Q2 2024 Talos Energy Inc Earnings Call

August 8, 2024

Good morning, ladies and gentlemen, and welcome to the Talos Energy 2nd Quarter 2024 Earnings Conference Call.

Operator: Subhasish Chandra, Benjamin Parham, Talos Energy If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 8th, 2024. I would now like to turn the conference over to Clay Johnson to start. Please go ahead.

Operator: Our Earnings Conference 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 you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 8th, 2024. I would now like to turn the conference over to Clay Jeansonne for the start. Please go ahead.

Operator: 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 you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 8th, 2024. I would now like to turn the conference over to Clay Jeansonne for the start. Please go ahead.

Speaker Change: 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 you require immediate assistance, please press star zero for the operator.

Speaker Change: This call is being recorded on Thursday, August 8th, 2024. I would now like to turn the conference over to Clay Johnson to start. Please go ahead.

Clay Johnson: Thank you, operator. Good morning, everyone, and welcome to our second 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 second quarter 2024 earnings slide presentation, which is available for viewing and downloading on Talos's website. Now, let's start on slide two, Cautionary Statement

Clay Jeansonne: Thank you, operator. Good morning, everyone, and welcome to our second 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 second quarter 2024 earnings slide presentation, which is available for viewing and downloading on Talos's website. Now, let's start on slide two, Cautionary Statement

Clay Johnson: Thank you, Operator. Good morning, everyone, and welcome to our second 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.

Speaker Change: For our prepared remarks, we will refer to our second quarter 2024 earnings slide presentation, which is available for viewing and downloading on Talos' website.

Clay Johnson: I'd like to remind you that our remarks will include forward-looking statements, and 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 June 30, 2024, filed yesterday with the SEC. Forward-looking statements are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events.

Clay Jeansonne: I'd like to remind you that our remarks will include forward-looking statements, and 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 June 30, 2024, filed yesterday with the SEC. Forward-looking statements are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events.

Speaker Change: Now let's start on slide 2, Cautionary Statements. I'd like to remind you that our remarks will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements.

Speaker Change: Factors that could cause these results to differ materially are set forth in yesterday's press release and are Form 10-Q for the period ending June 30, 2024, filed yesterday with the SEC.

Speaker Change: Forward-looking statements are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events.

Clay Johnson: During this call, we may present GAAP and non-GAAP financial measures. 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. Now, I'd like to turn the call over to Tim. Thanks.

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

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

Tim Duncan: Thanks, Clay, and welcome everyone to our call. We're looking forward to highlighting a fantastic quarter from an operational and financial execution standpoint and introducing a new project we picked up in the quarter. So let's get right into the slide deck.

Timothy Duncan: Thanks, Clay, and welcome everyone to our call. We're looking forward to highlighting a fantastic quarter from an operational and financial execution standpoint and introducing a new project we picked up in the quarter. So let's get right into the slide deck.

Speaker Change: And now, I'd like to turn the call over to Tim. Thanks, Clay, and welcome everyone to our call. We're looking forward to highlighting a fantastic quarter from an operational and financial execution standpoint and introduce a new project we picked up in the quarter. So let's get right into the slide deck.

Tim Duncan: So let's jump in on slide three. As I look at this introduction slide, I always like to start on the right side of the page and talk about the core tenets of our strategy. We like having oil-weighted production in the Gulf of Mexico. We think it's critically important to have infrastructure where we can focus on short cycle times in our drilling inventory and lower break-even. We think if we execute that program well, it leads to consistent generation of free cash flow, which certainly we saw in the second quarter. We've always been committed to low leverage over the 13 years that we've operated Talos Energy.

Timothy Duncan: So let's jump in on slide three. As I look at this introduction slide, I always like to start on the right side of the page and talk about the core tenets of our strategy. We like having oil-weighted production in the Gulf of Mexico. We think it's critically important to have infrastructure where we can focus on short cycle times in our drilling inventory and lower break-even. We think if we execute that program well, it leads to consistent generation of free cash flow, which certainly we saw in the second quarter. We've always been committed to low leverage over the 13 years that we've operated Talos Energy.

Tim: So let's jump in on slide three.

Tim: As I look at this introduction slide, I always like to start on the right side of the page and talk about the core tenets of our strategy.

Tim: We like having oil-weighted production in the Gulf of Mexico. We think it's critically important to have infrastructure where we can focus on short cycle times in our drilling inventory and lower break-even. We think if we execute that program well, it leads to consistent generation of free cash flow, which certainly we saw in the second quarter.

Talos Energy: We've always been committed to low leverage over the 13 years that we've operated Talos Energy and over those 13 years that's led us to be the fifth largest operator in the Gulf of Mexico, fourth largest acreage holder in the Gulf of Mexico.

Tim Duncan: And over those 13 years, that's led us to be the fifth largest operator in the Gulf of Mexico, the fourth largest acreage holder in the Gulf of Mexico, and production guidance for the year between 89,000 and 95,000 barrels of equivalent daily. So it's been a journey, and I think this quarter really highlights the impact of what that journey has been for us and what our team has been able to deliver. So on page four, we'll jump right into some of the highlights of the quarter.

Timothy Duncan: And over those 13 years, that's led us to be the fifth largest operator in the Gulf of Mexico, the fourth largest acreage holder in the Gulf of Mexico, and production guidance for the year between 89,000 and 95,000 barrels of equivalent daily. So it's been a journey, and I think this quarter really highlights the impact of what that journey has been for us and what our team has been able to deliver. So on page four, we'll jump right into some of the highlights of the quarter. And I'm going to draw your attention to the first three things on the right side of the page. 95,000 barrels equivalent a day, 344 million of adjusted EBITDA, and 148 million of adjusted free cash flow.

Tim: and Production Guidance for the Year between 89,000 and 95,000 barrels equivalent a day. So it's been a journey and I think this quarter really highlights the impact of what that journey has been for us and what our team has been able to deliver.

Tim Duncan: And I'm gonna draw your attention to the first three things on the right side of the page. 95,000 barrels equivalent a day, 344 million of adjusted EBITDA, and 148 million of adjusted free cash flow. Those are all records for the company for the quarter.

Tim: So on page four, we'll jump right into some of the highlights of the quarter.

Tim: And I'm going to draw your attention to the first three things on the right side of the page. 95,000 barrels equivalent a day.

Tim: three hundred and forty four million of adjusted ebitda and one hundred and forty eight millionadjusted free cash flow those are all records for the company for the quarter

Timothy Duncan: Those are all records for the company for the quarter, and we're very proud of that. They're budgeted by having 81% oil liquids, leading us to a $40 BOE net back EBITDA margin. Now, we spent $123 million of capital for the quarter. If you think about that from the reinvestment rate, that's a 36% reinvestment rate on just our capital program. If we include $22 million of P&A spend, that's a 42% reinvestment rate.

Tim Duncan: And we're very proud of that. They're budgeted by having 81% oil liquids, leading us to a $40 BOE net back EBITDA margin. Now we spent $123 million of capital for the quarter. If you think about that from the reinvestment rate, that's a 36% reinvestment rate on just our capital program. If we include $22 million of P&A spend, that's a 42% reinvestment rate.

Tim: and we're very proud of that. They're buttressed by having 81% oil liquids.

Tim: leading us to a $40 BOE net VAC EBITDA margin.

Tim: Now, we spent $123 million of capital for the quarter. If you think about that from a reinvestment rate, that's a 36% reinvestment rate on just our capital program.

Tim: If we include $22 million of P&A spend, that's a 42% reinvestment rate. I think we talked about in previous calls, this was going to be one of those years because of the delivery of new projects as we entered the year.

Timothy Duncan: I think we talked about in previous calls that this was going to be one of those years because of the delivery of new projects as we entered the year and the delivery of the rig in the second half of the year to expect robust free cash flow generation, particularly in the first half of the year. And that's exactly what our team has delivered. Now, with that free cash flow, we were also able to continue to pay down our debt.

Tim Duncan: I think we talked about in previous calls that this was gonna be one of those years because of the delivery of new projects as we entered the year and the delivery of the rig in the second half of the year to expect robust free cash flow generation, particularly in the first half of the year. And that's exactly what our team has delivered. Now, with that free cash flow, we were also able to continue to pay down our debt.

Tim: and the delivery of the rig in the second half of the year to expect robust free cash flow generation, particularly in the first half of the year, and that's exactly what our team is executed on.

Tim Duncan: We paid down $100 million of debt, and then, opportunistically, we used some of the previous buyback authorization to buy 3.8 million shares in the open market, and we increased that authorization for another $150 million that we talked about in our earnings release.

Timothy Duncan: We paid down $100 million of debt, and then, opportunistically, we used some of the previous buyback authorization to buy 3.8 million shares in the open market, and we increased that authorization for another $150 million that we talked about in our earnings report.

Tim: Now with that free cash flow, we were able to also continue to pay down our debt. We paid down $100 million of debt, and then opportunistically, we used some of the previous buyback authorization.

Tim: to buy 3.8 million shares in the open market and we increased that authorization for another $150 million that we talked about in our earnings release.

Tim Duncan: If you go to the left side of the page, there are a couple of things I would highlight. Again, maintaining our leverage of one times. We were able to hit that goal for the year early in the first quarter, in part with the sale of our CCS business. Our integration and synergies are on track. I look forward to talking to you about that in a couple of slides. HP1 Dry Dock went well, as we would expect it to. And we're gonna introduce a high impact project called Monuments. Exciting! It's our first real Wilcox play.

Timothy Duncan: If you go to the left side of the page, there are a couple of things I would highlight. Again, maintaining our leverage of one times. We were able to hit that goal for the year early in the first quarter, in part with the sale of our CCS business. Our integration and synergies are on track. I look forward to talking to you about that in a couple of slides. HP1 Dry Dock went well, as we would expect it to. And we're gonna introduce a high impact project called Monuments. Exciting! It's our first real Wilcox play.

Speaker Change: If you go to the left side of the page, a couple of things I would highlight. Again, maintaining our leverage of one times, we were able to hit that goal for the year early in the first quarter in part with the sale of our CCS business.

Speaker Change: Our integration and synergies are on track, I look forward to talking to you about that in a couple of slides.

Speaker Change: HP1 Dry Dock went well, as we would expect it to, and we're going to introduce a high impact project called Monuments, exciting, it's our first real Wilcox play, it's a trend that we've been working on for some time, and we'll talk about that in our call today as well.

Tim Duncan: It's a trend that we've been working on for some time, and we'll talk about that in our call today as well. Let's go to slide five. And, you know, I look at this slide, and I'd be remiss not to shout out to our team and how hard they've worked, not only in executing our base business leading into this year, but getting a very important transaction done, the Corda Nord transaction, and then immediately executing on that transaction and integration, so that we can deliver a pro forma business that's giving us the results that we see You know, it's not complicated.

Timothy Duncan: It's a trend that we've been working on for some time, and we'll talk about that in our call today as well. Let's go to slide five. And, you know, I look at this slide, and I'd be remiss not to shout out to our team and how hard they've worked, not only in executing our base business leading into this year, but getting a very important transaction done, the Cordon Nord transaction, and then immediately executing on that transaction and integration, so that we can deliver a pro forma business that's giving us the results that we see You know, it's not complicated.

Tim: Well, let's go to slide five, and I look at this slide and I'd be remiss to not shout out to our team and how hard they've worked, not only in executing our base business leading into this year.

Tim: Getting a very important transaction done in the Cordon Nord transaction and then immediately executing on that transaction and integration So we can deliver a pro forma business that's giving us the results that we see on this page

Tim Duncan: Our hope all along was that with the right execution of our base business and the new projects coming online in Venice and Lime Rock, the integration of Corda Nord and the assets we really liked about that, lowering our base decline, that ultimately, it would deliver more consistent results quarter over quarter. And what you see here in the first two quarters, as we beat consensus on production and adjusted EBITDA and adjusted free cash flow, each quarter of our first two quarters, and, frankly, I would say pretty materially on an adjusted EBITDA basis in the second, But on page six. That hasn't changed, you know, what our focus has been for 2024 and what our priorities are for the year.

Timothy Duncan: Our hope all along was that with the right execution of our base business and the new projects coming online in Venice and Lime Rock, the integration of Cordon Nord and the assets we really liked about that, lowering our base decline, which would ultimately deliver more consistent results quarter over quarter. And what you see here in the first two quarters, as we beat consensus on production and adjusted EBITDA and adjusted free cash flow, each quarter of our first two quarters, and, frankly, I would say pretty materially on an adjusted EBITDA basis in the second, But on page six.

Tim: You know, it's not complicated. Our hope all along was with the right execution of our base business and the new projects coming online in Venice and Lime Rock, the integration of Quarter North and the assets we really liked about that, lowering our base decline, that ultimately it would deliver more consistent results quarter over quarter. And what you see here in the first two quarters.

Tim: As we beat consensus on production and adjusted EBITDA and adjusted free cash flow each quarter of our first two quarters, and frankly, I would say pretty materially on certainly on an adjusted EBITDA basis in the second quarter.

Timothy Duncan: That hasn't changed, you know, what our focus has been for 2024 and what our priorities are for the year. We want to keep really working, showing how we can execute on these assets. And we knew by doing so, we would generate material free cash flow. If you look at the $148 million of free cash flow in the second quarter, add that to the first quarter, that ramps up to $225 million of adjusted free cash flow off these assets for the year.

Tim: but on page 6.

Tim: That hasn't changed, you know, what our focus has been for 2024 and what our priorities are for the year.

Tim Duncan: We want to keep working hard, showing how we can execute on these assets, and we knew by doing so, we could generate material free cash flow. If you look at the $148 million of free cash flow in the second quarter, add that to the first quarter, that ramps up to $225 million of adjusted free cash flow off these assets for the year.

Tim: We want to keep.

Tim: Really working showing how we can execute on these assets and we knew by doing so generate material free cash flow

Tim: If you look at the $148 million free cash flow in the second quarter, add that to the first quarter, that ramps up to $225 million of adjusted free cash flow off these assets for the year. That's just a tremendous amount of free cash flow yield.

Timothy Duncan: That's just a tremendous amount of free cash flow yield. I'm very happy about that and happy with how the business is being executed. I've talked about some of these other items on completing quarter north.

Tim Duncan: That's just a tremendous amount of free cash flow yield. I'm very happy about that and happy with how the business is being executed. I've talked about some of these other items on completing quarter north.

Tim: I'm very happy about that and happy how the business is being executed. I've talked about some of these other items on completing quarter north. We mentioned annual guidance earlier in the presentation. Let me introduce the third quarter guidance between 92,000 and 97,000 barrels of equipment a day. A little wider range than what we had in the second quarter. That guidance was 93,000 to 96,000. If we're in a weather season, we think that's appropriate, and we're looking forward to delivering on that.

Timothy Duncan: We mentioned, you know, annual guidance earlier in the presentation. Let me introduce the third quarter guidance of between 92 and 97,000 barrels of equipment a day. A little wider range than what we had in the second quarter; that guidance was 93 to 96. Or in a weather season, we think that's appropriate.

Tim Duncan: We mentioned, you know, annual guidance earlier in the presentation. Let me introduce the third quarter guidance of between 92 and 97,000 barrels of equipment a day. A little wider range than what we had in the second quarter; that guidance was 93 to 96. Or in a weather season, we think that's appropriate.

Timothy Duncan: And we're looking forward to delivering on that. The financial execution has been strong this year. As I mentioned earlier, we hit that one-time leverage target in the first quarter, in part because of the sale down to CCS. We continue to keep it there, and we're going to work that a little lower throughout the year. But by being ahead of schedule, it allowed us to opportunistically buy back some shares in the second quarter.

Tim Duncan: And we're looking forward to delivering on that. The financial execution has been strong this year. As I mentioned earlier, we hit that one-time leverage target in the first quarter, in part because of the sale down to CCS. We continue to keep it there, and we're going to work that a little lower throughout the year. But by being ahead of schedule, it allowed us to opportunistically buy back some shares in the second quarter.

Tim: The financial execution has been strong this year. As I mentioned earlier, we hit that one-times leverage target in the first quarter in part because of the sale down to CCS. We continue to keep it there, and we're going to work that a little lower throughout the year. But by being ahead of schedule, it allowed us to opportunistically buy back some shares in the second quarter.

Tim Duncan: We're going to continue to generate significant free cash flow. That might slow down a little bit in the second half of the year as we get the delivery of the Westfella rig to go drill our high-impact drilling program. And that leads to the next part of the strategy. We want to have those prospects in our portfolio. We're excited about what's happening out in Katmai. I'll talk about that.

Timothy Duncan: We're going to continue to generate significant free cash flow. That might slow down a little bit in the second half of the year as we get the delivery of the Westfella rig to go drill our high-impact drilling program. And that leads to the next part of the strategy. We want to have those prospects in our portfolio. We're excited about what's happening out in Katmai. I'll talk about that.

Tim: We're going to continue to generate significant free cash flow. That might slow down a little bit in the second half of the year as we get the delivery of the Westfella rig to go drill our high-impact drilling program.

Tim: but it leads to the next part of the strategy. We want to have those prospects in our portfolio. We're excited about what's happening out in Katmai. I'll talk about that. We're excited about, you know, how we're stacking up.

Tim Duncan: We're excited about how we're stacking up some really exciting prospects into 24 and into 25. And then we really want to talk about the Monument project that we've been farming into in the last several weeks and what that brings to the table. And in the middle of all this, we're going to keep being tactical in our pursuit of adding value. Here's a project that we're able to come in on post-FID. Risk is off the table.

Timothy Duncan: We're excited about how we're stacking up some really exciting prospects into 24 and into 25. And then we really want to talk about the Monument project that we've been farming into in the last several weeks and what that brings to the table. And in the middle of all this, we're going to keep being tactical in our pursuit of adding value. Here's a project that we're able to come in on post-FID. Risk is off the table.

Tim: Some really exciting prospects into 24 and into 25 and then we really want to talk about the monument project that we farmed into in the last several weeks and what that brings to the table.

Tim: And in the middle of all this, we're going to keep being tactical in our pursuit of adding value. Monument represents that. Here's a project that we're able to come in post-FID. Risk is off the table.

Tim Duncan: Someone else got it to the FID point, so we're entering post-FID at a low entry cost and an immediate value add. I'm so excited about the project, and we'll talk about it here in a few seconds. But let's stay with the execution, though, and talk about the integration of the Quarter North asset. And, you know, look, the team has done a really good job. If you remember from the last call, we were able to close this a little ahead of schedule. We thought, you know, it might ultimately lead till April before we could close this. But we were able to sneak in a partial month in March.

Timothy Duncan: Someone else got it to the FID point, so we're entering post-FID at a low entry cost and an immediate value add. I'm so excited about the project, and we'll talk about it here in a few seconds. But let's stay with the execution, though, and talk about the integration of the Quarter North asset. And, you know, look, the team has done a really good job. If you remember from the last call, we were able to close this a little ahead of schedule. We thought, you know, it might ultimately lead till April before we could close this. But we were able to sneak in a partial month in March.

Timothy Duncan: Someone else got it to the FID point, so we're entering post-FID at a low entry cost and an immediate value add. I'm so excited about the project, and we'll talk about it here in a few seconds. But let's stay with the execution, though, and talk about the integration of the quarter north asset. And, you know, look, the team has done a really good job. If you remember from the last call, we were able to close this a little ahead of schedule. We thought, you know, it might ultimately lead till April before we could close this. But we were able to sneak in a partial month in March.

Tim: sequ

Tim: Let's stay with the execution, though, and talk about integration of the quarter north asset. And, you know, look, it's the team has done a really good job. If you remember from the last call, we were able to close this a little ahead of schedule.

Tim: We thought, you know, it ultimately might lead to April before we could close this. We were able to sneak in partial month in March. That allowed us to really get to the process of what I would call physical integration. So think about the offshore personnel and getting them integrated in our assets offshore.

Timothy Duncan: That allowed us to really get to the process of what I would call physical integration. So think about the offshore personnel and getting them integrated in our assets offshore. Think about internally in the office and getting folks to the right offices, closing down their office, moving folks into our office, changing accounting systems. There's a lot of work involved and a lot of people really spent a lot of time and effort to do that, dragging that through the second quarter probably caused our our gna to go up a little more than i would like it to be in the second quarter but i think you're going to see that materially come down in the third and fourth quarter so ran a little hot on gna in the second quarter to make sure we get this fully completed by the end of the second quarter you're really going to see gna i think start to walk down in the third and fourth quarter but what we're really excited about is the synergies we think we've identified that can stay in the system as we really think about annualizing this business going forward i think i mentioned on a previous call you know we thought when we put this these assets together we'd see some savings for example on the insurance side and on the insurance side and high grading that portfolio and and being able to figure out you know kind of the right synergy there we hope we'd save maybe seven million dollars between the assets we ended up saving 10 and so just an example of where we're getting ahead of schedule in our synergies i think we were hoping for 25 million in in 2024 at a quarter north we knew we'd get five million you know by selling the tlcs ccs business that got you to 30 i think we've revised that forecast to 35 and over 25 that 55 million to our synergy forecast we think we're revising that up into 65 million, Let's go to page eight and talk about the drilling program. I'm not gonna go through these individually.

