Augustus Parks: Are the range of opportunities you see out there.

Noel Augustus Parks:

Noel Augustus Parks: Yeah.

Noel Augustus Parks: Sure.

Noel Augustus Parks: Sure.

Noel Augustus Parks: Your strategy regarding these facilities is that pretty.

Noel Augustus Parks: Is that a.

Noel Augustus Parks: A larger subset of what might be out there compared to say.

Noel Augustus Parks: Maybe things were.

Noel Augustus Parks: The attraction would be more just underutilized technology stage.

Noel Augustus Parks: So on the existing book.

Noel Augustus Parks: Maybe still fairly well used.

Noel Augustus Parks: Project.

Timothy S. Duncan: Well, look, I think the technological advancements that we've had in our basin related to seismic technology, related to drilling technology with these seventh-generation rigs, related to subsea tiebacks, and they're getting longer, and how you think about flow assurance. And we're not, you know, we're not patenting any of this stuff, right? I mean, the best operators in the Gulf of Mexico all understand that. So we're all employing that within the execution of our business plan.

Noel Augustus Parks: Well look I think.

Timothy S. Duncan: I think the technology advancements that we've had in our basin related to seismic technology related drilling technology with the seventh generation rigs related to subsea tie backs and they are getting longer and how you think about flow assurance and but we're not we're not.

Timothy S. Duncan: Patenting any of this stuff right I mean, the best operators in the Gulf of Mexico, All understand that so we're all employed that within our execution of our business plan I do think longer term as you think about us and that counterparty statement, 70% of the production in the Gulf of Mexico still operated by four names. It is the three majors plus oxi and so you know they all have their own economists. They all have their own view on oil prices you all have.

Timothy S. Duncan: I do think longer term, as you think about us in that counterparty statement, 70% of the production in the Gulf of Mexico is still operated by four names, and it's the three majors plus Oxy. And so, you know, they all have their own economists, they all have their own view on oil prices, they all have their own kind of view on how Chevron and BP and Shell are managing their asset set. So there's no predictiveness on when they could come to the market.

Timothy S. Duncan: They did their own kind of between Chevron and BP and shell, how they're managing their assets set so there's no predict there's no predicting this on when they can come to the market now if they do come to the market. We think we're a good counterparty to be a buyer of those assets, but we simply can't you know as I mentioned earlier the reason.

Unknown Executive: Now, if they do come to the market, we think we're a good counterparty to be a buyer of those assets. But we simply can't, you know, as I mentioned earlier, the reason I can't give you an idea where the M&A flow is in the Gulf of Mexico is because some of the private sellers who we probably knew about, we've done those transactions. And now you're going back to, again, what we think would be, ultimately, when they come to the market, underutilized deepwater assets that we could find some benefit from.

Unknown Executive: Can't give you an idea where M&A flow is in the Gulf of Mexico is because some of the private sellers, who we probably knew about we've done those transactions and now you're going back to again, what we think would be ultimately when they come to the market underutilized deepwater assets things that we could find some benefit from some of the prospects that we talked about in that middle category can be material to companies.

Unknown Executive: Some of the prospects that we talked about in that middle category can be material to companies like us, but maybe a little less material to a company like Chevron. That's really interesting to us. But right now, you know, again, more tactical and smaller things while we wait to see where those potentially transact in the future, knowing that it's totally unpredictable right now.

Unknown Executive: US, but maybe a little less material to a company like Chevron, that's really interesting to us, but right now again more tactical and smaller things, while we wait and see where those potentially transact in the future knowing that it's totally unpredictable right now.

Unknown Executive: Right, thanks. And I wondered if you just had any updated thoughts on the offshore rig market, which continues to be in high utilization there, and the pricing power increasingly seems to be with the vendors. So any thoughts there on how that might affect your outlook? You know, it does a little bit. I think there's a couple

Speaker Change: Right. Thanks.