Tim Duncan: That allowed us to really get to the process of what I would call physical integration. So think about the offshore personnel and getting them integrated with our assets offshore. Think about internally in the office and getting folks to the right offices, closing down their offices, moving folks into our offices, changing accounting systems.

Tim: think about internally in the office and getting folks to the right offices closing down their office moving folks and our office changing accounting systems there's a lot of work involved in a lot of people really spent a lot of time and effort to do that

Tim Duncan: There's a lot of work involved, and a lot of people really spend a lot of time and effort to do that. Dragging that through the second quarter probably caused our GNA to go up a little more than I would like it to be in the second quarter, but I think you're going to see that materially come down in the third and fourth quarter. So I ran a little hot on GNA in the second quarter to make sure we get this fully completed by the end of the second quarter.

Tim: dragging that through the second quarter probably caused g go up alittle morethan i like it to beinthe quarter buti think you'regoingto seethat materially come down in the third and fourth quarterso rana little ho on g a in the quarter to make sure we get this fully completed by the end of the second quarter you're really going to seec g n a i think start to walk down in the third and fourth quarter but what we're really excited about as the synergies we think we've identified can stay in the system as we really think about annualizing this business

Tim Duncan: You're really going to see GNA I think start to walk down in the third and fourth quarter But what we're really excited about is the synergies we think we've identified that can stay in the system as we really think about Annualizing this business going forward. I think I mentioned on a previous call, you know we thought when we put this these assets together we'd see some savings up for example on the insurance size and on the insurance side and High-grading that portfolio and and being able to figure out, you know, kind of the right synergy there We hope we'd save maybe seven million dollars between the assets We ended up saving ten and so just an example of where we're getting ahead of schedule in our synergies I think we were hoping for 25 million in in 2024 at a quarter north We knew we'd get five million, you know by selling the TLCS CCS business that got you to 30 I think we've revised that forecast to 35 and over 25 that 55 million to our synergy forecast We think we're revising that up into 65 million, Let's go to page eight and talk about the drilling program. I'm not gonna go through these individually.

Speaker Change: I think I mentioned on a previous call, you know, we thought when we put this, these assets together, we'd see some savings, for example, on the insurance size.

Tim: On the insurance side and high grading that portfolio and being able to figure out, you know, kind of the right synergy there. We hope we'd save maybe 7 million dollars between the assets we ended up saving 10. And so just an example of where we're getting ahead of schedule in our synergies, I think we were hoping for 25 million in in 2024 at 1 quarter north.

Tim: we knew we get five million by selling the tl c s cs business that got you to thirty i think we've revised that forecast to thirty-five and over twenty five that fifty-five million our strgergy forecast we think 'revising that up in the sixty-five lion range

Tim Duncan: We've talked about Venice and Lime Rock. They're still performing well. We had successes that really wrapped up in the second quarter, like the Lobster Water Flood and the Claiborne sidetrack. That was a non-op.

Timothy Duncan: We've talked about Venice and Lime Rock. They're still performing well. We had successes that really wrapped up in the second quarter, like the Lobster Water Flood and the Claiborne sidetrack. That was a non-op.

Speaker Change: Let's go to page 8 and talk about the drilling program. I'm not going to go through these individually. We've talked about Venice and Lime Rock. They're still performing well. We had successes that really wrapped up in the second quarter and the Lobster Water Flood and the Claiborne sidetrack. That was a non-op. And then we had a stimulation campaign.

Tim Duncan: And then we had a stimulation campaign, which does add work over cost. It's somewhat seasonal when we are doing those activities. You'll see that working over cost come down dramatically as well in the third and fourth quarter, but we're wrapping up that campaign. So happy with the results of that activity to date. And then, as we get into the second half of the year, we would expect delivery of the Westfellow rig.

Timothy Duncan: And then we had a stimulation campaign, which does add work over cost. It's somewhat seasonal when we are doing those activities. You'll see that working over cost come down dramatically as well in the third and fourth quarter, but we're wrapping up that campaign. So happy with the results of that activity to date. And then, as we get into the second half of the year, we would expect delivery of the Westfellow rig.

Speaker Change: campaign which does that work over cost that's somewhat' seasonal to when we are doing those activities you'll see that work over cost come down dramatically as inthe third and fourthquarter butwe're apping up that campaign so so happy with the results of that activity to date

Tim: And then as we get into the second half of the year, we would expect the delivery of the Westfellow rig, and that's a 7th gen, large, deep water rig that we're going to go drill the Katmai West well with, then we'll go execute on the Daenerys prospect, and then ultimately the Helm's Deep prospect as you get into 2025.

Timothy Duncan: And that's a 7th gen, large deep water rig that we're going to drill the Katmai West well with. Then we'll go execute on the Daenerys prospect and then ultimately the Helms Deep prospect as you get into 2025. Now, we still have a rig line that we're working on that will allow us to go get the sun sphere completion.

Tim Duncan: And that's a 7th gen large deep water rig that we're going to drill the Katmai West well with. Then we'll go execute on the Daenerys prospect and then ultimately the Helms Deep prospect as you get into 2025. Now, we still have a rig line that we're working on that will allow us to go get the sun sphere completion.

Tim: Now, we still have a rig line that we're working on that will allow us to go get the SunSphere completion. And so that's still a high-priority project. We've been working on long leads. We're getting that ready to get production in the first half of 2025. As we think about a rig for that program,

Tim Duncan: And so that's still a high priority project. We've been working on long leads. We're getting that ready to get production in the first half of 2025. As we think about a rig for that program, we'll also think about finding a rig that can extend that and drill what I would call the middle market part of our portfolio. So if you think of Katmai West and Daenerys and Helm's Deep, Subsalt, High Impact, we have a lot of exploitation opportunities similar to Venice and Lime Rock that don't need that seventh-generation rig. They can use one of the smaller rigs that can be, you know, kind of more available in the program next year.

Timothy Duncan: And so that's still a high priority project. We've been working on long leads. We're getting that ready to get production in the first half of 2025. As we think about a rig for that program, we'll also think about finding a rig that can extend that and drill what I would call the middle market part of our portfolio. So if you think of Katmai West and Daenerys and Helm's Deep, Subsalt, High Impact, we have a lot of exploitation opportunities similar to Venice and Lime Rock that don't need that seventh-generation rig. They can use one of the smaller rigs that can be, you know, kind of more available in the program next year.

Tim: We'll also think about finding a rig that can extend that and drill what I would call that middle market part of our portfolio. So if you think of...

Tim: Cab My West and Daenerys and Helm's Deeds, Subsault, High Impact. We have a lot of exploitation opportunities, similar to Venice and Lime Rock. They don't need that seventh generation rig. They can use one of the smaller rigs. They can be, you know, kind of more available in the program next year. And we're going to be in the market looking for that rig to complement the program in 2025.

Tim Duncan: And we're going to be in the market looking for that rig to complement the program. And then, at the bottom, we see Monuments. So that's the add-on to the project. What we're able to do there is add that project and not change our capital guidance for the year. And I think that's very important for us to really make sure, you know, we emphasize.

Timothy Duncan: And we're going to be in the market looking for that rig to complement the program. And then, at the bottom, we see Monuments. So that's the add-on to the project. What we're able to do there is add that project and not change our capital guidance for the year. And I think that's very important for us to really make sure, you know, we emphasize.

Speaker Change: And then at the bottom, we see Monuments, so that's the add to the project. What we're able to do there is add that project and not change our capital guidance for the year. And I think that's very important for us to really...

Tim Duncan: By being ahead of the execution on parts of our program, having a little bit of a delay in rig delivery for CAPMI, it opened up a window for us to pull in a high-impact project and not feel like we had to change our capital guidance and then reshape the capital program with this project when we think about 25 and 26. So excited to have that project, and we'll talk about it. It's always good to remind ourselves why we like Katmai.

Timothy Duncan: By being ahead of the execution on parts of our program, having a little bit of a delay in rig delivery for CAPMI, it opened up a window for us to pull in a high-impact project and not feel like we had to change our capital guidance and then reshape the capital program with this project when we think about 25 and 26. So excited to have that project, and we'll talk about it. It's always good to remind ourselves why we like Katmai.

Tim: make sure we emphasize by by being ahead of the execution on parts of our program having a little bit of the delay of rig delivery for capat my it opened up a window for us to pull in a high impact project

Tim: And not feel like we had to change our capital guidance and then reshape the capital program with this project when we think about 25 and 26. So excited to have that project and we'll talk about it here in a second.

Tim Duncan: I mean, it was the anchor of the transaction. I said this on the last call that we think this area, we want to go to Katmai West and Katmai East. Those are two wells, go to the bottom right of this page, and they're still humming along at 27,000 barrels equivalent a day gross. We think this is a 180 to 200 million barrel complex when it's all said and done. It's going to take some wells to get there, and the one we're focused on first is Katmai West.

Timothy Duncan: I mean, it was the anchor of the transaction. I said this in the last call. We think this area, we want to go to Katmai West and Katmai East. Those are two wells, go to the bottom right of this page, and they are still humming along at 27,000 barrels equivalent a day gross. We think this will be a 180 to 200 million barrel complex when it's all said and done. It's going to take some wells to get there. And the one we're focused on first is Katmai West.

Speaker Change: 's always good to remind ourselves whybably like atmike i mean it was the anchor of the transaction i said this in the last call we think this

Tim: We want to go Katmai West and Katmai East. Those are two wells. Go to the bottom right of this page, and still humming along at 27,000 barrels equivalent a day gross. We think this is 180 to 200 million barrel complex when it's all said and done. It's going to take some wells to get there, and the one we're focused on first is Katmai West. We really like what that well has done since it's been online for over a year. We've spent a lot of time with advanced engineering data trying to understand it. We think it's seeing a big tank. I'll talk about how that flows into the reserve books, but it needs a well to really prove that story out. Again, the rig's coming. We look forward to executing on it. The team's focused on it. It's also interesting because it's an asset where

Tim Duncan: We really like what that well has done since it's been online for over a year. We've spent a lot of time with advanced engineering data trying to understand it. We think it's seeing a big tank.

Timothy Duncan: We really like what that well has done since it's been online for over a year. We've spent a lot of time with advanced engineering data trying to understand it. We think it's seeing a big tank. I'll talk about how that flows into the reserve books, but it needs a well to really prove that story out. And so again, the rig's coming. We look forward to working on it. The team's focused on it.

Tim Duncan: I'll talk about how that flows into the reserve books, but it needs a well to really prove that story out. And so again, the rig's coming, we look forward to executing on it, the team's focused on it. It's also interesting because it's an asset where we own 50% of the hydrocarbon interest, but we own 100% of the facility. So as we execute on this project with our partners and collect those production handling fees through our partners, there's just another revenue line for us that comes with the success that we've talked about as the importance of owning infrastructure.

Timothy Duncan: It's also interesting because it's an asset where we own 50% of the hydrocarbon interest, but we own 100% of the facility. So as we execute on this project with our partners and collect those production handling fees through our partners, there's just another revenue line for us that comes with the success that we've talked about as the importance of owning infrastructure. Now, if we go to the next page, you know, and I kind of introduced this in the last call, I think it's a good reminder, just it shows a couple things here, the thickness of the hydrocarbon column. I mean, one of the first things that gets us excited is just how thick this is.

Tim: You know, we own 50% of the hydrocarbon interest, but we own 100% of the facilities. So as we execute on this project with our partners and collect those production handling fees through our partners, there's just another revenue line for us that comes with the success that we've talked about as the importance of owning infrastructure.

Tim Duncan: Now, if we go to the next page, you know, and I kind of introduced this in the last call, I think it's a good reminder, just it shows a couple things here, the thickness of the hydrocarbon column. I mean, one of the first things that gets us excited is just how thick this is. And these wells are flowing, for this particular well is flowing between 15 and 18,000 barrels equivalent a day gross relatively flat. And so what it was able to prove is what that log, so you look in the middle at that 400 feet of gross thickness, geology could only prove a part of that structure.

Timothy Duncan: And these wells are flowing, for this particular well is flowing between 15 and 18,000 barrels of equivalent a day, relatively flat. And so what it was able to prove is what that log, so you look in the middle at that 400 feet of gross thickness, that geology could only prove a part of that structure.

Tim: Now, if we go to the next page, you know, and I went, I kind of introduced this in the last call. I think it's a good reminder, just it shows a couple things here, the thickness of the hydrocarbon column. I mean, it's one of the first things that gets us excited is.

Tim: Just how thick this is and these wells are flowing for this particular well It's flowing between 15 and 18 thousand barrels equivalent a day gross relatively flat

Tim: and so what it was able to prove is what that log so you look the middle of that four hundred feet gross thickness that geology could only approve a part of that structure

Tim Duncan: We think obviously we're seeing a geological response well past that log and that some of those reserves are going to be in the probable and possible category. When we drill this well, we'll really be able to put that story together. And so if you look at the graphic, the Katmai West well, that's what's producing Katmai West number two, that's the rig that's coming.

Timothy Duncan: We think obviously we're seeing a geological response well past that log and that some of those reserves are going to be in the probable and possible category. When we drill this well, we'll really be able to put that story together. And so if you look at the graphic, the Katmai West well, that's what's producing Katmai West number two, that's the rig that's coming.

Tim: We think obviously we're seeing a geological response well past that log.

Speaker Change: And some of those reserves are going to be in the probable and possible category. When we drill this well, we'll really be able to put that story together.

Tim Duncan: We'll also be able to hook right into that infrastructure and flow it back to our tarantula facility. So this is one of those projects where not only is it high impact, not only is it a huge catalyst for the company, but it's one where we can get results to production in less than three to six months. And again, if I can't reemphasize why it's important for us to own the infrastructure, I think being able to have something this important to the company and be able to turn it around and get it online quickly in a deep water environment is exactly why we try to do this.

Timothy Duncan: We'll also be able to hook right into that infrastructure and flow it back to our tarantula facility. So this is one of those projects where not only is it high impact, not only is it a huge catalyst for the company, but it's one where we can get results to production in less than three to six months. And again, if I can't reemphasize why it's important for us to own the infrastructure, I think being able to have something this important to the company and be able to turn it around and get it online quickly in a deep water environment is exactly why we try to do this.

Speaker Change: And so if you look at the graphic, the Katmai West well, that's what's producing, Katmai West number two, that's the rig that's coming. We'll also be able to hook right into that infrastructure and flow it back to our tarantula facility.

Speaker Change: So, this is one of those, not only is it high impact, not only is it a huge catalyst for the company, it's one where we can get results to production in less than three to six months. And again, if I can't reemphasize...

Speaker Change: Why it's important for us to own the infrastructure, I think to be able to have something this important to the company and be able to turn it around and get it online quickly in a deep water environment is exactly why we try to do this.

Tim Duncan: So we're really excited about that, and I also think just talking about this transition into how we think about proved and probable reserves will be important later when we talk about how you should think about our asset set and how much value we think is unlocked outside proved reserves. Daenerys is just one of those prospects that, you know, again, as the schedule slips a little bit, this slips as well, but we put it in here just to keep it on the radar.

Timothy Duncan: So we're really excited about that, and I also think just talking about this transition into how we think about proved and probable reserves will be important later when we talk about how you should think about our asset set and how much value we think is unlocked outside proved reserves. Daenerys is just one of those prospects that, you know, again, as the schedule slips a little bit, this slips as well, but we put it in here just to keep it on the radar.

Speaker Change: So we're really excited about that. And I also think, you know, just talking about this transition into how we think about proved and probable reserves is important later when we talk about how you should think about our asset set and how much value we think is unlocked outside proved reserves.

Speaker Change: the rs is just one of those prospectsthat you know again the schedule li a little bit slips as well but putitinhere just to keep it on the radar ithinkit's could one of the most tal about spects in the gulf xic next year this is a large for foraway turtle feature there's not manyofthose left in the ulf ofmexo took what it took a long time to really get the right imaging around it it's a huge featature so examples of these tottal structures you know fromthe past in the gulfof mexico for those who follow the goulf little bit think thunder horse and think faith and those are analog fields

Tim Duncan: I think it's going to be one of the most talked about prospects in the Gulf of Mexico next year. This is a large four-way turtle feature. There are not many of those left in the Gulf of Mexico.

Timothy Duncan: I think it's going to be one of the most talked about prospects in the Gulf of Mexico next year. This is a large four-way turtle feature. There are not many of those left in the Gulf of Mexico.

Tim Duncan: It took a long time to really get the right imaging around it right. It's a huge feature. So examples of these turtle structures, you know, from the past in the Gulf of Mexico, for those who follow the Gulf a little bit, think of Thunder Horse and think of Black Faith. And those are analog fields. And look, you know, you don't know until you drill it, but we're excited about this. Owning 27% is probably the right interest for us in this.

Timothy Duncan: It took a long time to really get the right imaging around it right. It's a huge feature. So examples of these turtle structures, you know, from the past in the Gulf of Mexico, for those who follow the Gulf a little bit, think of Thunder Horse and think of Black Faith, and those are analog fields. And look, you know, you don't know until you drill it, but we're excited about this. Owning 27% is probably the right interest for us on this.

Speaker Change: And look, you don't know until you drill it, but we're excited about this. Only 27%, probably the right interest for us on this. It's an expensive well, but it's a high-impact well, and we'll look forward to getting that started next year.

Tim Duncan: It's an expensive well, but it's a high-impact well, and we'll look forward to getting that started next year. But let's talk about the Wilcox strand. So, like many trends in the Gulf of Mexico, as you get deeper into the section and you get more distal to the coast, you find these thick sands, and Wilcox is a geological plate. It exists onshore. As you get further away from the source, these sands get thicker, but they do get deeper. It makes it harder for them to see, and it makes it harder for them to reach.

Timothy Duncan: It's an expensive well, but it's a high-impact well, and we'll look forward to getting that started next year. But let's talk about the Wilcox trend. So, like many trends in the Gulf of Mexico, as you get deeper into the section and you get more distal to the coast, you find these thick sands, and Wilcox is a geological plate. It exists onshore. As you get further away from the source, these sands get thicker, but they do get deeper. It makes it harder for them to see, and it makes it harder for them to reach.

Speaker Change: Well, let's talk about the Wilcox trend.

Speaker Change: So, like many trends in the Gulf of Mexico, as you get deeper into the section and you get more distal to the coast.

Speaker Change: you find these thick sands. And the Wilcox is a geological plate. It exists onshore. As you get further away from the source, these sands get thicker, but they do get deeper. It makes it harder for them to image, and it makes it harder for them to reach. And as you would expect.

Tim Duncan: And as you would expect, our friends at the majors led the way in trying to explore for these sands 15-plus years ago. They had good success, and they established production. And what you see on the slide here is that you have established fields that have already produced over a billion barrels to date, still producing well over 260,000 barrels a day. So we have a successful trend that took a lot of technology to get us comfortable with how to image it, how to drill for it, and how to produce it. But we didn't need to be the first mover.

Timothy Duncan: And as you would expect, our friends at the majors led the way in trying to explore for these sands 15-plus years ago. They had good success, and they established production. And what you see on the slide here is that you have established fields that have already produced over a billion barrels to date, still producing well over 260,000 barrels a day. So we have a successful trend that took a lot of technology to get us comfortable with how to image it, how to drill for it, and how to produce it. But we didn't need to be the first mover.

Speaker Change: Our friends at the majors led the way in trying to explore for these sands.

Speaker Change: 15 plus years ago. But they established good success and they established production. And what you see on the slide here is you have established fields that have already produced over a billion barrels to date, still producing well over 260,000 barrels a day.

Speaker Change: So we have a successful trend that took a lot of technology to get us comfortable with how to image it.

Speaker Change: How to drill for it and how to produce it. But we didn't need to be the first mover. What we did is we followed this trend. We've looked at the previous successes. We've even looked at some of the discoveries being developed now and tried to decide where do we fit in all of this.

Tim Duncan: What we did is we followed this trend, we looked at the previous successes, and we even looked at some of the discoveries being developed now and tried to decide where we fit in all of this. And so if you look on the left, the orange are some of the discoveries. The black are some of the new developments that are ongoing, and we've seen technological advancements in 20K BOP stacks and 20K trees.

Timothy Duncan: What we did is we followed this trend, we looked at the previous successes, and we even looked at some of the discoveries being developed now and tried to decide where we fit in all of this. And so if you look on the left, the orange are some of the discoveries. The black are some of the new developments that are ongoing, and we've seen technological advancements in 20K BOP stacks and 20K trees.

Speaker Change: and so if you look on the left that or into some of the discoveries the black is some of the new developments that are ongoing and and we've seen technology advancements in two y -k b p stags in twotwentthousand k trees

Tim Duncan: We started building a position from various sources, and as I have said in the past, part of our business development is always trying to find out how to attach more acreage to the transactions that we do. And so, if you think about the quarter north and the invent acreage, excuse me, transactions, we've always talked about big acreage positions unrelated to the underwritten proved value that we did the transaction on. And so we picked up three Wilcox prospects through both lease sales and multiple transactions over the last four or five years, including Coronado Enterprise and Don Haro.

Timothy Duncan: We started building a position from various sources, and as I have said in the past, part of our business development is always trying to find out how to attach more acreage to the transactions that we do. And so, if you think about the quarter north and the invent acreage, excuse me, transactions, we've always talked about big acreage positions unrelated to the underwritten proved value that we did the transaction on. And so we picked up three Wilcox prospects through both lease sales and multiple transactions over the last four or five years, including Coronado Enterprise and Don Jaro.

Speaker Change: We started building a position from various sources.

Speaker Change: and I think I've said in the past.

Speaker Change: Part of our business development is always trying to find out how to attach more acreage to the transactions that we do. And so if you think about the quarter north and the invent acreage, excuse me, transactions, we've always talked about big acreage positions unrelated to the underwritten proved value that we did the transaction on.

Speaker Change: And so, we picked up three Wilcox prospects through both lease sales and multiple transactions over the last four or five years, including Coronado, Enterprise, and Don Jaro.

Tim Duncan: Now as we've studied those, we really kept our eyes around the Shenandoah area. And that was first discovered by Anadarko, which was taken over by Beacon, which is a private company. And they're good partners of ours, and we've always watched their progress and thought about our acreage position and then looked at the monument discovery that was made by Equinor but subsequently farmed into by Beacon, Repsol, and Navitas. So we approached them and were able to work a deal out where we're going to kind of come in at 21.4%, join their partnership on what is a post-FI So I'm on page 13, and there's a lot going on here, but I'll walk you through it.

Timothy Duncan: Now as we've studied those, we really kept our eyes around the Shenandoah area. And that was first discovered by Anadarko, which was taken over by Beacon, which is a private company. And they're good partners of ours, and we've always watched their progress and thought about our acreage position and then looked at the monument discovery that was made by Equinor but subsequently farmed into by Beacon, Repsol, and Navitas. So we approached them and were able to work a deal out where we're going to kind of come in at 21.4%, join their partnership on what is a post-FI So I'm on page 13, and there's a lot going on here, but I'll walk you through it.

Speaker Change: Now, as we studied those, we really kept our eyes around the Shenandoah area, and that was first discovered by Anadarko, taken over by Beacon, which is a private company.

Speaker Change: and are good partners of ours and we've always watched their progress and thought about our acreage position and then looked at the monument discovery that was made by Equinor but subsequently farmed into by Beacon and Repsol and Navitas.

Speaker Change: We approached them and were able to work a deal out where we're going to kind of come in at 21.4%, join their partnership on what is a post-FID development that we're going to describe here on the next page.

Speaker Change: So I'm on now page 13, and there's a lot going on here, but I'll walk you through it. If you go to the upper right, that's the geological picture. So similar to what we did in Katmai, let's just walk through this geological picture. So they have two discovery wells that help define the geological picture.

Timothy Duncan: If you go to the upper right, that's the geological picture. So, similar to what we did in Katmai, let's just walk through this geological picture. So they have two discovery wells that help define the geological picture. And that's why you have Neldon and Sewell with a full 2P report of 115 million barrels equivalent gross. So we're going to step into those reserves that are 21.4%. On a net basis, that's already worth $265 million.

Tim Duncan: If you go to the upper right, that's the geological picture. So, similar to what we did in Katmai, let's just walk through this geological picture. So they have two discovery wells to help define the geological picture, and that's why you have Netherland and Sewell with a full 2P report of 115 million barrels equivalent gross. So we're going to step into those reserves at our 21.4%. On a net basis, that's already worked out to $265 million.

Speaker Change: and 's why you have no a soul with a full to p report of one hundred and fifteen million barls equivalent growrossth so we're going to step into those reserves at our twenty one point four percent on the net basis that's already worked two hundred sixty five million dollars

Tim Duncan: But what makes this even more exciting is there's still an untested fault block there. So not only do we see the initial development, which will be the two orange future wells, but those discovery wells were plugged by the previous operator. The new operating group led by Beacon will drill two new wells.

Timothy Duncan: But what makes this even more exciting is there's still an untested fault block there. So not only do we see the initial development, which will be the two orange future wells, but those discovery wells were plugged by the previous operator. The new operating group, led by Beacon, will drill two new wells.

Speaker Change: But what makes this even more exciting is there's still an untested fault block there. So not only do we see the initial development, which will be the two orange future wells, so those discovery wells were plugged by the previous operator.

Timothy Duncan: Those will be tied back to the Shenandoah facility that's 17 miles away, and we walk in with inventory on the prospective drilling location to the south. So we like this because it checks a lot of boxes. It's got a couple wells that can lead us on a short tieback. It's got upside in drilling locations, and ultimately, this could be as big as a five-well development. And the facility is going to guarantee us 20,000 barrels a day, gross.

Speaker Change: The new operating group, led by Beacon, will drill two new wells. Those will be tied back to the Shenandoah facility that's 17 miles away, and we walk in with inventory on the prospective drilling location to the south. So we like this because it checks a lot of boxes. It's been discovered.

Tim Duncan: Those will be tied back to the Shenandoah facility that's 17 miles away, and we walk in with inventory on the prospective drilling location to the south. So we like this because it checks a lot of boxes. It's been discovered.

Tim Duncan: It's got a couple wells that can lead us in a short tieback. It's got upside in drilling locations. Ultimately, this could be as big as a five-well development, and the facility is going to guarantee us 20,000 barrels a day gross. And then as more eulogy becomes available, then we may have more ability to bring those rates up to as much as 30,000 barrels a day gross. So we're in a good spot in terms of risk and having a discovered resource and appraised resource, upside within the discovery in the new fault block, a facility that we can tie back to with availability to have upside. So I'm going to hand it over to Sergio to walk you through a couple of the financial slides.

Speaker Change: it's got a couple well th can lead us in a short tie back it's got upside and drilling locations ultimately this could be as big as a five-well development

Timothy Duncan: And then as more eulogy becomes available, then we may have more ability to bring those rates up to as much as 30,000 barrels a day gross. So we're in a good spot in terms of risk and having a discovered resource and appraised resource, upside within the discovery in the new fault block, a facility that we can tie back to with availability to have upside. So I'm going to hand it over to Sergio to walk you through a couple of the financial slides.

Speaker Change: And the facility is going to guarantee us 20,000 barrels a day gross.

Speaker Change: and then as more more usish becomes available than we mayhave more ability to bring those rates up to as much as thirty thousand barllls today growth so

Speaker Change: You know, we're in a good spot in terms of risk and having a discovered resource and appraised resource, upside within the discovery in the new fault block, a facility that we can tie back to with availability to have upside in rate.

Sergio Maiworm: Thank you, Jim, and good morning, everyone, and thank you for joining our call this morning. Before diving into the next slide, I just wanted to provide a couple of thoughts on the business so far and going forward. We continue to be laser focused on execution of our business plan, as evidenced by the performance in the second quarter. It's another quarter of very strong execution in delivering results above and beyond the market expectations.

Speaker Change: So I'm going to hand it over to Sergio to walk through a couple of the financial slides.

Sergio: Thank you, Jim, and good morning, everyone, and thank you for joining our call this morning.

Sergio: before diveving into the next slide i just wanted to provide a couple of thoughts on the business so far and going forward we continue to be laser focus on execution of our business plan as evidenced by the performance in the second quarter

Sergio: It's another quarter of very strong execution in delivering results above and beyond the market expectations.

Sergio Maiworm: And I expect this execution to continue in the second half of the year as well. We're reaffirming our full-year operational and financial guidance, and we expect to hit all of our numbers in the coming quarter. We're also providing third quarter production guidance of 92 to 97,000 barrels of oil equivalents per day, which is in line with current market expectations. It's a bit of a wider range than usual, but that is reflective of the fact that we're entering the thick of the weather season offshore.

Sergio Maiworm: And I expect this execution to continue in the second half of the year as well. We're reaffirming our full-year operational and financial guidance, and we expect to hit all of our numbers in the coming quarter. We're also providing third quarter production guidance of 92 to 97,000 barrels of oil equivalents per day, which is in line with current market expectations. It's a bit of a wider range than usual. But that is reflective of the fact that we're entering the thick of the weather season offshore.

Sergio: and i expect this execution to continue in the second half of the year as well we're reaffirming our full year operational and financial guidance and we expect to hit all of our numbers in the coming quarters

Sergio: We're also providing third quarter production guidance of 92 to 97 thousands of barrel of oil equivalents per day, which is in line with current market expectations.

Speaker Change: it's a bit of a wider range than usual but that is reflective of the fact that we're entering the thick of weather season offshore so we think this range is appropriate at the moment

Sergio Maiworm: So we think this range is appropriate at the monuments Tim already highlighted, but I just wanted to touch on a couple of different things. First, as Tim mentioned, the net value creation of acquiring those assets is $265 million, which is greater than 10% of our market cap. So just by bringing this asset into our portfolio, we're immediately creating significant shareholder value just by having this asset in the... and delivering on this asset in our portfolio.

Sergio Maiworm: So we think this range is appropriate. Tim already highlighted some landmarks, but I just wanted to touch on a couple of different ones. First, as Tim mentioned, the net value creation of acquiring those assets is $265 million, which is greater than 10% of our market cap. So just by bringing this asset into our portfolio, we're immediately creating significant shareholder value just by having this asset and delivering on this asset in our portfolio. The other point is that this asset further bolsters our inventory by preserving other high-quality locations of inventory for future drilling.

Tim: Tim already highlighted monuments, but I just wanted to touch on a couple of different points.

Asto: first asto mention the net value creation of acquirred those assets it's two hundred and sixty five million dollars

Speaker Change: which is greater than 10% of our market cap. So just by bringing this asset into our portfolio, we're immediately creating significant shareholder value just by having this asset in the, and delivering on this asset in our portfolio.

Sergio Maiworm: The other point is that this asset further bolsters our inventory by preserving other high-quality locations of inventory for future drilling. Lastly, I just wanted to thank the incredible Talos team for the very successful integration of Quarter North and for working diligently to find additional synergies, and I can, and I believe that we're going to continue to do that going forward. So turning to slide 14, I just wanted to talk a little bit about our progress so far on our debt repayment. We're a little ahead of where we thought we would be at mid-year.

Tim: the other points that this asset further bolsters are inventory by preserving other high-quality locations of inventory for future drilling

Sergio Maiworm: Lastly, I just wanted to thank the incredible Talos team for the very successful integration of Quarter North and for working diligently to find additional synergies. I can, and I believe that we're going to continue to do that going forward. So turning to slide 14, I just wanted to talk a little bit about our progress so far on our debt repayment. We're a little ahead of where we thought we were going to be at mid-year.

Speaker Change: Lastly, I just wanted to thank the incredible Talos team for the very successful integration of Quarter North and for working diligently in finding additional synergies, and I believe that we're going to continue to do that going forward.

Sergio Maiworm: And I can, and I believe that we're going to continue to do that going forward. So turning to slide 14, I just wanted to talk a little bit about our progress so far on our debt repayment. We're a little ahead of where we thought we would be at mid-year.

Sergio Maiworm: That is even including some of the shares that we repurchased in the second quarter of 2024. So I'm pretty excited about where we are. And looking forward into the second half, I expect Talos to generate free cash flow in excess of the $225 million that we have left on the revolver. So that gives us a lot of flexibility to continue to pay down the revolver going forward. In turning to slide 15, I'm very excited about our opportunistic share repurchases during the second quarter.

Sergio Maiworm: That is even including some of the shares that we repurchased in the second quarter of 2024. So I'm pretty excited about where we are. And looking forward into the second half, I expect Talos to generate free cash flow in excess of the 225 million dollars that we have left on the revolver. So that gives us a lot of flexibility to continue to pay down the revolver going forward. In turning to slide 15, I'm very excited about our opportunistic share repurchases during the second quarter.

Sergio: So, turning to slide 14, I just wanted to talk a little bit about our progress so far on our debt repayment.

Sergio: We're a little ahead of where we thought we were going to be at mid-year, that is even including some of the shares that we repurchased in the second quarter of 2024. So I'm pretty excited of where we are. I'm looking forward into the second half.

Sergio Maiworm: That is even including some of the shares that we repurchased in the second quarter of 2024. So I'm pretty excited about where we are. And looking forward into the second half, I expect Talos to generate free cash flow in excess of the 225 million dollars that we have left on the revolver. So that gives us a lot of flexibility to continue to pay down the revolver going forward. In turning to slide 15, I'm very excited about our opportunistic share repurchases during the second quarter.

Sergio: I expect Talos will generate free cash flow in excess of the $225 million that we have left on the revolver. So that gives us a lot of flexibility to continue to pay down the revolver going forward.

Sergio: and turning to slide fifteen

Sergio: I'm very excited about our opportunities to share repurchases during the second quarter.

Sergio Maiworm: As we pointed out before, we repurchased 3.8 million shares for about $43 million in the second quarter. So that utilized most of the authorization that we already had from the board. And subsequent to that, the board authorized another $150 million of potential share repurchases in the future. So that gives us a lot of flexibility to continue to move forward with potential shareholder returns. Thank you.

Sergio Maiworm: As we've pointed out before, we repurchased 3.8 million shares for about $43 million in the second quarter. So that utilized most of the authorization that we already had from the board. And subsequent to that, the board authorized another $150 million of potential share repurchases in the future. So that gives us a lot of flexibility to continue to move forward with potential shareholder returns. Thank you.

Sergio: As we pointed out before, we've repurchased 3.8 million shares for about $43 million in the second quarter. So that utilized most of the authorization that we already had from the board. And subsequent to that, the board authorized another $150 million of potential share repurchases in the future. So that gives us a lot of flexibility to continue to move forward with potential

Sergio: shareholder returns in the future.

Sergio Maiworm: Turning over to slide 16, there's a lot of really good information here, but I'll focus on the NAV analysis in the center of the slides. I'll start with that first bar on the left, our approved PV10. So this is the PV10 of our approved reserves of $5.1 billion. And what I wanted to point out there is that $5.1 billion is already net, or said another way, is already burdened by the costs of P&A.

Sergio Maiworm: Turning over to slide 16, there's a lot of really good information here, but I'll focus on the NAV analysis in the center of the slides. I'll start with that first bar on the left, our approved PV-10. So this is the PV-10 of our approved reserves of $5.1 billion. And what I wanted to point out there is that $5.1 billion is already net, or said another way, is already burdened by the costs of P&A.

Sergio: Turning over to slide 16, there's a lot of really good information here, but I'll focus on the NAV analysis in the center of the slides.

Sergio Maiworm: So if someone were to deduct ARO from that 5.1, they would be double counting P&A costs. That is why we show that graph, adding back the arrow and then removing it for clarification purposes to avoid that double-click.

Sergio Maiworm: So if someone were to deduct ARO from that 5.1, they would be double-counting P&A costs. That is why we showed that graph adding back the arrow and then removing it for clarification purposes to avoid that double-click.

Sergio Maiworm: So if someone were to deduct ARO from that 5.1, they would be double counting P&A costs. That is why we showed that graph, adding back the arrow and then removing it for clarification purposes to avoid that double-click.

Sergio: I'll start with that first bar on the left, our approved PV-10. So this is the PV-10 of our approved reserves of $5.1 billion.

Sergio: And what I wanted to point out there is that 5.1 billion dollars is already net, or said another way, is already burdened by the cost of P&A. So if someone were to deduct ARO from that 5.1, they would be double counting P&A costs.

Sergio: That is why we show that graph adding back the arrow and then removing it for clarification purposes to avoid that double counting.

Sergio Maiworm: The next item that I wanted to point out is the amount of value that Talos has outside of its approved reserves. Those are very real, not pie in the sky. In the case of the probable developed, for example, they're also audited by the Netherlands, so they're very real, and we do expect that value to transfer into approved over time. So we do see a lot of value in those approved developed reserves. The other item that we have here on the chart is the value of monuments. So we just talked about it, Tim talked about monuments, and I briefly touched on it as well.

Sergio: The next item that I wanted to point out is the amount of value that Talos has outside of its approved reserves.

Sergio: Those are very real, not pie in the sky.

Unknown Executive: under 2024 earnings conference call. At this time all lines are in listen only mode. Following the presentation we will conduct a question and answer session.

Sergio: In the case of the probable developed, for example, they're also audited by Netherlands. So they're very real and we do expect that value to transfer into proved over time. So we do see a lot of value in those proved developed reserves.

Unknown Executive: If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 8th, 2024.

Sergio: The other item that we have here on the chart is the value of monuments.

Clay Jeansonne: I would now like to turn the conference over to Clay Jeansonne for to start. Please go ahead. Thank you operator. Good morning everyone. And welcome to our second quarter of 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 second quarter of 2024 earnings slide presentation, which is available for viewing and downloading on Talos' website.

Tim: So, we just talked about it, Tim talked about Monument, and I briefly touched on it as well. So, that $265 million of value, that is already accreted to our shareholders. So, we absolutely count that as value outside of our approved reserves.

Sergio Maiworm: So that $265 million of value is already accreted to our shareholders. So we absolutely count that as value outside of our approved reserve. The third one, or the third bucket that I wanted to talk about that's not here on the chart, and maybe it's a little less intuitive, is the value of our drilling inventory. As a reminder, due to different reserve booking rules between offshore and onshore companies, we typically do not book most of our drilling locations in PUDs, and that's why they're not already improved reserves, which is different than some of our shale colleagues who do include that in their PUDs.

Speaker Change: The third one, or the third bucket that I wanted to talk about that is not here in the chart, and maybe it's a little less intuitive, is the value of our drilling inventory.

Sergio: As a reminder, due to different reserves booking rules between offshore and onshore companies, we typically do not book most of our drilling locations in PUDs, and that's why they're not already improved reserves, which is different than some of our shale colleagues, that they do include that in their PUDs.

Clay Jeansonne: Now let's start on slide two cautionary statements. I'd like to remind you that our remarks will include forward-looking statements after 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 10Q for the period ending June 30th of 2024 filed yesterday with the SEC. Forward-looking statements are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events. During this call we may present a gap and non-gap 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.

Sergio Maiworm: Another point that I wanted to make is, I fully understand that each investor may have different views on discount rates or perhaps add some additional risking factors to some of the elements that we have here on the page. But the point that I'm trying to make is that there are a lot of different avenues and enough value here that you can support a much higher value for Talos than the market currently assigns.

Sergio: Another point that I wanted to make is, I mean, I fully understand that each investor may have different views on discount rates or perhaps add some additional risking factors in some of the elements that we have here on the page.

Sergio: But the point that I'm trying to make is that there are a lot of different avenues and enough value here that you can support a much higher value for Talos than the market currently ascribes to us.

Sergio Maiworm: Look, we understand that there may be other non-fundamental considerations out there, but if we just focus on the fundamentals of the business, there should be significant upside on our market valuation. Tim, do you have any additional thoughts that you would like to share?

Sergio: Look, we understand that there may be other non-fundamental considerations out there, but if we just focus on the fundamentals of the business, there should be significant upside on our market valuation.

Timothy Duncan: And now I'd like to turn the call over to Tim. Thanks Clay and welcome everyone to our call. We're looking forward to highlighting a fantastic quarter from an operational and financial execution standpoint and introduced a new project that we picked up in the quarter. So let's get right into the slide deck. So let's jump in on slide three.

Sergio: Tim, do you have any additional thoughts that you would like to share?

Tim Duncan: You know, Sergio, if I can jump in as well, as you think about the things I talked about earlier in my slides, and we think about the sun sphere completion, which is actually a probable undeveloped, if you think about all that upside we see in the broader CAPMI complex, those are things that are outside the proven. And so if we think about this business and use it as a proxy value for how to think about the value per share, the next question is fine, but then how confident can I be that they're going to deliver and continue to deliver and have that proven to be sustainable?

Timothy Duncan: You know, Sergio, if I can jump in as well, as you think about the things I talked about earlier in my slides, and we think about the sun sphere completion, which is actually a probable undeveloped, if you think about all that upside we see in the broader CAPMI complex, those are things that are outside the proven. And so if we think about this business improved as a proxy value for how to think about the value per share, the next question is fine, but then how confident can I be that they're going to deliver and continue to deliver and have that proved to be sustainable?

Timothy Duncan: You know, Sergio, if I can jump in as well. As you think about the things I talked about earlier in my slides, and we think about the sun sphere completion, which is actually a probable undeveloped. If you think about all that upside we see in the broader CAPMI complex, those are things that are outside the proven. And so if we think about this business and the proven as a proxy value for how to think about the value per share, the next question is fine, but then how confident can I be that they're going to deliver and continue to deliver and have that proven to be sustainable?

Tim: You know, Sergio, if I can jump in as well, as you think about the things I talked about earlier in my slides, and we think about the sun sphere completion, which is actually a probable undeveloped, if you think about all that upside we see in the broader CAPMI complex.

Timothy Duncan: As I look at this introduction slide I always like to start on the right side of the page and talk about the core tenets of our strategy. We like having an oil weighted production in the Gulf of Mexico. I think it's critically important to have infrastructure where we can focus on short cycle times in our drilling inventory and lower break even. We think if we execute that program well at least a consistent generation of free cash flow which is certainly we saw in the second quarter.

Speaker Change: Those are things that are outside the proved and so if we think about this business

Speaker Change: Improved as a proxy value for how to think about the value per share. The next question is fine, but then how confident can I be that they're going to deliver and continue to deliver and have that proved to be sustainable? I think the message we're trying to deliver is we've got a lot of that value outside approved that we think creates the sustainability of this business. So we're looking forward to that execution and then ultimately revisiting the impact that has on slides like this.