Unknown Executive: And I Wonder if you just had any updated thoughts on the offshore rig market continues to be high utilization, there and the pricing power.

Unknown Executive: He seems to be to the to the vendors so any thoughts there on how that might affect your outlook.

Unknown Executive: You know, it does a little bit. I think there's a couple. It's an interesting question.

Unknown Executive: It does a little bit I think there's a couple of its an interesting question.

Unknown Executive: You know, so when I go through those categories of prospects we try to drill, those deeper ones clearly supersede that final category when you're getting, you know, 24,000, 25,000 feet, something like Katmai, you do need those big rigs. You need, you know, managed pressure drilling systems. You need the best efficiency on those.

Unknown Executive: If we're not again I'll go through those categories of prospects, we tried to drill those deeper ones clearly sub salt that final category when youre getting.

Unknown Executive: 24 to 25000 feet something like Katmai, you do need those big rigs you need you know managed pressure drilling systems, you need the best efficiency on those and so yeah. There's a part of our portfolio that does utilize that but theres a big vast part of our portfolio that doesn't have to have a seventh generation type of rig and so we had some success with a smaller rig last year.

Timothy S. Duncan: And so, yeah, there's a part of our portfolio that does utilize that. But there's a big, vast part of our portfolio that doesn't have to have a seventh-generation type of rig. And so we had some success with a smaller rig last year that they priced out at a different rate. And so, you know, we're going to try to make sure we've got the right rig that fits our portfolio.

Timothy S. Duncan: They do price out at a different price right and so we're going to try to make sure. We've got the right rig that fits our portfolio look the other thing that we haven't done and I'll continue to resist doing it it's taken a long term rig contracts. If you think about how companies in the Gulf hasn't made it and there's people that have had horror stories around that over the last 10 15 years typically they do.

Timothy S. Duncan: Look, the other thing that we haven't done, and I'll continue to resist doing it, is taking on long-term rig contracts. If you think about how companies in the Gulf haven't made it, and there are people that have had horror stories about that over the last 10, 15 years, typically, they didn't hedge when it was appropriate to take on some hedges. And we did that in the second quarter, by the way, for over $80.

Timothy S. Duncan: Hedge when it was appropriate to take on some hedges and we did that in the second quarter by the way at over $80.

Timothy S. Duncan: Or, somebody asked, they take on too long of a rig contract. Or they take too high of a working interest in a deepwater project for a company their size. We're not going to take on a two-year rig contract at the current rig rates. We're just not going to do it. And so that could cause, you know, capital to be a little lumpier and, frankly, could generate more free cash flow, maybe a little less predictive of how you think about production.

Timothy S. Duncan: They take on too long of a rig contract or somebody asked it take too high of a working interest in the deepwater project for a company their size, we're not going to take on a two year rig contracted at the current rig rates, we're just not going to do it and so that could cause capital to be a little lumpier and frankly could generate more free cash flow, maybe a little less predictive on how you think about production, but I'd.

Timothy S. Duncan: But I'd rather take on a little bit of that lumpiness than take on that obligation. And so we're just going to have to be watchful and look for windows. I mean, if the window is, hey, look, we can go execute something for 180 days instead of doing something for 18 straight months, we'll do that to make sure we don't take on too big of an obligation for a company our size.

Timothy S. Duncan: Either take on a little bit of that Lumpiness, then take on that obligation and so we're just going to have to be watchful and look for windows. I mean, if we if the window is hey look we can go execute something for 180 days and instead of doing something for 18 straight months, we'll do that to make sure. We don't take on too big of an obligation for a company our size.

Speaker Change: Great. Thanks, a lot.

Speaker Change: Got it.

Timothy S. Duncan: Yeah.

Unknown Executive: Thank you. And we have a follow-up question from Subhasish Chandra from Benchmark. Please go ahead.

Timothy S. Duncan: Thank you and we have a follow up question from Sebastian Chandra from benchmark. Please go ahead.