Timothy Duncan: I think the message we're trying to deliver is we've got a lot of that value outside approved that we think creates the sustainability of this business. So we're looking forward to that execution and then ultimately revisiting the impact that has on slides like this, which leads me to page 17 and why we think the equity value of this company is determined to go up, and we think it's certainly a discount for those entering into the equity story now.

Tim Duncan: I think the message we're trying to deliver is we've got a lot of value outside approved that we think creates the sustainability of this business. So we're looking forward to that execution and then ultimately revisiting the impact that has on slides like this, which leads me to page 17 and why we think the equity value of this company is determined to go up. And we think it's certainly a discount for those entering into the equity story now.

Timothy Duncan: I think the message we're trying to deliver is we've got a lot of value outside of proven that we think creates the sustainability of this business. So we're looking forward to that execution and then ultimately revisiting the impact that has on slides like this, which leads me to page 17 and why we think the equity value of this company is determined to go up. And we think it's certainly a discount for those entering into the equity story.

Timothy Duncan: Always could be in committed the low leverage over the 13 years that we've operated talus energy and over those 13 years that's led us to be the fifth largest operator in the Gulf of Mexico. Fourth largest acreage holder in the Gulf of Mexico and production guidance for the year between 89 and 95,000 barrels equivalent a day.

Speaker Change: which leads me to page 17 and why we think the equity value of this company is determined to go up. And we think it's certainly a discount for those entering into the equity story now. We really believe we have a lot of upside around this infrastructure. By owning this infrastructure, we get hyper-focused.

Tim Duncan: We really believe we have a lot of upside around this infrastructure. By owning this infrastructure, we become hyper-focused on utilizing it and finding inventory that can come back to that fixed cost and ultimately deliver first-in-class, best-in-class net back margins. And so we have a high degree of inventory that we're focused on for execution year over year. We really thought that when we integrated these assets and with a lower decline base, we would get more consistent results.

Timothy Duncan: We really believe we have a lot of upside around this infrastructure. By owning this infrastructure, we become hyper-focused on utilizing it and finding inventory that can come back to that fixed cost and ultimately deliver first in class, best in class net back margins. And so we have a high degree of inventory that we're focused on for execution year over year. We really thought that when we integrated these assets and with a lower decline base, we would get more consistent results.

Timothy Duncan: Now, we really believe we have a lot of upside around this infrastructure. By owning this infrastructure, we become hyper focused on utilizing it and finding inventory that can come back to that fixed cost and ultimately deliver first in class, best in class net back margins. And so we have a high degree of inventory that we're focused on for execution year over year. We really thought that when we integrated these assets and with a lower decline base, we would get more consistent results.

Timothy Duncan: So it's been a journey and I think this quarter really highlights the impact of what that journey's been for us and what our team has been able to deliver. So on page four we'll jump right into some of the highlights of the quarter and I'm going to draw your attention to the first three things on the right side of the page. 95,000,000 barrels equivalent a day, 344 million of adjusted EBITDA and 148 million adjusted free cash flow.

Speaker Change: on utilizing it and finding inventory that can come back to that fixed cost and ultimately deliver first-in-class, best-in-class net back margins. And so we have a high degree of inventory that we're focused on for execution year-over-year.

Sergio: We really had thought that when we integrated these assets with a lower decline base, we get more consistent results. We're seeing that with a higher quality asset base than we've had in the past. It is certainly leading us to having these $40 per BOE net back margins, which we think are some of the higher in the space.

Tim Duncan: We're seeing that with a higher quality asset base than we've had in the past. It is certainly leading us to having these $40 per BOE net back margins, which we think are some of the highest in the space. It's delivering significant free cash flows, evidenced by what we did in the first half of the year at $225 million. We're certainly happy about that.

Timothy Duncan: We're seeing that with a higher quality asset base than we've had in the past. It is certainly leading us to having these $40 per BOE net back margins, which we think are some of the highest in the space. It's delivering significant free cash flows, as evidenced by what we did in the first half of the year at $225 million. We're certainly happy about that.

Timothy Duncan: Those were all records for the company for the quarter and we're very proud of that. They're buttressed by having 81% oil liquids leading us to a $40 bill we net back EBITDA margin. Now we spent $123 million a capital for the quarter. If you think about that from a reinvestment rate, that's a 36% reinvestment rate on just our capital program. If we include $22 million a PNA spend that's a 42% reinvestment rate.

Timothy Duncan: That also delivers a large free cash flow yield. And we've always been committed to low leverage. We've been here 13 years, and we've never had financial distress because of our commitment to keeping our leverage low.

Sergio: It's delivering significant free cash flows, evidenced by what we did in the first half of the year at $225 million. Certainly happy about that. That also delivers a large free cash flow yield. And we've always been committed to low leverage. We've been here 13 years. We've never had financial distress because of our commitment to keeping our leverage low. We were able to hit that target of one time in the first quarter, and we're going to continue to push that down.

Tim Duncan: That also delivers a large free cash flow yield. And we've always been committed to low leverage. We've been here 13 years, and we've never had financial distress because of our commitment to keeping our leverage low.

Tim Duncan: We were able to hit that target once in the first quarter, and we're going to continue to push that down. And we do this with a focus on our employees and our community. When you build and start companies, it's a different feeling for our employees to be a part of that. We take that very seriously, and we're proud of our team and what they're delivering for our customers. So with that, we'll open it up for Q&A.

Timothy Duncan: We were able to hit that target once in the first quarter, and we're going to continue to push that down. And we do this with a focus on our employees and our community. When you build and start companies, it's a different feeling for our employees to be a part of that. We take that very seriously. We're proud of our team and what they're delivering for us. So with that, we'll open it up for Q&A.

Timothy Duncan: I think we talked about in previous calls this was going to be one of those years because of the delivery of new projects as we entered the year and the delivery of the rig and the second half of the year to expect robust free cash flow generation particularly in the first half of the year, on. Now with that free cash flow we were able to also continue to pay down our debt, we paid down a hundred million of debt, and then opportunistically we used some of the previous buyback authorization to buy 3.8 million shares in the open market and we increased that authorization for another 150 million dollars that we talked about in our earnings release.

Sergio: And we do this with a focus on our employees and our community. We, you know, when you build and start companies, that becomes, it's a different feeling for our employees of being a part of that. We take that very seriously. We're proud of our team and what they're delivering for our company. So with that, we'll open it up for Q&A.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number 2. If you are using a speakerphone, please make sure to lift the handset before pressing any key. Your first question comes from Neil Mather from Goldman Sachs. Your line is now open.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised.

Timothy Duncan: If you go to the left side of the page a couple things I would highlight. Again, maintaining our leverage of one times, we were able to hit that goal for the year early in the first quarter in part with the sale of our CCS business. Our integration and synergies are on track. I look forward to talking to you about that in a couple slides. Hp1 dry dock went well as we would expect it to, and we're going to introduce a high impact project called monument exciting. It's our first real Wilcox play. It's a trend that we've been working on for some time and we'll talk about that in our call today as well.

Speaker Change: Should you wish to decline from the polling process, please press star followed by the number 2. If you are using a speakerphone, please make sure to lift the handset before pressing any keys.

Speaker Change: Your first question comes from the line of Neil Mather from Goldman Sachs. Your line is now open.

Neil Mehta: Thank you, Tim, Sergio, and team, and congratulations on a very good free cash flow execution this quarter. One specific question, and then one big picture question. The specific one's on Monument. Can you talk a little bit more about how that came together and the market has received it well? Are there other opportunities like that as we think about the opportunity set in the Gulf of Mexico?

Neil Mather: Thank you, Tim, Sergio, and team, and congratulations on a very good free cash flow execution this quarter. Now, one specific question, that one big picture question, the specific one's on Monument. Can you talk a little bit more about how that came together and the market has received it well, and are there other opportunities like that as we think about the opportunity set in the Gulf of Mexico?

Neil Mehta: Thank you, Tim, Sergio, and team, and congratulations on a very good free cash flow execution this quarter. Now, one specific question, that one big picture question, the specific one's on Monument. Can you talk a little bit more about how that came together and the market has received it well, and are there other opportunities like that as we think about the opportunity set in the Gulf of Mexico?

Neil Mather: Thank you, Tim, Sergio, and team, and congrats on a very good pre-cash flow execution this quarter. One specific question, and then one big picture question, the specific one's on Monument. Can you talk a little bit more about...

Timothy Duncan: Let's go to slide 5 and I look at the slide and I'd be remiss to not shout out to our team and how hard they've worked not only in executing our base business leading into this year, getting a very important transaction done in the quarter north transaction and immediately executing on that transaction and integration so we can deliver a pro form of business is giving us the results that we see on this page. It's not complicated.

Speaker Change: How that came together and the market has received it well, are there other opportunities like that as we think about the opportunity set in the Gulf of Mexico?

Tim Duncan: Yeah, thanks, and kind of welcome to the call. I think it came together just as we've been building such a big acreage position. I talked about, you know, in the remarks that when we do these transactions, we underwrite the transactions, but we typically buy big acreage positions around these transactions. Look, the last few transactions came with over 700,000 acres, and then we also participate. And we're typically a top five participant in deep water in these lease sales, and so we've had our eye on the trend and had our eye on the play.

Timothy Duncan: Yeah, thanks, and kind of welcome to the call. I think it came together just as we've been building such a big acreage position. I talked about, you know, in the remarks, that when we do these transactions, we underwrite them, but we typically buy big acreage positions around these transactions. Look, the last few transactions came with over 700,000 acres, and then we also participate. And we're typically a top five participant in deepwater in these lease sales. And so we've had our eye on the trend and have our eye on the play.

Timothy Duncan: Yeah. Hey, Neil, thanks and a kind of welcome to the call.

Timothy Duncan: I think it came together just as we've been building such a big acreage position. I talked about, you know, in the remarks that when we do these transactions, we underwrite the risk, but we typically buy big acreage positions around these transactions. Look, the last few transactions came with over 700,000 acres, and then we also participate. And we're typically a top five participant in deep water in these lease sales. And so we've had our eye on the trend and have had our eye on the play.

Speaker Change: Yeah, hey Neal, thanks and kind of

Speaker Change: I think it came together just as we've been building such a big acreage position, I talked about in the remarks.

Speaker Change: Then when we do these transactions, you know, we underwrite approved, but we typically buy big acreage positions around these transactions. Look, the last two transactions came with over 700,000 acres. And then we also participate, and we're typically a top five participant in deep water in these lease sales. And so we've had our eye on the trend and had our eye on the play. If you look at that slide where I highlight the Wilcox, I noticed, I noted this Coronado well that has pay in it. We picked that up in a transaction in 2019. That was our entry point. And then we started building from there. So you've got two things in play. Did we build an acreage position around this before this deal? Yes.

Timothy Duncan: Our hope all along was with the right execution of our base business and the new projects coming online in business and line rock, the integration of quarter north and the assets we really liked about that lowering our base decline, but ultimately it would deliver more consistent results quarter of a quarter. And what you see here in the first two quarters as we be consensus on production and adjusted EBITDA and adjusted free cashflow each quarter of our first two quarters. And frankly, I would say pretty materially on certainly on an adjusted EBITDA basis in the second quarter.

Timothy Duncan: If you look at that slide where I highlight Wilcox, I noticed I noted this Coronado well that has pay in it. We picked that up in a transaction in 2019. That was our entry point, and then we started building from there. So you've got two things in play. Did we build an acreage position around this before this deal? Yes. Now, how do we think about the right way to enter and the partnership in which to enter? And so Beacon's a great operator.

Timothy Duncan: If you look at that slide where I highlight the Wilcox, I noticed, I noted this Coronado well that has pay in it. We picked that up in a transaction in 2019. That was our entry point, and then we started building from there. So you've got two things in play. Did we build an acreage position around this before this deal? Yes. Now, how do we think about the right way to enter and the partnership in which to enter? And so Beacon's a great operator.

Tim Duncan: If you look at that slide where I highlight Wilcox, I noticed I noted this Coronado well that has pay in it. We picked that up in a transaction in 2019. That was our entry point, and then we started building from there. So you've got two things in play. Did we build an acreage position around this before this deal? Yes. Now, how do we think about the right way to enter and the partnership in which to enter? And so Beacon's a great operator.

Timothy Duncan: But on page 6, that hasn't changed what our focus has been for 2024 and what our priorities are for the year. We want to keep really working showing how we can execute on these assets and we knew by doing so generate material free cashflow. If you look at the 148 million dollars free cashflow and the first second quarter add that to the first quarter that ramps up to 225 million dollars if adjusted free cashflow off these assets for the year.

Timothy Duncan: This is really their kind of focus is Wilcox development. They're a partner of ours. If you go to the drilling calendar, there was a well in Claiborne where they were a partner of ours. So we knew them well.

Speaker Change: Now, how do we think about the right way to enter and the partnership in which to enter? And so Beacon's a great operator. This is really their...

Tim Duncan: This is really their kind of focus is Wilcox development. They're a partner of ours. If you go to the drilling calendar, there was a well in Claiborne where they were a partner of ours. So we knew them well.

Speaker Change: The focus is Wilcox Development. They are a partner of ours. We also announced a partnership in an exploration JV with Repsol over the last six months that we are working on. So, we have partners that we recognize.

Timothy Duncan: We've also announced a partnership with, in an exploration JV with Repsol over the last six months that we're working on. So we have partners that we recognize that are developing a major project right around the acreage position that we've been building. So it's a great spot for us to watch this come together. And then specific to the project monument, you know, Beacon's already drilled four wells recently in their phase one campaign. They're constructing a facility that will be delivered in the first quarter. They expect production in the second quarter.

Tim Duncan: We've also announced a partnership in an exploration JV with Repsol over the last six months that we're working on. So we have partners that we recognize that are developing a major project right around the acreage position that we've been building. So it's a great spot for us to watch this come together. And then specific to the project monument, you know, Beacon's already drilled four wells recently in their phase one campaign. They're constructing a facility that will be delivered in the first quarter. They expect production in the second quarter.

Timothy Duncan: We've also announced a partnership in an exploration JV with Repsol over the last six months that we're working on. So we have partners that we recognize that are developing a major project right around the acreage position that we've been building. So it's a great spot for us to watch this come together. And then specific to the project monument, you know, Beacon's already drilled four wells recently in their phase one campaign. They're constructing a facility that will be delivered in the first quarter. They expect production in the second quarter.

Timothy Duncan: That's just a tremendous amount of free cashflow yield. I'm very happy about that and happy how the business is being executed. I've talked about some of these other items on completing quarter north. We mentioned you know annual guidance earlier in the presentation. Let me introduce the third quarter guidance between 92 and 97,000 barrels equivalent a day. A little wider range to what we had in the second quarter that guidance was 93 to 96 or in a weather season we think that's appropriate and we're looking forward to delivering on that.

Speaker Change: that are developing a major project right around the acreage position that we've been building. So it's a great spot.

Speaker Change: for us to watch this come together and then.

Speaker Change: Specific to the Project Monument.

Speaker Change: You know, Beacon's already drilled four wells recently in their Phase 1 campaign. They're constructing a facility that will be delivered in the first quarter. They expect production in the second quarter. So we're going to get a front row seat in watching that get developed as we start to spend capital on this project in 2025 and then ultimately drill and complete a couple wells and get them online in late 2026. So, you know, Acres position came together over time, partners that we recognize, active activity where we can watch and learn, and ultimately we think that helps with the execution of the other acres we've put together. So it's a lot of things coming together to make this work, but it's part of the evolution of the company as well.

Timothy Duncan: So we're going to get a front row seat and watching that come develop, you know, get developed as we start to spend capital on this project in 25 and then ultimately drill and complete a couple of wells and get them online in late 26. So, you know, acreage position came together over time, partners that we recognize, and active activity where we can watch and learn. And ultimately, we think that helps with the execution of the other acreage we've put together. So there are a lot of things coming together to make this work, but it's part of the evolution of the company as well.

Tim Duncan: So we're going to get a front row seat and watching that come to life as we start to spend capital on this project in 25 and then ultimately drill and complete a couple of wells and get them online in late 26. So, you know, the acreage position came together over time, partners that we recognize, and active activity where we can watch and learn. And ultimately, we think that helps with the execution of the other acreage we've put together. So there are a lot of things coming together to make this work, but it's part of the evolution of the company as well.

Timothy Duncan: The financial execution has been strong these years. As I mentioned earlier we hit that one times leverage target in the first quarter in part because of the sale down to CCS. We continue to keep it there and we're going to work that a little lower throughout the year. But by being ahead of schedule it allowed us to opportunistically buy back some shares in the second quarter. We're going to continue to generate significant free cashflow.

Neil Mather: Thanks, Tim. And then the follow-up is a more big picture question, which I really like, Sergio, your slide 16, that walks through how you guys think about value. And the area that I would imagine that you would get pushback on this calculation is really the use of PV 10, right? Because there's implicit, I think, in with the stock trading worth of a 20% free cash flow yield view that the cost of capital for the Gulf of Mexico, E&P is higher than 10%.

Neil Mehta: Thanks, Tim. And then the follow-up is a more big picture question, which I really like, Sergio, your slide 16, that walks through how you guys think about value. And the area that I would imagine that you would get pushback on this calculation is really the use of PV 10, right? Because there's implicit, I think, in with the stock trading worth of a 20% free cash flow yield view that the cost of capital for the Gulf of Mexico, E&P is higher than 10%.

Neil Mehta: Thanks, Tim. And then the follow-up is a more big picture question, which I really like, Sergio, your slide 16, that walks through how you guys think about value. And the area that I would imagine that you would get pushback on this calculation is really the use of PV10, right? Because there's implicit, I think, with the stock trading worth of a 20% free cash flow yield, a view that the cost of capital for Gulf of Mexico E&P is higher than 10%.

Timothy Duncan: That might slow down a little bit in the second half of the years. We get the delivery of the Westfeller rig to Goodrill our high impact drilling program but at least to the next part of the strategy we want to have those prospects in our portfolio. We're excited about what's happening out in Katmai. I'll talk about that. We're excited about you know how we're stacking up some really exciting prospects into 24 and into 25 and then we really want to talk about the monument project that we formed into in the last several weeks, and then in the middle of all this, we're going to keep being tactical in our pursuit of adding value.

Speaker Change: Thanks, Tim. And then the follow-up is more big-picture question, which is, I really like, Sergio, your slide 16.

Speaker Change: that walks through how you guys think about value. And the area that I would imagine that you would get pushback on this calculation is really.

Speaker Change: The use of PV10, right? Because there's implicit, I think, in with the stock trading worth of a 20% free cash flow yield view that the cost of capital for Gulf of Mexico

Neil Mehta: So how do you respond to those out there who think that the cost of capital is well higher than the traditional PV10 metric? And how do you change the market perception about the risk profile associated with your operations?

Speaker Change: Unknown Speaker, how do you respond to those out there who think that, you know, the cost of capital is well higher than the traditional PV10 metric? And how do you how do you change the market perception about, you know, the, the risk profile associated with your operations? Unknown Speaker Thank you. Thank you.

Neil Mather: So how do you respond to those out there who think that, you know, the cost of capital is well higher than the traditional PV 10 metric? And how do you change the market perception about, you know, the risk profile associated with your operations?

Neil Mehta: So how do you respond to those out there who think that, you know, the cost of capital is well higher than the traditional PV 10 metric? And how do you change the market perception about, you know, the risk profile associated with your operations?

Timothy Duncan: Minimum it represents that. Here's a project that we're able to come in post FID, risk is off the table. Someone else got it to DFID point. We're entering post FID at a low entry cost and an immediate value add. So excited about the project and we'll talk about it here in a few slides.

Sergio Maiworm: Yeah, sure, Neil. Thanks for the question and thanks for joining us.

Speaker Change: Yeah, sure, Neil. Thanks for the question and thanks for joining us.

Sergio Maiworm: Look, and I mentioned that in my prepared remarks as well, right? We do recognize that some folks may think about the discount rate here, the cost capital a little bit higher than the PV-10s, and that's fine. But I think the main focus of that comment was that there's so much value above and beyond PV-10, sorry, above and beyond proved reserves that even if you assume a higher discount rate, there's so many other avenues that you can get to a much higher stock price or market capitalization than what we currently have that folks should feel comfortable even with a higher discount rate that the stock is actually pretty undervalued compared to the fundamental value of our business, right, even at a slightly higher discount rate.

Speaker Change: Look, and I mentioned that in my prepared remarks as well, right? We do recognize that some folks may think about the discount rate here, the cost capital a little bit higher than the PV10s, and that's fine, but I think the main focus of that comment

Timothy Duncan: Let's stay with the execution though and talk about integration of the quarter north asset. The team has done a really good job if you remember from the last call. We were able to close this a little head of scale. We thought ultimately might lead to April before we could close this. We were able to sneak in partial month and March. That allowed us to really get to the process of what I would call physical integration.

Sergio Maiworm: Look, and I mentioned that in my prepared remarks as well, right? We do recognize that some folks may think about the discount rate here, the cost capital a little bit higher than the PV10s, and that's fine. But I think the main focus of that comment was that there's so much value above and beyond PV10 – I'm sorry, above and beyond proved reserves that even if you assume a higher discount rate, there's so many other avenues that you can get to a much higher stock price or market capitalization than what we currently have that folks should feel comfortable even with a higher discount rate that the stock is actually pretty undervalued compared to the fundamental value of our business, right, even at a slightly higher discount rate.

Sergio Maiworm: Look, and I mentioned that in my prepared remarks as well, right? We do recognize that some folks may think about the discount rate here or the cost capital a little bit higher than the PV10s, and that's fine. But I think the main focus of that comment was that there's so much value above and beyond PV10 – I'm sorry, above and beyond proved reserves that even if you assume a higher discount rate, there's so many other avenues that you can get to a much higher stock price or market capitalization than what we currently have that folks should feel comfortable even with a higher discount rate that the stock is actually pretty undervalued compared to the fundamental value of our business, right, even at a slightly higher discount rate.

Speaker Change: was that there's so much value above and beyond PV10, I'm sorry, above and beyond proved reserves, that even if you assume...

Speaker Change: a higher discount rate.

Speaker Change: there so many so many other avenues that you can get to a much higher stock price or market capitalization than we currently have

Timothy Duncan: So think about the offshore personnel and getting them integrated in our assets offshore. Think about internally in the office and getting folks to the right offices, closing down their office, moving folks into our office. Changing accounting systems. There's a lot of work involved and a lot of people really spent a lot of time in effort to do that. Dragging that through the second quarter probably caused our our GNA to go up a little more than I would like it to be in the second quarter.

Speaker Change: that folks should feel comfortable even with a higher discount rate that the stock is actually pretty undervalued compared to the fundamental value of our business, right, even at a slightly higher discount rate. So I don't necessarily disagree too much with perhaps a little higher than PV10 would be the most appropriate discount rate of the business, but I don't think it's that much higher either. But even if you assume that

Sergio Maiworm: So I don't necessarily disagree too much with perhaps a little higher than PV10 would be the most appropriate discount rate for the business, but I don't think it's that much higher either. But even if you assume that, you can still arrive at a much higher valuation than currently.

Sergio Maiworm: So I don't necessarily disagree too much with perhaps a little higher than PV-10 would be the most appropriate discount rate for the business, but I don't think it's that much higher either. But even if you assume that, you can still arrive at a much higher valuation than currently.

Timothy Duncan: But I think you're going to see that materially come down in the third and fourth quarter. So ran a little hot on GNA in the second quarter to make sure we get this fully completed by the end of the second quarter. You're really going to see GNA, I think start to walk down in the third and fourth quarter.

Speaker Change: you can still arrive at a much higher valuation than then currently

Tim Duncan: Yeah, and I think what I tried to add to that, Neil, is that investors can ask, look, you know, these guys have now built a certain level of scale, a certain level of diversity that we've built into the asset set pro forma from the quarter north transaction. And, you know, can they keep it up? And I think when you dig into the projects, and you think about something like Katmai, and you think about something like Monument that we've added, and you think about the drilling portfolio that we're going to, you know, execute next year, and how we think about layering that on year over year, I think we're just in a heck of a lot better position, and most of that value is outside proven as Sergio Perfect. Thank you, Tim. Thanks for coming.

Timothy Duncan: Yeah, yeah, and I think what I tried to add to that, Neil, is that investors can ask, look, you know, these guys have now built a certain level of scale, a certain level of diversity that we've built into the asset set pro forma from the quarter north transaction, and can they keep it up? And I think when you dig into the projects and think about something like Katmai, and you think about something like Monument that we've added, and you think about the drilling portfolio that we're going to, you know, execute next year and how we think about layering that on year over year, I think we're just in a heck of a lot better position. And most of that value is outside proved, as Sergio Perfect. Thank you, Tim. Thanks for reading this.

Timothy Duncan: Yeah, and I think what I tried to add to that, Neil, is that investors can ask, look, you know, these guys have now built a certain level of scale, a certain level of diversity that we've built in the asset set pro forma from the quarter north transaction, and can they keep it up? And I think when you dig into the projects and think about something like CapMine, you think about something like Monument that we've added, and you think about the drilling portfolio that we're going to, you know, execute next year and how we think about layering that on year over year, I think we're just in a heck of a lot better position. And most of that value is outside proved as Sergio.

Neil Mather: Yeah, and I think what I tried to add to that, Neil, is I think investors can ask, look, you know, these guys have now built a certain level of scale, a certain level of diversity that we've built into the asset set pro forma from the quarter north transaction, and, you know, can they keep it up? And I think when that's where you dig into the projects and you think about something like Katmai and you think about something like Monuments,

Timothy Duncan: But what we're really excited about is the centers. We think we've identified that can stay in the system as we really think about annualizing this business going forward. I think I mentioned on a previous call, we thought when we put these assets together we'd see some savings, for example on the insurance side and on the insurance side and high grading that portfolio and being able to figure out kind of the right synergy there. We hope we'd save maybe $7 million between the assets. We ended up saving 10. And so just an example of where we're getting ahead of schedule in our synergies.

Neil Mather: that we've added and you think about the drilling portfolio that we're gonna execute next year and how we think about layering that on year over year, I think we're just in a heck of a lot better position and most of that value is outside approved as Sergio alluded to.

Neil Mehta: Perfect. Thank you, Tim. Thanks, Sergio.

Timothy Duncan: Perfect. Thank you, Tim. Thanks, Sergio.

Tim Duncan: Perfect. Thank you, Tim. Thanks, Sergio.

Neil Mehta: Perfect. Thank you, Tim. Thanks.

Speaker Change: Perfect. Thank you, Tim. Thanks, Sergio.

Timothy Duncan: I think we were hoping for 25 million in 2024 at a quarter north. We knew we'd get 5 million by selling the TLCS, CCS business. That got you to 30. I think we've revised that forecast to 35 and over 25 that 55 million to our synergy forecast. I think we're revising that up in the 65 million dollar range.

Leo Mariani: Your next question comes from the line of Leo Mariani from Roth. Please go ahead.

Speaker Change: Your next question comes from the line of Leo Mariani from Roth. Please go ahead.

Leo Mariani: Hey, guys. A question here on Monument. Obviously, nice to see the project enter the fold. I know you guys commented that a little bit of additional CapEx to Monument this year basically is kind of counterbalanced by a little bit of other CapEx that's maybe slipping a little bit into next year. But as we look into 2025 or 2026, really just trying to get a sense of the capital that you folks are talking about on the Monument project, do you view that as really kind of an additive to the budget over the next couple years?

Leo Mariani: Hey, guys. A question here on Monument. Obviously, nice to see the project enter the fold. I know you guys commented that a little bit of additional CapEx to Monument this year basically is kind of counterbalanced by a little bit of other CapEx that's maybe slipping a little bit into next year. But as we look into 25 or 26, really just trying to get a sense of the capital that you folks are talking about on the Monument project, do you view that as really kind of an additive to the budget over the next couple years?

Neil Mather: ear

Leo Mariani: Hey guys, question here on Monument, obviously nice to see the...

Timothy Duncan: Let's go to page 8 and talk about the drilling program.

Speaker Change: the project enter the fold i know you guys commented that

Timothy Duncan: I'm not going to go through these individually. We've talked about Venezuelan line rock. They're still performing well. We had successes that really wrapped up in the second quarter and the lobster water flood and the Clayborne side track. That was a non-op and then we had a stimulation campaign campaign, which does that work over cost that's somewhat seasonal to when we are doing those activities. You'll see that work over cost come down dramatically as well in the third and fourth quarter.

Speaker Change: A little bit of additional CapEx and Monument, you know, this year, you know, basically is kind of counterbalanced by a little bit of other CapEx that's maybe slipping a little bit into next year. But as we look into 25 or 26, really just trying to get a sense.

Speaker Change: of the capital that you folks are talking about on the Monument Project.

Leo Mariani: Or can Talos continue to shuffle some things around and possibly push out, you know, a few other projects so that $160 million over the next couple years isn't necessarily completely additive but might take the place of some other spend?

Speaker Change: give you that is really kind of additive to the budget over the next couple of years or k k telllous continue to to shuffle some things around and impossi and push out you know a few other projects so that one hundred and six million over the next couple ofyears isn'tyou know necessarily completely additive but might take the place of some spend

Timothy Duncan: But we're wrapping up that campaign. So happy with the results of that activity to date. And then as we get into the second half of the year, we would expect the delivery of the West Fellow rig. And that's a seventh-gen, large deep water rig that we're going to go drill the Katmai West well with. Then we'll go execute on the Daenerys prospect and then ultimately to Helm's deep prospect as you get into 2025.

Timothy Duncan: Yeah, that's exactly right, Leo. And if we think about, you know, the incremental spending on Monument, and again, we alluded to that being $160 million net to our interest in 2025 and 2026, probably two-thirds of that weighted into 2026. And so, you know, we don't expect to change the long-term view of how we think about capital inside the budget. We can move some projects around. So much of our acreage position is operated. It's under our control. Frankly, it's around our infrastructure.

Tim Duncan: Yeah, that's exactly right, Leo. And if we think about, you know, the incremental spending on Monument, and again, we alluded to that being $160 million net to our interest in 2025 and 2026, probably two-thirds of that weighted into 2026. And so, you know, we don't expect to change the long-term view of how we think about capital inside the budget. We can move some projects around. So much of our acreage position is operated. It's under our control. Frankly, it's around our infrastructure.

Timothy Duncan: Yeah, that's exactly right, Leo. And if we think about, you know, the incremental spending on Monument, and again, we alluded to that being 160 million net to our interest in 25 and 26, probably two thirds of that weighted into 26. And so, you know, we don't expect to change the long-term view of how we think about capital inside the budget; we can move some projects around because much of our acreage position is operated, it's under our control, and frankly, it's around our infrastructure.

Speaker Change: that's exactly right and if we think about youknow the incremental spending on monument in again we alluded that being one hundred and sixty million if i net to our interest in twenty five and twenty six

Timothy Duncan: Now, we still have a rig line that we're working on that will allow us to go get the sun spear completion. And so that's still a high priority project. We've been working on long weeds. We're getting that ready to get production in the first half of 2025. As we think about a rig for that program, we'll also think about finding a rig that can extend that and drill what I would call that middle market part of our portfolio.

Speaker Change: probably two thirds that that weed into twenty six and so

Speaker Change: we don't expect to change a long-term view of how we think about capital inside

Speaker Change: The budget we can move some projects around so much of our acreage position is operated. It's under our control frankly. It's around our infrastructure

Tim Duncan: So we'll be able to still, you know, as we think about broadly putting the year-over-year program together, it'll just be around shifting projects. And look, we've said that we're not going to bury ourselves in the rig market. We're going to try to be opportunistic there, and so there are a lot of moving pieces that'll allow us to let this fit right in, particularly in 2025. And then we've got plenty of time to manage it around 2026.

Timothy Duncan: So we'll be able to still, you know, as we think about broadly putting the year over year program together, it'll just be around shifting projects. And look, we've said that we're not going to bury ourselves in the rig market; we're going to try to be opportunistic there. And so there's a lot of moving pieces that will allow us to let this fit right in, particularly in 25. And then we've got plenty of time to manage around 26.

Timothy Duncan: So we'll be able to still, you know, as we think about broadly putting the year-over-year program together, it'll just be around shifting projects. And look, we've said that we're not going to bury ourselves in the rig market. We're going to try to be opportunistic there. And so there are a lot of moving pieces that will allow us to let this fit right in, particularly in 2025. And then we've got plenty of time to manage it around 2026.

Speaker Change: So, we'll be able to still, you know, as we think about broadly putting the year-over-year program together, it'll just be around shifting projects. Look, we've said that we're not going to bury ourselves in the rig market. We're going to try to be opportunistic there. And so, there's a lot of moving pieces that'll allow us to let this fit right in, particularly in 25, and then we've got plenty of time to manage around 26. So, I think we were in a good spot, and it worked out that we were able to add this project and not change any of our guidance for 24 as well. So, everything looks good in that regard.

Timothy Duncan: So if you think of Katmai West and Daenerys and Helm's deep subsault tie impact, we have a lot of exploitation opportunities. Some would have been in line rock. They don't need that seventh-generation rig. They can use one of the smaller rigs. They can be more available in the program next year. And we're going to be in the market looking for that rig to complement. Program in 2025. And then at the bottom we see monument.

Timothy Duncan: So I think we were in a good spot. And it worked out that we were able to add this project and not change any of our guidance for 2024 as well. So everything looks good in that regard.

Tim Duncan: So I think we were in a good spot. And it worked out that we were able to add this project and not change any of our guidance for 2024 as well. So everything looks good in that regard.

Timothy Duncan: So I think we were in a good spot. And it worked out that we were able to add this project and not change any of our guidance for 24 as well. So everything looks good in that regard.

Timothy Duncan: So that's the add to the project. What we're able to do there is add that project and not change our capital guidance for the year. And I think that's very important for us to really make sure, you know, we emphasize by by being ahead of the execution on parts of our program, having a little bit of a delay of rig delivery for cat my it opened up a window for us to pull in a high impact project and not feel like we had to change our capital guidance and then reshape the capital program with this project when we think about 25 and 26. So excited to have that project and we'll talk about it here in a second.

Leo Mariani: Okay, you know, that's helpful.

Leo Mariani: And then just with respect to the share buyback program, obviously, you know, pretty robust this quarter and certainly seems like you guys made some smart purchases here for sure, with respect to the stock. How are you kind of thinking about balancing that, you know, versus debt paydown as we roll, you know, into the second half? And I guess also we've seen, you know, Carlos Slim out there, you know, doing some recent buying. Do you guys have any perspective you can kind of maybe share on what, you know, Slim's goals might be with Talos?

Sergio Maiworm: And then just for the share buyback program, obviously, you know, pretty robust this quarter and certainly seems like you guys made some smart purchases here for sure with respect to the stock. How are you kind of thinking about balancing that, you know, versus debt paydown as we roll into the second half? And I guess also we've seen, you know, Carlos Slim out there, you know, doing some recent buying. Do you guys have any perspective you can kind of maybe share on what, you know, Slim's goals might be with Talos?

Speaker Change: ok you know that's helpful and then just with the respect to the share buyback program obviously you know pretty robust this quarter and certainly seems like he guys made some smart purchases you know here for sure with the respects to stock

Speaker Change: How are you kind of thinking about balancing that, you know, versus debt pay down as we roll, you know, into the second half? And I guess also we've seen, you know, Carlos Slim out there, you know, doing some recent buying.

Timothy Duncan: But it's always good to remind ourselves why we like cat mine. I mean it was the anchor of the transaction. I said this in the last call. We think this area when we go cat my west and cat my east. Those are two wells go to the bottom right of this page and still humming along at 27,000 barrels equivalent a day gross. We think this is 180 to 200 million barrel complex when it's all said and done.

Speaker Change: Do you guys have any perspective you can kind of maybe share on what, you know, SLIM's goals might be with Talos?

Sergio Maiworm: Hey Leo, this is Sergio. Let me start with the share repurchases question, and then Tim can address the Carlos Lim part of your question there. Look, the share buyback program is an opportunistic program. We're going to continue to evaluate the market. We're going to continue to look for opportunities to do all of that. Same with the debt repayment; we have a goal of continuing to deliver the balance sheets, and we're going to continue to do that.

Sergio Maiworm: Hey, Leo. This is Sergio. Let me start with the share repurchases question, and then Tim can address the Carlos Lim part of your question there. Look, the share buyback program is an opportunistic program. We're going to continue to evaluate the market. We're going to continue to look for opportunities to do all of that. Same with the debt repayment; we have a goal of continuing to deliver the balance sheets, and we're going to continue to do that.

Sergio Maiworm: Hey, Leo. This is Sergio. Let me start with the share repurchases question, and then Tim can address the Carlos Lim part of your question there. Look, the share buyback program is an opportunistic program. We're going to continue to evaluate the market. We're going to continue to look for opportunities to kind of do all of that. Same with the debt repayment. We have a goal of continuing to deliver the balance sheets, and we're going to continue to do that.

Sergio: Hey Leo, this is Sergio. Let me start with the share repurchases question and then Tim can address the the Carlos Lim part of your question there.

Leo Mariani: look be the share buyback program that's an opportunistic program we're going to continue to evaluate the market we're goingto continue to look for opportunities to kind of to do all of that

Timothy Duncan: It's going to take some wells to get there and the one we're focused on first is cat my west. We really like what that that well is done since it's been online for over a year. We spent a lot of time with advanced engineering data trying to understand it. We think it's seeing a big tank. I'll talk about how that flows into the reserve books. But it needs a well to really prove that story out.

Tim: Same with the debt repayment, we have a goal of continuing to deliver the balance sheet and we're going to continue to do that.

Sergio Maiworm: But if the right set of circumstances present themselves, I think we would absolutely look for potential buyback. So I don't think it's going to be one or the other. I think there could be a possibility of us continuing to evaluate doing both throughout the remainder. Look, I'm at the Slim Family Office, and

Speaker Change: But if the right set of circumstances present themselves, I think we would absolutely look for potential buybacks.

Timothy Duncan: And so again, the rigs coming. We look forward to executing on it. The team's focused on it. It's also interesting because it's an asset where we own 50% of the hydrocarbon interest, but we own 100% of the facilities. So as we execute on this project with our partners and collect those production handling fees through our partners, there's just another revenue line for us that comes with the success that we've talked about as the importance of owning infrastructure.

Speaker Change: So, I don't think it's going to be one or the other, I think there could be a possibility of us continuing to evaluate doing both throughout the remainder of the year.

Timothy Duncan: Look, at the Slim Family Office and the purchase of our shares, we got to know, obviously, the entire organization last year when we transacted around Zama. And I certainly don't want to speak, you know, of any kind of further investing history, but I think it's well documented in telecommunications, infrastructure, and banking. And I don't know how much they've done specifically in upstream oil and gas.

Tim Duncan: Look, at the Slim Family Office and the purchase of our shares, we got to know, obviously, the entire organization last year when we transacted around Zama. And I certainly don't want to speak, you know, of any kind of further investing history, but I think it's well documented in telecommunications, infrastructure, and banking. And I don't know how much they've done specifically in upstream oil and gas.

Speaker Change: Look, on the Slim Family Office and purchasing of our shares, we got to know obviously the entire organization last year when we transacted around Zama and I certainly don't want to speak

Timothy Duncan: Now, if we go to the next page, you know, and I went and I kind of introduced this in the last call. I think it's a good reminder. Just it shows a couple things here, the thickness of the hydrocarbon column. I mean, so one of the first things that gets us excited is just how thick this is. And these wells are flowing for this particular well. It's flowing between 15 and 18,000 grows equivalent a day gross relatively flat.

Speaker Change: kind of further investing history but i think it's well documented on telecommunications and infrastructure and banking and i don't know howmuch they've done specifically upstream moil gas as they got familiar with the project

Timothy Duncan: As they got familiar with the project, and familiar with how we run our business, I think they saw a long-term fundamental view of the company. I think they have a long-term fundamental view of the constructiveness of the commodity, and we became a good investment for them. You know, look, they've been nothing but supportive so far for us. It's something we can keep an eye on. But we certainly, you know, like having such a sophisticated long-term fundamental holder of our stock.

Tim Duncan: As they got familiar with the project, and familiar with how we run our business, I think they saw a long-term fundamental view of the company. I think they have a long-term fundamental view of the constructiveness of the commodity, and we became a good investment for them. You know, look, they've been nothing but supportive so far for us. It's something we can keep an eye on. But we certainly, you know, like having such a sophisticated long-term fundamental holder of our stock.

Speaker Change: familiar with how we execute our business. I think they saw a long fundamental view in the company. I think that I think they have a long fundamental view on the constructiveness of the commodity and we became a good investment for them.

Timothy Duncan: And so what it was able to prove is what that log. So you look in the middle and that 400 beta gross thickness. That geology could only prove a part of that structure. We think obviously we're seeing a geological response well past that log. And some of those reserves are going to be in the probable impossible category. When we drill this well, we'll really be able to put that story together. And so if you look at the graphic to cap my west well, that's what's producing cap my west number two.

Speaker Change: Look, they've been nothing but supportive so far for us. It's something we can keep an eye on, but we certainly like having such a sophisticated, long-term, fundamental holder of our stock. And so, we don't communicate them often on what they're thinking. There's just really the Zama project we have in common, but we know that they're weighing up on energy-related items and they have a fundamental view that our stock's cheap, and certainly we appreciate.

Timothy Duncan: And so, you know, we don't communicate with them often about what they're thinking. There's just really the Zama project we have in common. But, you know, we know that they're weighing up on energy-related items, and they have a fundamental view that our stock's cheap, and certainly we appreciate it.

Tim Duncan: And so, you know, we don't communicate with them often about what they're thinking. There's just really the Zama project we have in common. But, you know, we know that they're weighing up on energy-related items, and they have a fundamental view that our stock's cheap, and certainly we appreciate it.

Timothy Duncan: That's the rig that's coming. We'll also be able to hook right into that infrastructure and flow it back to our transula facility. So this is one of those not only is it high impact not only is it a huge catalyst for the company. It's one where we can get results to production in less than three to six months. And again, if I can't re-emphasize why it's important for us to only infrastructure.

Speaker Change: All right, thank you.

Leo: Thanks, Leo.

Jared Giroux: Your next question comes from the line of Jared Giroux from Stevens. Please go ahead.