Subhasish Chandra: It's just revisiting that I guess the waterfall of production, just curious as we sort of now we've got a view of Q2, we come out of Q2, HP1 is back, and we go into Q3, the uncertainties of the storm, etc., etc., in the Gulf. Are there any counterbalancing drivers for Q3 that you can tell us about on the production side above and beyond HP1 coming back?

Unknown Executive: Okay.

Subhasish Chandra: Revisiting again that I guess the waterfall.

Subhasish Chandra: Of production just curious as we sort of now.

Subhasish Chandra: We got a view of Q2, we come out of Q2 HP. One is back and we go into Q3, the uncertainties of the storm et cetera et cetera.

Subhasish Chandra: In the Gulf.

Subhasish Chandra: Are there any counterbalancing drivers for Q3, but.

Subhasish Chandra: No.

Subhasish Chandra: But you can tell us about.

Subhasish Chandra: On the production side above and beyond <unk>.

Subhasish Chandra: It should be one coming back yes.

Timothy S. Duncan: Yeah, look, I think, you know, some of the timings of these shut-ins and some of this downtime, I mean, look, you know, you can beat the schedule. We might have two weeks and something and realize you can beat it by four days and get the production back a little sooner. I think there's some performance in a couple assets that could surprise to the upside. You know, we had some declines in the tornado field last year, and some of that has stabilized and surprised to the upside.

Speaker Change: Yeah look I think I think some of the timings of these shut ins and some of this downtime I mean look you know you can beat the schedule, we might have two weeks in something and realize you can beat them by four days and get the production back a little sooner.

Timothy S. Duncan: I think just performance in a couple of assets that could surprise to the upside you know we had some declines and the tornado field last year and some of that is stabilized and surprise to the upside and so you know I.

Timothy S. Duncan: It's always a combination of how your assets performing how are you managing the downtime can you beat the schedule there could be some natural slippage, which actually could be to potentially a benefit for this year and then we can model it through kind of into next year. So you know we've gotten to where our asset base. You Bosch again, you should think about this as a 100000 barrel equivalent a day business and when you have that asset base.

Timothy S. Duncan: And so, you know, I think it's always a combination of how your assets are performing, how you manage the downtime, can you beat the schedule? There could be some natural slippage, which could actually be a benefit for this year, and then we can model it through kind of in the next year. So yeah, you know, we've gotten to where our asset base, Subhas, again, you should think about this as a 100,000 barrel equipment a day business.

Timothy S. Duncan: And when you have that asset base, you know, things move around across all these assets with some upsides in some areas, and then, again, some downside risk of a third-party pipeline calls us out of the blue, and we realize the field shuts down, and we didn't get a lot of warning on that. So we're going to do our best to be transparent about it quarter to quarter. It's hard to be predictive when I think three quarters out.

Timothy S. Duncan: Things move around across all these assets with some upsides in some areas and then against some downside risk of a third party pipeline calls inside of the Blue and we realize the field shut in and we didn't get a lot of warning on that so we're going to do our best to be transparent about it quarter to quarter, it's hard to be predictive when I think three quarters out and that's why I think we've talked about Andy.

Timothy S. Duncan: And that's why I think we've talked about annual guidance. And then, as we enter the quarter, we're going to talk about quarterly guidance, as opposed to giving guidance for all four quarters when these things can move around. And, you know, again, it's a little less in our control.

Timothy S. Duncan: Guidance and then as we entered the quarter, we're going to talk about quarterly guidance.

Timothy S. Duncan: As opposed to lay out guidance for all four quarters with these things can move around and you know again, it's a little less in our control.

Unknown Executive: Got it. And to that, the odd job project, you know, non-offer. When do you see that sort of coming back? Or, I guess, Enhancing Bond.

Speaker Change: Got it.

Timothy S. Duncan: To that.

Unknown Executive: Job project.