Leo Mariani: All right, thank you. Thanks, Leo. Your next question comes from the line of Jarrod Giroue from Stevens. Please go ahead.

Jarrod Giroue: Your next question comes from the line of Jarrod Giroue from Stevens. Please go ahead.

Speaker Change: Your next question comes from the line of Jared Giroux from Stevens. Please go ahead.

Jarrod Giroue: Hey, good morning, guys, and congrats on a strong quarter. Thank you.

Jared Giroux: Hey, good morning, guys, and congrats on a strong quarter. Thank you.

Jarrod Giroue: Hey, good morning, guys, and congrats on a strong quarter. Thank you.

Jared Giroux: My first question is, I was just hoping you could provide a little color on the CAPEX guidance for the back half of the year. Based on first half actuals and the drilling schedule on slide eight, it looks like a little step up in the back half of the year. Do you see this being fairly level loaded or not, or is the end of the year going to be a little higher than 3Q?

Jarrod Giroue: My first question is, I was just hoping you could provide a little color on the CAPEX guidance for the back half of the year. Based on first half actuals and the drilling schedule on slide eight, it looks like a little step up in the back half of the year. Do you see this being fairly level loaded or not? Or is the end of the year going to be a little higher than?

Jared Giroux: Hey, good morning, guys, and congrats on a strong quarter.

Jarrod Giroue: My first question is, I was just hoping you could provide a little color on the CapEx guidance for the back half of the year. Based on first half actuals and the drilling schedule on slide eight, it looks like a little step up in the back half of the year. Do you see this being fairly level loaded, or is the end of the year going to be a little higher than 3Q?

Jared Giroux: Thank you. My first question, I was just hoping you could provide a little color on the CAPEX guidance for the back half of the year. Based on first half actuals and the drilling schedule on slide eight, looks like a little step up in the back half of the year. Do you see this being fairly level loaded or?

Timothy Duncan: I think to be able to have something this important to the company and be able to turn it around and get it online quickly in a deep water environment is exactly why we try to do this. So we're really excited about that. And I also think, you know, just talking about this transition into how we think about proved and probable reserves is important later when we talk about how you should think about our assets set and how much value we think is unlock outside proof reserves.

Sergio Maiworm: I can start there, Jarrod. This is Sergio, by the way.

Sergio Maiworm: I can start there, Jared. This is Sergio, by the way.

Sergio Maiworm: I can start there, Jarrod. This is Sergio, by the way.

Sergio: I can start there, Jared. This is Sergio, by the way. Look, we're still thinking that it's relatively level third and fourth quarters, obviously, with the rig, the West Vela, arriving towards the end of the third quarter. That may shift around a little bit, depending on when the rig is actually delivered.

Timothy Duncan: The narrative is just one of those prospects. Again, as the schedule slips a little bit, this slips as well, but we put it in here just to keep it on the radar. I think it's going to be one of the most talked about prospects in the Gulf of Mexico next year. This is a large for a way turtle feature. There's not many of those left in the Gulf of Mexico. It took a long time to really get the right imaging around it.

Sergio Maiworm: Look, we're still thinking that it's relatively level in the third and fourth quarters. Obviously, with the rig, West Vela, arriving towards the end of the third quarter, that may shift around a little bit depending on when the rig is actually delivered. But I would say it's probably going to be relatively balanced in both quarters.

Sergio Maiworm: Look, we're still thinking that it's relatively level in the third and fourth quarters. Obviously, with the rig, the West Vela, arriving towards the end of the third quarter, that may shift around a little bit depending on when the rig is actually delivered. But I would say it's probably going to be relatively balanced in both quarters, but heavier than this quarter. But heavier than the first quarter. Yeah, look, this has been

Speaker Change: But I would say it's probably going to be relatively balanced on both quarters, but heavier than this quarter, but heavier than the first quarter. Yeah, I think it look, this has been a fantastic quarter. We knew it might be a little lighter on CapEx. We were hot on PNA in the first quarter should be lighter in the second.

Timothy Duncan: But heavier than this quarter, but heavier than the first quarter. Yeah, I think it looks like this has been a fantastic quarter. We knew it might be a little lighter on CapEx. We were hot on PNA in the first quarter, and it should be lighter in the second. And that allowed us to generate just an impactful amount of free cash flow as we get the rigged delivery. We'll see what happens during the weather season. We'll probably have a little more CapEx spend, and then we'll see where free cash flow lands.

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Timothy Duncan: It's a huge feature. So examples of these turtle structures, you know, from the past in the Gulf of Mexico, for those who follow them. You know, you don't know until you drill it, but we're excited about this. Only 27% probably the right interest for us on this. It's an expensive well, but it's a high impact well and we'll look forward to getting that started next year.

Sergio Maiworm: We knew it might be a little lighter on CapEx. We were hot on PNA in the first quarter, so it'd be lighter in the second. And that allowed us to generate just an impactful amount of free cash flow. As we get the rig delivery, we'll see what happens during the weather season. We'll probably have a little more CapEx spend, and then we'll see where free cash flow is going.

Jared Giroux: And that allowed us to generate just an impactful amount of free cash flow. As we get the rigged delivery, we'll see what happens in weather season. We'll probably have a little more CapEx spend, and then we'll see where free cash flow lands.

Jarrod Giroue: And then my last one is just on the lobster water flood. I know in the release you said you don't expect to see the production increase for 12 to 18 months, but I was just kind of curious if you've seen any response to it yet.

Jared Giroux: And then my last one is just on the lobster water flood. I know in the release you said you don't expect to see the production increase for 12 to 18 months, but I was just kind of curious if you've seen any response to it yet.

Sergio Maiworm: And then my last one is just on the lobster water flood. I know in the release you said you don't expect to see the production increase for 12 to 18 months, but I was just kind of curious if you've seen any response to it yet.

Timothy Duncan: But let's talk about the Wilcox trend. So like many trends in the Gulf of Mexico, as you get deeper into the section and you get more distal to the coast, you find these thick sands and the Wilcox is a geological play that exists on shore. As you get further away from the source, these sands get thicker, but they do get deeper. It makes it harder for them to image and it makes it harder for them to reach.

Speaker Change: Perfect, thank you. And then my last one is just on the lobster water flood. I know in the release you said you don't expect to see that production increase for 12 to 18 months, but I was just kind of curious if you've seen any response on it yet.

Tim Duncan: Well, we've seen very good performance on injection. I mean, the difference there compared to, say, the tornado water flood, and keep in mind for those just trying to understand this, this is a water flood project where we're not sourcing any outside water. You know, all of it's coming from other wet sands inside the same geological wellbore. And so we're pulling these wet sands in; they then flood the pay sands, and ultimately, geologically, other producing wells start to increase their production and increase their reservoir pressure. So it worked marvelously at tornado, that was deep water, and those rock properties were world-class.

Timothy Duncan: Well, we've seen very good performance on injection. I mean, the difference there compared to, say, the tornado water flood, and keep in mind for those just trying to understand this, this is a water flood project where we're not sourcing any outside water. You know, all of it's coming from other wet sands inside the same geological well bore. And so we're pulling these wet sands in; they then flood the pay sands, and ultimately, geologically, other producing wells start to increase their production and increase their reservoir pressure. So it worked marvelously at tornado, that was deep water, and those rock properties were world-class.

Timothy Duncan: Well, we've seen very good performance on injection. I mean, the difference there compared to, say, you know, the tornado water flooding. Keep in mind for those just trying to understand this, this is a water flood project where we're not sourcing any outside water. You know, all of it's coming from other wet sands inside the same geological wellbore. And so we're pulling these wet sands in; they then flood the pay sands, and ultimately, geologically, other producing wells start to increase their production and increase their reservoir pressure. So it worked marvelously at the tornado. That was deep water,

Speaker Change: Well, we've seen very good performance on injection. I mean, the difference there compared to, say, you know, the tornado water flooding.

Timothy Duncan: And as you would expect. Our friends of the majors led the way in trying to explore for these sands 15 plus years ago, but they established good success and they established production. And what you see on the slide here is you have established fields that have already produced over a billion barrels today, still producing well over 260,000 barrels a day. So we have a successful trend that took a lot of technology to get us comfortable with how to image it, how to drill for it and how to produce it.

Speaker Change: Keep in mind for those just trying to understand this, this is a water flood project where we're not sourcing any outside water. You know, all of it's coming from other wet sands inside the same geological well bore.

Leo: And so we're pulling these wet sands in, they then flood the pay sands and ultimately up-dip geologically.

Leo: other producing wells start to increase their production and increase their reservoir pressure. So it worked marvelously at Tornado. That was deep water. Those rock properties were world class. Here, a little bit more of a mature field, actually a bigger structure and more wells. It's going to take a little longer to get that water to influence those wells. But the first measure is, can you see the injection happening and working? And we're seeing it work unbelievably well. In fact, I would tell you, we're injecting probably 50% more water than we anticipated.

Timothy Duncan: Those rock properties were world-class here, a little bit more of a mature field, actually a bigger structure and more wells. It's going to take a little longer to get that water to influence those wells. But the first measure is, can you see the injection happening and working? And we're seeing it work unbelievably well. In fact, I would tell you, we're injecting probably 50% more water than we anticipated. And so we think we'll start to see some responses in the next several months, and then we'll start to see real production increases as we get into 2025.

Tim Duncan: Here, a little bit more of a mature field, actually a bigger structure and more wells, it's going to take a little longer to get that water to influence those wells. But the first measure is, can you see the injection happening and working? And we're seeing it work unbelievably well. In fact, I would tell you we're injecting probably 50% more water than we anticipated. And so we think we'll start to see some responses in the next several months, and then we'll start to see real production increases as we get into 2025.

Timothy Duncan: Here, a little bit more of a mature field, actually a bigger structure and more wells, it's going to take a little longer to get that water to influence those wells. But the first measure is, can you see the injection happening and working? And we're seeing it work unbelievably well. In fact, I would tell you we're injecting probably 50% more water than we anticipated. And so we think we'll start to see some responses in the next several months, and then we'll start to see real production increases as we get into 2025.

Timothy Duncan: But what we didn't need to be the first mover, what we did is we followed this trend, we've looked at the previous successes, we've even looked at some of the discoveries being developed now and tried to decide where do we fit in all of this. And so if you look on the left, the orange or some of the discoveries, the black is some of the new developments that are ongoing and we've seen technology advancements in 20k BOP stacks and 20k trees.

Leo: And so we think we'll start to see some responses in the next several months and then we'll start to see real production increases.

Tim Duncan: But we're absolutely happy with the way we've completed the wells and the way we're getting injection into the reservoir. And that's the first thing you have to have. If it starts to back up on you, then something went wrong in terms of what you thought about the geology. But everything is working out like we hoped it would. In fact, probably better.

Timothy Duncan: But we're absolutely happy with the way we've completed the wells and the way we're getting injection into the reservoir. And that's the first thing you have to have. If it starts to back up on you, then something went wrong in terms of what you thought about the geology. But everything is working out like we hoped it would. In fact, probably better.

Timothy Duncan: But we're absolutely happy with the way we've completed the wells and the way we're getting injection into the reservoir. And that's the first thing you have to have, if it starts to back up on you, then something went wrong in terms of what you thought about the geology, but everything is working out like we hoped it would. In fact, probably better.

Leo: As we get into 2025, but we're absolutely happy with the way we've completed the wells and the way we're getting injection into the reservoir. And that's the first thing you have to have. If it starts to back up on you, then something went wrong in terms of what you thought about the geology, but everything is working out like we hoped it would. In fact, probably better.

Timothy Duncan: We started building a position from various sources. And I think I've said in the past part of our business development is always trying to find out how to attach more acreage to the transactions that we do. And so if you think about the court in North and the Indian acreage, excuse me transactions, we've always talked about big acreage positions unrelated to the underwritten proved value that we did the transaction on. And so we picked up three Wilcox prospects through both Lee Sales and multiple transactions over the last four or five years, including Coronado Enterprise and Don Harrow.

Jared Giroux: Perfect. Thanks, Tim, Sergio, and team.

Jarrod Giroue: Perfect. Thanks, Tim, Sergio, and team.

Jarrod Giroue: All right. Great. Thanks.

Tim Duncan: All right. Great. Thanks.

Timothy Duncan: All right. Great. Thanks.

Leo: Perfect. Thanks, Tim, Sergio, and team. All right. Great. Thanks. Thanks, Brad.

Timothy Duncan: All right. Great. Thanks. Thanks, Jarrod.

Jarrod Giroue: All right. Great. Thanks. Thanks, Jarrod.

Tim Duncan: All right. Great. Thanks. Thanks, Brad.

Speaker Change: Your next question comes from the line of Jeff Robertson from Water Tower Research. Your line is now open.

Jarrod Giroue: Your next question comes from the line of Jeff Robertson from Water Tower Research. Your line is now open.

Jeff Robertson: Your next question comes from the line of Jeff Robertson from Water Tower Research. Your line is now open.

Jeff Robertson: Thanks, good morning. Tim, are there other opportunities across the asset base for water floods like you've done at Tornado and Lobster?

Jeff Robertson: Thanks. Good morning, Tim. Are there other opportunities across the asset base for water floods like you've done at Tornado and Lobster?

Jeff Robertson: Thanks, good morning. Tim, are there other opportunities across the asset base for water floods like you've done at Tornado and Lobster?

Timothy Duncan: Now as we studied those, we really kept our eyes around the Shenandoah area and that that was a first discovered by Anadarko, taken over by Beacon, which is a private company. And there are good partners of ours and we've always watched their progress and thought about our acreage position and then looked at the monument discovery that was made by Equinor, but subsequently farmed into by Beacon and Repsol Navitas.

Timothy Duncan: I can promise you that as soon as we started working on Tornado, we started scouring the asset set for another idea, and Lobster was that idea. I think it's tricky. You really have to check a lot of boxes. Frankly, you've got to have a little bit of nerve and courage to just do what we're doing. These two projects were great examples of that.

Tim Duncan: I promise you, as soon as it started working on Tornado, we started scouring the asset set for another idea. And Lobster was that idea. I think it's tricky. You really have to check a lot of boxes. Frankly, you've got to have a little bit of nerve and courage to just do what we're doing. These two projects were great examples of that.

Timothy Duncan: I can promise you that as soon as we started working on Tornado, we started scouring the asset set for another idea, and Lobster was that idea.

Tim: I promise you, as soon as we started working on Tornado, we started scouring the asset set for another idea.

Leo: And Lobster, you know, was that idea. I think it's tricky. You've got to really check a lot of boxes. Frankly, you've got to have a little bit of nerve and courage to just do it, what we're doing.

Tim Duncan: Again, there is still a lot to do on the Lobster side. We'll keep looking. I think we have a team that, when you taste a little bit of success, and that effort pays itself, you start looking for other ideas. I don't have one on the horizon, as I answered the question for you, Jeff. But look, the fact that we found two ways to use this application, both in Deepwater, which, again, was the first of its kind in the world in a subsidy environment, and then on this shelf, where it's been done before, but not for a while. We're happy with what we're doing on that side of our portfolio.

Timothy Duncan: I think it's tricky. You've got to really check a lot of boxes. Frankly, you've got to have a little bit of nerve and courage to just do what we're doing. These two projects were great examples of that.

Timothy Duncan: So we approach them and we're able to work a deal out where we're going to kind of come in at 21.4% join their partnership on what is a post FID development that we're going to describe here on the next page.

Leo: These two projects were great examples of it, you know, again, still a lot to do on the lobster side, but we'll keep looking. I think we have a team that, you know, when you feel, taste a little bit of success and that effort is paid, you know, itself.

Jeff Robertson: Again, there is still a lot to do on the Lobster side. We'll keep looking. I think we have a team that, when you taste a little bit of success, and that effort pays itself off, you start looking for other ideas. I don't have one on the horizon, as I answered a question for you, Jeff. But look, the fact that we found two ways to use this application, both in Deepwater, which, again, was the first of its kind in the world in a subsea environment, and then on this shelf, where it's been done before, but not for a while. We're happy with what we're doing on that side of our portfolio.

Timothy Duncan: Again, there is still a lot to do on the Lobster side. We'll keep looking. I think we have a team that, when you taste a little bit of success, and that effort has paid itself off, you start looking for other ideas. I don't have one on the horizon, as I answered your question, Jeff, but look, the fact that we found two ways to use this application, both in Deepwater, which, again, was the first of its kind in the world in a subsea environment, and then on this shelf, where it's been done before, but not for a while. We're happy with what we're doing on that side of our portfolio.

Sergio Maiworm: So I'm on now page 13 and there's a lot going on here, but I'll walk you through it.

Sergio Maiworm: If you go to the upper right, that's the geological picture. So similar to what we did in Katmai, let's just walk through this geological picture. So they have two discovery wells to help define the geological picture. And that's why you have no but a stool with a full 2P report of 115 million barrels equivalent gross. So we're going to step into those reserves at our 21.4%. On a net basis, that's already worked 265 million dollars.

Leo: You start looking for other ideas. I don't have one on the horizon, as I answered the question for you, Jeff, but look, I mean, the fact that we found two ways to use this application, both in deep water, which, again, was the first of its kind in the world in a subsea environment.

Leo: And then in this shelf where it's been done before, but not in a while, you know, we're happy with what we're doing in that side of our portfolio.

Jeff Robertson: Can you talk about, at a high level, how you think about the capital program in 2025, just with all the moving parts of consolidation, and whether or not there are additional opportunities like you've executed on Monument? Do you want to keep dry powder, I guess, as a question for the thing that you don't know today?

Timothy Duncan: Can you talk about, at a high level, how you think about the capital program in 2025, just with all the moving parts of consolidation, and whether or not there are additional opportunities like you've executed on Monument? Do you want to keep dry powder, I guess, as a question for the thing that you don't know today?

Speaker Change: Can you talk about, at a high level, how you think about...

Sergio Maiworm: But what makes this even more exciting is there's still an untested fault block there. So not only do we see the initial development, which will be the two orange future wells. So those discovery wells were plugged by the previous operator, the new operating group led by Beacon will drill two new wells. Those will be tied back to the Shenandoah facility, the 17 miles away, and we walk in with inventory on the perspective drilling location to the south.

Speaker Change: The Capital Program in 2025, just with all the moving parts of consolidation and whether or not there are additional opportunities like you've executed on Monument. Do you want to keep dry powder, I guess, as a question for the thing that you don't know today?

Tim Duncan: Well, I mean, you have to be, you know, kind of flexible in how you build your plans so you can move some capital in and out so you can fit a project in. But, you know, as we think about 2025, and any year we start thinking about, you know, walking into the next round of drilling in our basin, it gives us three things. It gives us, you know, good geology, good prices, and good infrastructure.

Timothy Duncan: Well, I mean, you have to be, you know, kind of flexible in how you build your plans so you can move some capital in and out so you can fit a project in. But, you know, as we think about 2025, and any year we start thinking about, you know, walking into the next round of drilling in our basin, it gives us three things. It gives us, you know, good geology, good prices, and good infrastructure.

Timothy Duncan: Well, I mean, you have to be, you know, kind of flexible in how you build your plans so you can move some capital in and out so you can fit a project in. But, you know, as we think about 2025 and any year we start thinking about, you know, walking into the next round of drilling in our basin, it gives us three things. It gives us, you know, good geology, good prices, and good infrastructure.

Speaker Change: Well, I mean, I think you have to be, you know, kind of flexible in how you build your plans that you can move some capital in and out so you can fit a project in. But, you know, as we think about 2025 and any year we start thinking about, you know, walking into the next round of drilling in our basin.

Sergio Maiworm: So we like this because it checks a lot of boxes. It's been discovered. It's got a couple well if they can lead us in a short tieback. It's got upside and drilling locations. Ultimately, this could be as big as a five well development. And the facility is going to guarantee us 20,000 barrels a day gross. And that as more is more eulish becomes available that we may have more ability to bring those rates up to as much as 30,000 barrels a day gross.

Leo: It gives us three things. It gives us, you know, good geology, good pricing, and infrastructure. And we've got to just keep working on how to utilize all three of those in our drilling program. So although we have some really high-impact things happening,

Tim Duncan: And we've got to just keep working on how to utilize all three of those in our drilling program. So although we have some really high impact things happening with what's going on in Katmai, the Daenerys, and now Monument, we've got to go back and find those exploitation, blocking, and tackling things like Venice and Lime Rock, which is what we're doing in Sunspear, and putting those more projects in the portfolio next year as well.

Timothy Duncan: And we've got to just keep working on how to utilize all three of those in our drilling program. So although we have some really high impact things happening with what's going on in Katmai, the Daenerys, and now Monument, we've got to go back and find those exploitation, blocking, and tackling things like Venice and Lime Rock, which is what we're doing in Sunspear, and putting those more projects in the portfolio next year as well.

Timothy Duncan: And we've got to just keep working on how to utilize all three of those in our program. So, although we have some really high impact things happening with what's going on in Katmai, the Daenerys, and now Monument, we've got to go back and find those exploitation, blocking, and tackling things like venison and lime rock, which is what we're doing in Sunspear, and putting those more projects in the portfolio next year as well.

Sergio Maiworm: So, you know, we're in a good spot in terms of risk in having a discovered resource and a praise resource, upside within the discovery and the new fault block of the facility that we can tie back to with availability to have upside. Rate.

Leo: With what's going on in Katmai, the Daenerys, and now Monument, we've got to go back and find those exploitation, blocking and tackling things like Venice and Lime Rock, which is what we're doing in Sunspear, and putting those more projects in the portfolio next year as well.

Timothy Duncan: Somewhere in there, we've got to be tactical around our assets in business development. So, we always have a little bit of dry powder. We bake into the guidance and we bake into the budget in case something comes our way that can be tactical and can fit in. If it really, really makes sense and we have to go back to the market and say, look, now we're talking about capital allocation outside the budget, you know, that's a decision we can certainly make at the board level and see how that ranks against debt repayments and something like a share buyback.

Tim Duncan: Somewhere in that, we've got to be tactical around our assets in business development. So we always have a little bit of dry powder, we bake into the guidance, and we bake into the budget in case something comes our way that can be tactical and can fit in. If it really, really makes sense, and we have to go back to the market and say, look, now we're talking about capital allocation outside the budget, you know, that's a decision we can certainly make at the board level and see how that ranks against debt repayments and something like a share buyback.

Timothy Duncan: Somewhere in there, we've got to be tactical around our assets in business development. So we always have a little bit of dry powder, we bake into the guidance, and we bake into the budget in case something comes our way that can be tactical and can fit in. If it really, really makes sense, and we have to go back to the market and say, look, now we're talking about capital allocation outside the budget, you know, that's a decision we can certainly make at the board level and see how that ranks against debt repayments and something like a share buyback.

Leo: Somewhere in there, we've got to be tactical around our assets and business development. So we always have a little bit of dry powder. We bake into the guidance and we bake into the budget in case something comes our way that can be tactical and can fit in. If it really, really makes sense and we have to come back to the market and say, look, now we're talking about outside the budget capital allocation, you know, that's a decision we can certainly make at the board level and see how that ranks against debt repayments and something like a share buyback. But.

Sergio Maiworm: So I'm going to hand it over to Sergio to walk through a couple of the financial slides.

Sergio Maiworm: Thank you, Jim, and good morning, everyone, and thank you for joining our call this morning. Before diving into the next slide, I just wanted to provide a couple of thoughts on the business so far and going forward. We continue to be laser focused on execution of our business plan as evidenced by the performance in the second quarter. It's another quarter of very strong execution in delivering results above and beyond the market expectations.

Sergio Maiworm: And I expect this execution to continue in the second half of the year as well, where reaffirming our full-year operational and financial guidance, and we expect to hit all of our numbers in the coming quarters. We're also providing third quarter production guidance of 92 to 97,000s of barrel of oil equivalents per day, which is in line with current market expectations. It's a bit of a wider range than usual, but that is reflective of the fact that we're entering the thick of weather season offshore, so we think this range is appropriate at the moment.

Tim Duncan: But, you know, we like where the opportunity set is in the Gulf. We like what the extra infrastructure of the last transaction, and including the infant transaction, has done for our ability to put together a portfolio of opportunities.

Timothy Duncan: But, you know, we like where the opportunity set is in the Gulf. We like what the extra infrastructure of the last transaction and, including the infant transaction, has done for our ability to put together a portfolio of opportunities.

Timothy Duncan: But, you know, we like where the opportunity set is in the Gulf. We like what the extra infrastructure of the last transaction, and including the infant transaction, has done for our ability to put together a portfolio.

Leo: You know, we like where the opportunity set is in the Gulf, we like what the extra infrastructure of the last transaction, and including the infant transaction, is done in our ability to put together a portfolio of opportunities.

Jeff Robertson: I'd like to ask one quick question on Mexico. With the change in administration, does that impact at all any of the discussions with respect to progressing Zama, or is that still just all handled at the ministry level?

Jeff Robertson: I'd like to ask one quick question on Mexico. With the change in the administration, does that impact at all any of the discussions with respect to progressing Zama, or is that still just all handled at the ministry level? Yeah, it really doesn't. I mean, I think it's really more

Jeff Robertson: I'd like to ask one quick question on Mexico. With the change in the administration, does that impact at all any of the discussions with respect to progressing Zama? Or is that still just all handled at the ministry level? Yeah, it really doesn't. I mean, I think it's really more

Speaker Change: I'd like to ask one one quick question on Mexico. With the change in the administration, does that impact at all any of the discussions with respect to progressing Zama or is that still just all handled at the ministry level?

Timothy Duncan: Yeah, it really doesn't. I mean, I think it's really more, you know, there was obviously a lot of moving pieces when we were arguing over unitization and operatorship, and there's been a little more stability by adding such a big local content partner, like the Carso organization. That changed some of the development plans, and now some of those, you know, kind of reworked and re-compromised development plans are going through a feeding study, and then I think we'll have some updates on that as we get to the second half of the year.

Tim Duncan: Yeah, it really doesn't. I mean, I think it's really more, you know, there was obviously a lot of moving pieces when we were arguing over unitization and operatorship, and there's been a little more stability by adding such a big local content partner, like the Carso organization. That changed some of the development plans, and now some of those, you know, kind of reworked and re-compromised development plans are going through a feeding study, and then I think we'll have some updates on that as we get to the second half of the year.

Timothy Duncan: Yeah, it really doesn't. I mean, I think it's really bad.

Speaker Change: yes it really doesn't i mean i think it's really more there was obviously a lot of moving pieces when we were arguing over unitization and operatorship and there's been a little morestability

Sergio Maiworm: Tim already highlighted monument, but I just wanted to touch on a couple of different points. First, as Tim mentioned, the net value creation of acquired those assets is $265 million, which is greater than 10% of our market cap. So just by bringing this asset into our portfolio, we're immediately creating significant shareholder value just by having this asset in delivering on this asset in our portfolio. The other points that this asset further bolsters our inventory by preserving other high-quality locations of inventory for future drilling.

Speaker Change: By adding such a big local content partner like the Carso organization, that changed some of the development plans and now some of those, you know, kind of reworked and re-compromised development plans are going through a feed study. And then I think we'll have some updates on that as we get to the second half of the year.

Timothy Duncan: So, you know, really all that is less related to the politics and more related to just new partnerships, compromised field development plans, putting that into a feed study, and then ultimately getting it closer to FID. So, really unrelated to the politics.

Tim Duncan: So, you know, really all that is less related to the politics and more related to just new partnerships, compromised field development plans, putting that into a feed study, and then ultimately getting it closer to FID. So, really unrelated to the politics.

Speaker Change: You know, really, all that is less related to the politics and more related to just new partnerships, compromise field development plans, putting that into a feed study, and then ultimately getting it closer to FID. So I really unrelated to the politics.

Speaker Change: Thank you. Okay, thanks, Jeff.

Operator: Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. If you are using a speakerphone, please make sure to lift the handset before pressing any keys. Your next question comes from the line of Noel Parks from Tui Brothers. Please go ahead.

Jeff Robertson: Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. If you are using a speakerphone, please make sure to lift the handset before pressing any keys. Your next question comes from the line of Noel Parks from Tui Brothers. Please go ahead.

Speaker Change: Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star one on your telephone keypad. If you're using a speakerphone, please make sure to lift the handset before pressing any keys.

Sergio Maiworm: Lastly, I just wanted to thank the incredible talistine for the very successful integration of quarter north and for working diligently in finding additional synergies. And I believe that we're going to continue to do that going forward.

Speaker Change: Your next question comes from the line of Noel Parks from Tui Brothers. Please go ahead.

Sergio Maiworm: So turning to slide 14, I just wanted to talk a little bit about our progress so far on our debt repayment. We're a little ahead of where we thought we're going to be at mid-year. That is even including some of the shares that we repurchased into second quarter of 2024.

Noel Parks: Hi, good morning. I just had a couple. You know, one, listening to the discussion and sort of what you laid out in your presentation, it sort of got me thinking, maybe as a reality check. Do you see... I...

Sergio Maiworm: So I'm pretty excited of where we are. And looking forward into the second half, I expect talists will generate free cash flow in excess of the $225 million that we have left on the revolver. So that gives us a lot of flexibility to continue to pay down the revolver going forward.

Noel Parks: I guess I'm wondering if you're seeing the same signs I am. Are you giving any signs of investor awareness or just creating value through conventional geology in EMP? And another thing that makes me wonder about this is that we've seen some sort of out of the blue, onshore A&D in basins, you know, looking to redevelop a conventional, conventional target, and then sort of discussion about, you know, looking beyond proved reserves to the possible and probable. They seem like sort of positive throwbacks. So I just wonder if you're seeing any appetite out there for Value Creation through Geology.

Noel Parks: I guess I'm wondering if you're seeing the same signs I am. Are you giving any signs of investor awareness or just creating values through conventional geology in EMP? And another thing that makes me wonder about this is we've seen some sort of out of the blue onshore A&D in basins, you know, looking to redevelop a conventional, conventional target, and then sort of discussion about, you know, looking beyond proved reserves to the possible and probable. They seem like sort of positive throwbacks. So I just wonder if you're seeing any appetite out there for Seeing Value Creation through Geology.

Noel Parks: Do you see...

Noel Parks: Are you giving any signs of investor awareness of just creating value through conventional geology in EMP? And another thing that makes me wonder about this is that we've seen some sort of out of the blue, onshore A&D in basins. You know, looking to redevelop a conventional, conventional target, and then sort of discussion about, you know, looking beyond proved reserves to the possible and probable. They seem like sort of positive throwbacks. So I just wonder if you're seeing any appetite out there for People-Seeing Value Creation through Geology.

Noel Parks: I guess I'm wondering if you're seeing the same signs I am.

Noel Parks: Are you getting any signs of investor awareness of

Speaker Change: just creating value through conventional geology in EMP. And another thing that makes me wonder about this is we've seen some sort of out-of-the-blue onshore A&D in basins.

Sergio Maiworm: And turning to slide 15, I'm very excited about our opportunistic share repurchases during the second quarter. As we pointed out before, we've repurchased 3.8 million shares for about $43 million in the second quarter. So that utilized most of the authorization that we already had from the board.

Sergio Maiworm: And subsequent to that, the board authorized another $150 million of potential share repurchases in the future. So that gives us a lot of flexibility to continue to move forward with potential shareholder returns in the future.

Speaker Change: You know looking to redevelop conventional conventional targets

Speaker Change: And then sort of the discussion about, you know, looking at looking beyond proved reserves to the possible and improbable They seem like sort of positive throwbacks. So I just wonder if you're if you're seeing any any appetite out there for just

Timothy Duncan: You know, that's a tough question. Look, it's a great question. I frankly love the question. It's a tough one to answer.

Tim Duncan: You know, that's a tough question. Look, it's a great question. I frankly love the question. It's a tough one to answer.

Timothy Duncan: You know, that's a tough question. Look, it's a great question. I frankly love the question. It's a tough one to answer.

Speaker Change: people seeing value creation through geology.

Speaker Change: You know, that's a tough, I look, it's a great question. I frankly love the question. It's tough one to answer. You know, it's not

Timothy Duncan: You know, when we talk to some of these investors, we try not to say, hey, look, why don't you focus more on us and away from whatever you're doing, you know, from time to time. We understand the views of thinking about multi-year inventory and tills and how that fits across an acreage set and how all that fits into a shareholder return model. Look, we aspire to get this company to a place where it's got the scale and diversity to deliver on those things as well.

Sergio Maiworm: Turning over to slide 16, there's a lot of really good information here, but I'll focus on the NAV analysis in the center of the slides. I'll start with that first bar on the left or approved PV10. So this is the PV10 of our approved reserves of $5.1 billion. And what I wanted to point out there is that $5.1 billion is already net or set another way is already burdened by the costs of PNA.

Tim Duncan: You know, when we talk to some of these investors, we try not to say, hey, look, why don't you focus more on us and away from whatever you're doing, you know, from time to time. We understand the views of thinking about multi-year inventory and tills and how that fits across an acreage set and how all that fits into a shareholder return model. Look, we aspire to get this company to a place where it's got the scale and diversity to deliver on those things as well.

Speaker Change: When we talk to some of these investors, we try not to say, hey, look, why don't you focus more on us and away from whatever you're doing, you know, from time to time. We understand, you know, the views of thinking about multi-year inventory and tills and how that fits across a acreage set, and how all that fits into a shareholder return model. Look, we aspire to get this company to a place.

Sergio Maiworm: So if someone were to deduct ARO from that 5.1, they would be double counting PNA costs. That is why we show that graph adding back the ARO and then removing it for clarification purposes to avoid that double count.

Timothy Duncan: And doing the buybacks, I think it's an important first step for us. But I do think one thing we try to always emphasize about this basin, it's been the second biggest producing oil basin in the country for a long time and for a sustainable amount of time, is that some of the things that we talk about when we think about onshore shale inventory, i.e. The next one is the next best one because the geology is so described and the technology is so well understood that that's what you should assume.

Tim Duncan: And doing the buybacks, I think it's an important first step for us. But I do think one thing we try to always emphasize about this basin, it's been the second biggest producing oil basin in the country for a long time and for a sustainable amount of time, is that some of the things that we talk about when we think about onshore shale inventory, i.e. The next one is the next best one because the geology is so described and the technology is so well understood that that's what you should assume.

Speaker Change: You know where it's got the scale and diversity to deliver on those things as well and doing the buybacks. I think it's important first step for us, but I, but I do think.

Speaker Change: One thing we try to always emphasize about this basin

Speaker Change: It's been the second biggest producing oil basin in the country for a long time and for a sustainable amount of time.

Sergio Maiworm: Browning. The next item that I wanted to point out is the amount of value that Talos has outside of its proof reserves. Those are very real, not pine the sky. In the case of the proof, the probable developed, for example, they're also ordered by Nettlenso, they're very real and we do expect that value to transferring to proved over time. So we do see a lot of value in those proof developed reserves.

Speaker Change: is that some of the things that we talk about when we think about onshore shale inventory, i.e. the next one is the next best one because the geology is so described and the technology is so well understood that that's what you should assume. You should not have those assumptions in the Gulf of Mexico. We reinvent this basin over and over again. The technology here is really about drilling applications, subsea applications, and seismic applications. And we kind of illuminate things.

Timothy Duncan: You should not have those assumptions in the Gulf of Mexico. We reinvent this basin over and over again. The technology here is really about drilling applications, subsea applications, and seismic applications. And we, you know, kind of illuminate things this year that we just couldn't see 10 years ago.

Tim Duncan: You should not have those assumptions in the Gulf of Mexico. We reinvent this basin over and over again. The technology here is really about drilling applications, subsea applications, and seismic applications. And we, you know, kind of illuminate things this year that we just couldn't see 10 years ago.

Timothy Duncan: So, I think it's an opportunity to bring investors back to the basin and say, hey, wait a minute, some of the assumptions that I just presume to make when I look at some of my onshore candidates, you know, things to go by, when I go offshore, these guys have been able to put drilling campaigns together again and reinvent themselves and utilize that infrastructure. They have the benefit of the pricing. They have the benefit of being oil weighted.

Tim Duncan: So I think it's an opportunity to bring investors back to the basin and say, hey, wait a minute, some of the assumptions that I just presumed to make when I look at some of my onshore candidates of things to go buy, when I go offshore, these guys have been able to put drilling campaigns together again and reinvent themselves and utilize that infrastructure. They have the benefit of the pricing. They have the benefit of being oil-weighted.

Timothy Duncan: So I think it's an opportunity to bring investors back to the basin and say, hey, wait a minute, some of the assumptions that I just presumed to make when I look at some of my onshore candidates of things to go buy, when I go offshore, these guys have been able to put drilling campaigns together again and reinvent themselves and utilize that infrastructure. They have the benefit of the pricing. They have the benefit of being oil-weighted.

Sergio Maiworm: The other item that we have here on the charts is the value of monument. So we just talked about it, Tim talked about monument and I briefly touched on it as well. So that's $265 million of value. That is already accreted to our shareholders. So we absolutely count that as value outside of our proof reserves.

Speaker Change: This year that we just couldn't see 10 years ago, so I think.

Speaker Change: It's an opportunity to bring investors back to the basin and say, hey, wait a minute.

Speaker Change: Some of the assumptions that I just presumed to make when I look at some of my onshore, you know, candidates of things to go buy, when I go offshore, these guys have been able to put...

Speaker Change: Drilling campaigns together again and reinvent themselves and utilize that infrastructure. They have the benefit of the pricing. They have the benefit of being oil-weighted. One thing we didn't talk about Monument is 91% oil-weighted. That's going to lead to significant net back margin. So, you know, there are some things that we think the boxes that this basin still checks.

Sergio Maiworm: The third one or the third bucket that I wanted to talk about that it's not here in the chart and maybe it's a little less intuitive is the value of our drilling inventory. As a reminder, due to different reserves book and rules between offshore and onshore companies, we typically do not book most of our drilling locations in putt and that's why they're not already improved reserve, which is different that some of our shell colleagues that they do include that in their putt.

Timothy Duncan: One thing we didn't talk about Monument, it's 91% oil weighted. That's going to lead to significant net back margins. So, you know, there are some things that we think the boxes that this basin still checks that you can't always check as easily on somebody onshore plays, recognizing there are some really interesting plays there. We're not trying to push away from that, but we're trying to reintroduce and provide that optionality in someone's portfolio, what our company and what our assets can bring to bear. And frankly, the fact that they're undervalued right now is a great opportunity to enter, you know, kind of enter the equity.

Tim Duncan: One thing we didn't talk about, Monument, it's 91% oil-weighted. That's gonna lead to a significant net back margin. So, you know, there are some things that we think, the boxes that this basin still checks, that you can't always check as easily on somebody's onshore plays, recognizing there are some really interesting plays there. We're not trying to push away from that, but we're trying to reintroduce and provide that optionality in someone's portfolio, what our company and what our assets can bring to bear. And frankly, the fact that they're undervalued right now is a great opportunity to enter, you know, kind of enter the equity.

Timothy Duncan: One thing we didn't talk about, Monument, it's 91% oil-weighted. That's gonna lead to a significant net back margin. So, you know, there are some things that we think, the boxes that this basin still checks, that you can't always check as easily on somebody's onshore plays, recognizing there are some really interesting plays there. We're not trying to push away from that, but we're trying to reintroduce and provide that optionality in someone's portfolio, what our company and what our assets can bring to bear. And frankly, the fact that they're undervalued right now is a great opportunity to enter, you know, kind of enter the equity.

Speaker Change: that you can't always check is easily on somebody onshore plays regnizing there'ssome really interesting plays that we're not trying to push away from that butwe're trying to reintroduce and provide that optionality

Speaker Change: in someone's portfolio, what our company, what our assets can bring to bear. And frankly, the fact that they're undervalued right now, it's a great opportunity to enter, you know, kind of enter the equity.

Sergio Maiworm: Another point that I wanted to make is I mean I fully understand that each investor may have different views on discount rates or perhaps add some additional risk factors in some of the elements that we have here on the page. But the point that I'm trying to make is that there are a lot of different avenues and enough value here that you can support a much higher value for talus than the market currently ascribes to us.

Noel Parks: Right, absolutely. And you hit right on where I was going, which is, sooner or later, depending, you know, all, whether new play or rediscovered play, you do run up against inventory. And that's very much on the, been a driver of consolidation, I'm sure. And it, it again, sort of leads me to the idea of, You know, sir, well, let us say before recognizing value in basis that that technology can go a lot further. And it does seem that this long period with capital investment kind of on a global level of underinvestment in new exploration and a topic I've heard more this running season And inventory is just kind of the latest sort of symptom of, Yeah, yeah, look, and I think again about some of the onshore plays you're in.

Noel Parks: Right, absolutely. And you you hit right on where I was going, which is Sooner or later, depending, you know, all, whether new play or rediscovered play, you do run up against inventory, and that's very much been a driver of consolidation, I'm sure, and it again sort of leads me to the idea of, You know, sort of, well, let us say before recognizing value in in basis that that from technology do can go a lot further and It does seem that this long period with capital investment kind of on a global level of under-investment in new exploration and, you know, a topic I've heard more this running season, on the horizon, the maybe really serious issues with fighting base decline that, again, it's sort of a dull, long-term topic, but it's kind of, you know, once again, we're sort of right back right back there, and inventory is just kind of the latest sort of symptom of, Yeah, yeah, look, and I think, again, some of the onshore plays you're in, you're

Noel Parks: Right, absolutely. And you you hit right on where I was going, which is Sooner or later, depending on whether new play or rediscovered play, you do run up against inventory, and that's very much been a driver of consolidation, I'm sure, and it again sort of leads me to the idea of, You know, sorry, well, let us say before recognizing value in in basis that that through technology do can go a lot further and It does seem that this long period with capital investment kind of on a global level of underinvestment in new exploration and a topic I've heard more this running season, on the horizon, the maybe really serious issues with fighting base decline, that again, it's sort of a dull, long-term topic.

Speaker Change: Right, absolutely. And you hit right on where I was going, which is...

Speaker Change: Sooner or later, depending on whether it's a new play or a rediscovered play, you do run up against inventory.

Speaker Change: That's very much been a driver of consolidation, I'm sure. And it again sort of leads me to the idea of

Timothy Duncan: Look, we understand that there may be other non fundamental considerations out there. But if we just focus on the fundamentals of the business, there should be a significant upside on our market valuation.

Speaker Change: You know, sort of, well, the thing for recognizing value in.