Unknown Executive: Yes.

Unknown Executive: When do you see that sort of coming back.

Unknown Executive: <unk>.

Unknown Executive: Or I guess.

Unknown Executive: Enhancing volumes.

Timothy S. Duncan: Yeah, no, that's a subsea pump, right, with Cosmos. It's Cosmos. Yeah, yeah, yeah, look, I look, I think that's a Cosmos question.

Speaker Change: Yeah, no that's a subsea pump right with Cosmos.

Timothy S. Duncan:

Timothy S. Duncan: Cosmos, Yes, yes, yes look I look I think that's Cosmos question I think I think it's on track and I certainly don't want to speak for them. We don't have as much exposure to that so it's not something I think we're about 17% if I remember working interest rate. So it's not something I'm following day to day, but my understanding is on track I would tell you just the technology of that is really really interest.

Unknown Executive: I think we're on track, and I certainly don't want to speak for them. We don't have as much exposure to that, so it's not something I think we're around 17%, if I remember working it out just right. So it's not something I'm following day to day, but my understanding is it's on track. I would tell you just the technology of that is really, really interesting. You know, the ability to lower the overall reservoir pressure has been a highly-performing asset.

Unknown Executive: Seeing the ability to lower the overall reservoir pressure that's been a high performing asset I know, it's important in their portfolio, even at 70%. It's important in mind, but kind of giving you. The date and time are probably a little less certainty in the operator, probably a better question for those guys.

Unknown Executive: I know it's important in their portfolio. It's, even at 17%, it's important in mine, but kind of giving you the date and time, I'm probably a little less certain than the operator, and probably a better question for those.

Unknown Executive: Okay, I appreciate that. Thank you. Good. Thank you. Once again, should you have a question...

Speaker Change: Okay I appreciate that thank you.

Unknown Executive: Okay.

Unknown Executive: Thank you. Once again, should you have a question, please press star, then the number one on your telephone keypad. There are no questions at this time. I will now hand the call back to Tim Duncan, CEO. Please go ahead.

Speaker Change: Thank you once again should you have a question. Please press Star then the number one on your telephone keypad.

Unknown Executive: Okay.

Unknown Executive: Okay.

Unknown Executive: There are no question at this time I will now hand, the call back to Tim Duncan CEO. Please go ahead.

Timothy S. Duncan: Thanks, operator. Look, great questions, good Q&A. It's good to see more people covering the story. We're going to get more questions, and we appreciate those, and we want to be transparent. We want to give the right amount of color so people understand our business.

Timothy S. Duncan: Thanks, operator, and look great questions. Good Q&A, it's good to see with more people covering the story, we're going to get more questions and we appreciate those and we want to be transparent we want to give the right amount of colors people understand our business.

Timothy S. Duncan: I'm really happy with the first quarter. Happy to see production, EBITDA, CapEx, free cash flow, kind of all ahead of consensus. You know, four transactions, refinancing the debt, driving down our cost of capital. I mean, all those are important milestones as we reposition the company.

Timothy S. Duncan: Really happy with the first quarter happy to see production EBITDA Capex free cash flow kind of all ahead of consensus.

Timothy S. Duncan: For transactions refinancing the debt driving down our cost of capital I mean, all of those are important milestones as we repositioned the company I'm excited about the second quarter I'm excited about the rest of the year. So.

Timothy S. Duncan: I'm excited about the second quarter. I'm excited about the rest of the year. So we should have some good calls throughout. So thanks for everyone's attendance, and we look forward to talking to all of you soon. Thank you. This concludes today's call. Thank you for participating. You may all disconnect.

Unknown Executive: [inaudible]

Unknown Executive: So we should have some good calls throughout so thanks for everyone's attendance and we look forward to talking to all of you soon.

Speaker Change: Thank you. This concludes today's call. Thank you for participating you may all disconnect.

Unknown Executive: Okay.