Timothy Duncan: Tim, do you have any additional thoughts that you would like to share? You know, Sergio, if I can jump in as well as you think about the things I talked about earlier in my slides and we think about the sun sphere completion, which is actually a probable undeveloped. If you think about all that upside, we see in the broader cap my complex, those are things that are outside the proved. And so if we think about this business improved as a proxy value for how to think about the value per share, the next question is fine.

Speaker Change: In bases that, that from technology do, you know, can go a lot further.

Speaker Change: and

Speaker Change: It does seem that...

Speaker Change: This long period with capital investment kind of on a global level of under-investment in new exploration and, you know, a topic I've heard more this running season.

Speaker Change: on the horizon

Speaker Change: the maybe really serious issues with fighting basase decline that again sort of a all long-term topic but 's it's kind of you know once again we're sort of right back right back there and inventory 's just kind of the latest sort of symto of it

Timothy Duncan: But then how confident can I be that they're going to deliver and continue to deliver and have that proved to be sustainable? I think the message we're trying to deliver is we've got a lot of that value outside of prove that we think creates the sustainability of this business.

Noel Parks: But it's kind of, you know, once again, we're sort of right back where we started. And inventory is just kind of the latest sort of symptom of, Yeah, yeah, look, and I think, again, some of the onshore plays you're in.

Timothy Duncan: Yeah, yeah, look, and I think, again, some of the onshore plays you're in are in core areas. Now, look, let's not forget that their completions are more efficient, and they're being more efficient with that acreage. They're finding new benches. So, again, I'm not going to try to campaign against that. I appreciate the efforts there. But I do think when you go offshore and you go to conventional geology, if you can find the right mix of risk and reward, you can bring in some assets. And look, we obviously have confidence in Hope Katmai.

Tim Duncan: Yeah, yeah, look, and I think, again, some of the onshore plays you're in are in core areas. Now, look, let's not forget that their completions are more efficient, and they're being more efficient with that acreage. They're finding new benches. So, again, I'm not going to try to campaign against that. I appreciate the effort there. But I do think when you go offshore and you go to conventional geology, if you can find the right mix of risk and reward, you can bring in some assets. And, look, we obviously have confidence in Hope Katmai.

Timothy Duncan: Yeah, yeah, look, and I think, again, some of the onshore plays. You're in, you're in core areas. Now, look, let's not forget that their completions are more efficient, and they're being more efficient with that acreage. They're finding new benches. So, again, I'm not going to try to campaign against that. I appreciate the effort there. But I do think when you go offshore and you go to conventional geology, if you can find the right mix of risk and reward, you can bring in some assets. And look, we obviously have confidence in Hope Katmai.

Timothy Duncan: So we're looking forward to that execution and then ultimately revisiting the impact that has on slides like this, which leads me to page 17. And why we think the equity values company is determined to go up and we think it's certainly a discount for those entering into the equity story now. We really believe we have a lot of upside around this infrastructure. By owning this infrastructure, we get hyper focused on utilizing it and finding inventory that can come back to that fixed cost and ultimately deliver first in class, best in class netback margins.

Speaker Change: Yeah, yeah. Look.

Speaker Change: I think, again, some of the onshore plays, you're in core areas, now look, let's not underscore that their completions are more efficient and they're being more efficient with that acreage. They're finding new benches. So, again, I'm not going to try to campaign against that. I appreciate...

Speaker Change: Yeah, it's there. But I do think when you go offshore and you go to conventional geology, if you can find the right mix of risk and reward, you can bring in some assets. And look, we obviously have confidence in Hope Katmai is one of them. They just have a different decline profile. Now, offset that you don't get as many shots on goal and deep water, but then you do have an opportunity to find material things and put those into your portfolio. And those are differentiating. And, you know, geology is laid down asymmetrically. It's a log normal distribution of outcomes that ultimately to drive the skewness, you have to have some really interesting big projects in the portfolio and conventional geology offshore operations.

Timothy Duncan: They just have a different decline profile. Now, to offset that, you don't get as many shots on goal in deep water, but then you do have an opportunity to find material things and put those into your portfolio, and those are differentiating. And, you know, geology is laid down asymmetrically. It's a log normal distribution of outcomes.

Tim Duncan: They just have a different decline profile. Now, to offset that, you don't get as many shots on goal in deep water, but then you do have an opportunity to find material things and put those into your portfolio, and those are differentiating. Geology is laid down asymmetrically. It's a log normal distribution of outcomes.

Timothy Duncan: They just have a different decline profile. Now, to offset that, you don't get as many shots on goal in deep water, but then you do have an opportunity to find material things and put those into your portfolio, and those are differentiating. And geology is laid down asymmetrically. It's a log normal distribution of outcomes.

Timothy Duncan: And so we have a high degree of inventory that we're focused on for execution year over year. We really had thought that when we integrated these assets over the lower decline base, we get more consistent results. We're seeing that with a higher quality asset base than we've had in the past. And it's certainly leading us to having these $40 per BOE netback margins, which we think are some of the higher in the space.

Timothy Duncan: Ultimately, to drive the skewness, you have to have some really interesting big projects in the portfolio. In conventional geology, and offshore operations, it allows you to introduce those from time to time. And frankly, when you step back from that and put it on a global scale, I think big offshore projects have differentiated a lot of otherwise onshore weighted companies. And we can think about things happening in Guyana and Trinidad and Tobago and Namibia. Look, we're early in our journey, but I think we've got the right mix of skills in the company to build something from here.

Timothy Duncan: Ultimately, to drive the skewness, you have to have some really interesting big projects in the portfolio. And conventional geology, offshore operations; it allows you to introduce those from time to time. And frankly, when you step back from that and put it on a global scale, I think big offshore projects have differentiated a lot of otherwise onshore weighted companies. And we can think about things happening in Guyana and Trinidad and Tobago and Namibia. So, look, we're early in our journey, but I think we've got the right mix of skills in the company to build something from here.

Tim Duncan: Ultimately, to drive the skewness, you have to have some really interesting big projects in the portfolio. In conventional geology, and offshore operations, it allows you to introduce those from time to time. And, frankly, when you step back from that and put it on a global scale, I think big offshore projects have differentiated a lot of otherwise onshore weighted companies. And we can think about things happening in Guyana and Trinidad and Tobago and Namibia. So, look, we're early in our journey, but I think we've got the right mix of skills in the company to build something from here.

Timothy Duncan: It's delivering significant free cash lows evidence by what we did in the first half of the year at $225 million. Certainly happy about that that also delivers a large free cash flow yield. And we've always been committed to low leverage. We've been here 13 years. We've never had financial distress because of our commitment to keeping our leverage low. We were able to hit that target of one time in the first quarter and we're going to continue to push that down.

Speaker Change: It allows you to introduce those from time to time, and frankly, when you step back from that and put it on a global scale, I think big offshore projects has differentiated a lot of otherwise onshore-weighted companies. And we can think about things happening in Guyana and Trinidad and Tobago and Namibia. So look, we're early in our journey, but I think we've got the right mix of skills in the company to build something from here.

Timothy Duncan: And we do this with a focus on our employees and our clients. Community. You know, when you build and start companies, that becomes, it's a different, it's a different feeling for our employee employees being a part of that. We take that very seriously. We're proud of our team and what they're delivering for our company.

Unknown Executive: So with that, we'll open it up for Q&A.

Speaker Change: Great, thanks a lot.

Operator: There are no further questions at this time. I'll hand the call back over to Tim Duncan for closing remarks. Sir, please go ahead. All right, thanks.

Timothy Duncan: There are no further questions at this time. I'll hand the call back over to Tim Duncan for closing remarks. Sir, please go ahead. All right, thanks.

Speaker Change: There are no further questions at this time. I'll hand the call back over to Tim Duncan for closing remarks. Sir, please go ahead.

Timothy Duncan: All right, thanks. Look, we appreciate everybody joining the call. It's a great quarter for the company. It's a great quarter for everybody involved and shows how hard we've been working to show the market that this collective set of assets can be differentiating for us and generate some cash flow. It's also kind of a turning point for where we're trying to take the company, the execution we're trying to deliver, and the value we're trying to add. So we really appreciate everyone's attendance, and we look forward to visiting you guys after the third quarter.

Tim Duncan: All right, thanks. Look, we appreciate everybody joining the call. It's a great quarter for the company. It's a great quarter for everybody involved and shows how hard we've been working to show the market that this collective set of assets can be differentiating for us and generate some cash flow. It's also kind of a turning point for where we're trying to take the company, the execution we're trying to deliver, and the value we're trying to add. So we really appreciate everyone's attendance, and we look forward to visiting you guys after the third quarter.

Tim Duncan: All right, thanks. Look, we appreciate everybody joining the call. It's a great quarter for the company. It's a great quarter for everybody involved and how hard we've been working to show the market that this collective set of assets can be differentiating for us and generate some cash flow. It's also, you know, kind of a turning point on where we're trying to take the company, the execution we're trying to deliver, and the value we're trying to add. So, really appreciate everyone's attendance and we look forward to visiting you guys after the third quarter.

Unknown Executive: Ladies and gentlemen, we will now begin the question and answers session. Should you have a question? Please press star followed by the number one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process? Please press star followed by the number two. If you're using a speaker phone, please make sure to lift the handset before pressing any keys.

Neil Mehta: Your first question comes from the line of Neil Mehta from Goldman Sachs. Your line is now open. Yeah. Thank you, Tim Sergio and team and congrats on a very good pre-catchable execution this quarter. One specific question, that one big picture question, the specific ones on monument. Can you talk a little bit more about how that came together and the market has received it well? Are there other opportunities like that as we think about the opportunity set in the Gulf of Mexico?

Operator: Ladies and gentlemen, this concludes today's conference. Thank you very much for your participation. You may now disconnect.

Operator: Ladies and gentlemen, this concludes today's conference. Thank you very much for your participation.

Speaker Change: Ladies and gentlemen, this concludes today's conference. Thank you very much for your participation. You may now disconnect.

Neil Mehta: Yeah. Hey, Neil, thanks and kind of welcome to the call. I think it came together just as we've been building such a big acreage position. I talked about, you know, in the remarks, then when we do these transactions, you know, we underwrite proof, but we typically buy big acreage positions around these transactions. Look, the last few transactions came with over 700,000 acres. And then we also just paid, and we're typically a top five participant in deep water in these lease sales.

Neil Mehta: And so we've had our eye on the trend and had our eye on the play. If you look at that slide where I highlight the Wilcox, I notice, I noted this Coronado well that has pay in it. We picked that up in a transaction in 2019. That was our entry point. And then we started building from there. So you've got two things in play. Did we build an acreage position around this before this deal? Yes. Now how do we think about the right way to enter and the partnership and which to enter? And so beacons a great opportunity.

Timothy Duncan: I'm going to say, I'm going to say, I'm going to say, I'm going to say, I'm going to say, I'm going to say, I'm going to say, I'm going to say, I'm going to say, I'm going to say, I'm going to say, I'm going to say, I'm going to say, I'm[inaudible] Yeah, sure, Neil. Thanks for the question and thanks for joining us. Look, and I mentioned that in my prepared remarks as well, right?

Timothy Duncan: We do recognize that some folks may think about the discount rate here at the cost gap a little bit higher than the PV10s. And that's fine, but I think the main focus of that comment was that there's so much value above and beyond PV10, sorry, but above and beyond proved reserves that even if you assume a higher discount rate, there's so many, so many other avenues that you can get to a much higher stock price or market capitalization than what we currently have that folks should feel comfortable even with a higher discount rate that the stock is actually pretty undervalued compared to the fundamental value of our business, right?

Timothy Duncan: Even at a slightly higher discount rate. So I don't necessarily disagree too much with perhaps the little higher than PV10 would be the most appropriate discount rate of the business, but I don't think it's that much higher either. But even if you assume that you can still arrive at a much higher valuation than currently. Yeah, and I think what I tried to add to that, Neil, is I think investors can ask, look, you know, these guys have now built a certain level of scale, a certain level of diversity that we've built into assets that pro-former from the quarter-north transaction and, you know, can they keep it up?

Timothy Duncan: And I think when that's where you dig into the projects and you think about something like Cat Mine, you think about something like Monument that we've added and you think about the drilling portfolio that we're going to execute next year and how we think about layering that on year over year, I think we're just going to heck of a lot better position. And most of that values outside proved as Sergio did it too.

Leo Mariani: Perfect. Thank you, Dan.

Leo Mariani: Thanks, Sergio. Your next question comes from the line of Leo Mariani from Roth. Please go ahead. Hey, Leo. Hey, guys. Question here on Monument. Obviously, nice to see the project enter the fold. I know you guys commented that a little bit of additional cat-back to Monument, you know, this year, you know, basically is kind of counterbalanced by a little bit of other cat-backs that's maybe slipping a little bit into next year.

Leo Mariani: But as we look into 25 or 26, really just trying to get a sense of the capital that you folks are talking about on the Monument project. Do you view that as really kind of additive to the budget over the next couple of years, or can, can Talos continue to shuffle some things around and possibly push out, you know, a few other projects so that 160 million over the next couple of years isn't necessarily completely additive, but might take the place of some other spend.

Leo Mariani: Yeah, that's exactly right, Leo. And if we think about, you know, the incremental spending on Monument, and again, we alluded to that being 160 million if I net to our interest in 25 and 26, probably two-thirds of that weighted into 26. And so, you know, we don't expect to change the long-term view of how we think about capital inside the budget. We can move some projects around so much of our acreage position is operated.

Leo Mariani: It's under our control. Frankly, it's around our infrastructure. So we'll be able to still, you know, as we think about broadly putting the year-over-year program together, it'll just be around shifting projects. Look, we've said that we're not going to bury ourselves in the rig market. We're trying to be opportunistic there. And so there's a lot of moving pieces that'll allow us to let this fit right in, particularly in 25. And then we've got plenty of time to manage around 26.

Leo Mariani: So I think we were in a good spot. And it worked out that we were able to add this project and not change any of our guidance for 24 as well. So everything looks good in that regard. Okay, you know, that's helpful. And then just with respect to the share buyback program, obviously, you know, pretty robust this quarter and certainly seems like you guys made some smart purchases, you know, here for sure, with respect to the stock.

Leo Mariani: How are you kind of thinking about balancing that, you know, versus debt paydown as we roll, you know, into the second half? And I guess also, we've seen, you know, Carlos Slim out there, you're doing some recent buying. Do you guys have any perspective, you can kind of maybe share on what, you know, Slim's goals might be with Talos? Leo, this is Sergio. Let me start with the share repurchases question and then Tim can address the Carlos Slim part of your question there.

Leo Mariani: Look, the share buyback program, that's an opportunistic program. We're going to continue to evaluate the market. We're going to continue to look for opportunities to kind of to do all of that. Same with the debt repayment, we have a goal of continue to deliver the balance sheet, and we're going to continue to do that. But if the rights set of circumstances present themselves, I think we would absolutely look for potential buybacks.

Leo Mariani: So I don't think we, it's going to be one or the other. I think there could be a possibility of us continuing to evaluate doing both throughout the, the written manual of the year. Look, on the Slim family office and purchasing of our shares, we got to know obviously the entire organization last year when we transact around Zalma. And on telecommunications and infrastructure and banking. And I don't know how much they've done specifically to upstream oil and gas.

Leo Mariani: They got familiar with the project, familiar with how we execute our business. I think they saw a long fundamental view in the company. I think they have a long fundamental view on the constructiveness of the commodity and we became a good investment for them. Look, they've been nothing but supportive so far for us. It's something we keep an eye on, but we certainly like having such a sophisticated long term fundamental holder of our stock.

Leo Mariani: And so we don't communicate them off and on what they're thinking. There's just really the Zalma project we haven't come in. But we know that they're weighing up on energy related items and they have a fundamental view that our stocks cheap and certainly we appreciate. All right, thank you. Thanks, Leah.

Jared Jero: Your next question comes from the line of Jared Jero from Stevens. Please go ahead. Hey, good morning guys and congrats on a strong quarter. Thank you. At first question, I was just hoping you could provide a little color on the CAPEX guidance for the back half of the year. Based on first half actuals and the drilling schedule on slide eight. It's like a little step up in the back half of the year. Do you see this being fairly level loaded or is the end of the year going to be a little higher than 3Q?

Sergio Maiworm: I can start there, Jared. This is Sergio, by the way. Look, we're still thinking that it's relatively level third and fourth quarters, obviously with the rig, the West Bella arriving towards the end of the third quarter. That may shift around a little bit depending on when the rig is actually delivered. But I would say it's probably going to be relatively balanced on both quarters. But heavier than this quarter. Yeah, I think it's been a fantastic quarter.

Sergio Maiworm: We knew it might be a little lighter on CAPEX. We were hot on PNA and the first quarters would be lighter in a second. And that allowed us to generate just an impactful amount of free cash flow. As we get the rig delivery, we'll see what happens in weather season. We'll probably have a little more CAPEX spend. And then we'll see what we can do. Elliott. Perfect, thank you.

Timothy Duncan: And then my last one is just on the lobster water flood. I know in the release you said you don't expect to see the production increase for 12, 18 months, but I was just kind of curious if you've seen any response on it yet. Well, we've seen very good performance on injection. I mean, the difference there compared to say, you know, the tornado water flooding, keep in mind for those just trying to understand this.

Timothy Duncan: This is a water flood project where we're not sourcing any outside water. You know, all of it's coming from other wet sands inside the same geological well bore. And so we're pulling these wet sands in. They then flood the pay sands and ultimately up to dip geologically, other producing wells start to increase their production and increase their reservoir pressure. So it worked marvelously at tornado. That was deep water. Those rock properties were world class here, a little bit more of a mature field, actually a bigger structure and more wells.

Timothy Duncan: It's going to take a little longer to get that water to influence those wells. But the first measure is can you see the injection happening and working and we're seeing it work unbelievably well. In fact, I would tell you we're injecting probably 50% more water than we anticipated. And so we think we'll start to see some responses in the next several months and then we'll start to see real production increases as we get into 2025.

Timothy Duncan: But we're absolutely happy with the way we've completed the wells and the way we're getting injection into the reservoir. And that's the first thing you have to have. If it starts to back up on you then something went wrong in terms of what you thought about the geology, but everything is working out like we hoped it would. In fact, probably better. Perfect. Thanks, Tim sir, geo and team. All right. Great. Thanks. Thanks, rad.

Jeff Robertson: Your next question comes from the line of Jeff Robertson from Water Tower Research. The line is now open. Thanks, good morning. Tim, are there other opportunities across the asset base for water floods like you've done at tornado and lobster? I can probably see as soon as it started working on tornado, we started gowering the assets for another idea. And lobster, you know, was that idea? I think it's tricky. You've got to really check a lot of boxes.

Jeff Robertson: Frankly, you've got to have a little bit of nerve encouraged to just do it what we're doing. These two projects were great examples of it. You know, again, still a lot to do on the lobster side. What will keep looking? I think we have a team that, you know, when you feel taste a little bit of success and that effort is paid, you know, itself, you start looking for other ideas. I don't have one on the horizon as I answered the question for you, Jeff, but look, I mean, the fact that we found two ways to use this application, both in deep water, which again, was the first of its kind in the world in a subsidy environment. And then in this shelf, where it's been done before, but not in a while, you know, we're happy with what we're doing in that side of our portfolio.

Timothy Duncan: Can you talk about at a high level of how you think about the capital program in 2025, just with all the meeting parts of consolidation and whether that there are additional opportunities like you executed on monument? Do you want to keep dry powder, I guess, as a question for the thing that you don't know today? Well, I mean, I think you have to be, you know, kind of flexible in how you build your plans that you can move some capital in and out so you can fit a project in.

Timothy Duncan: But, you know, as we think about 2025, and any year we start thinking about, you know, walking into the next round of drilling, in our basin, it gives us three things. It gives us, you know, good geology, good pricing and infrastructure. And we've got to just keep working on how to utilize all three of those in our drilling program. So although we have some really high impact things happening with what's going on in Katmai, the Daenerys and now monument, we've got to go back and find those exploitation, blocking and tackling things like vines and lime rock, which is what we're doing in Sunspir and putting those more projects in the portfolio next year as well.

Timothy Duncan: Some were in that we've got to be tactical around our assets in business development. So we always have a little bit of dry powder we bake into the guidance and we bake into the budget in case something comes our way that can be tactical and can fit in. If it really really makes sense and we have to come back to the market and say, look, now we're talking about outside the budget capital allocation, you know, that's the decision we can certainly make the board level and see how that ranks against debt repayments and something like a share buyback.

Timothy Duncan: But, you know, we like where the opportunity status in the Gulf we like with the extra infrastructure of the last transaction and including the Infant Transaction is done in our ability to put together a portfolio of opportunities, opportunities.

Timothy Duncan: I asked one quick question on Mexico with the change in the administration. Does that impact at all in any of the discussions with respect to progressing Zama, or is that still just all handle at the ministry level? Yeah, it really doesn't. I mean, I think it's really more, you know, there was obviously a lot of moving pieces when we were arguing over unitization and operation. And there's been a little more stability by adding such a big local content partner like the car so organization.

Timothy Duncan: And that changed some of the development plans and now some of those, you know, kind of reworked and re-compromised development plans are going through a feed study. And then I think we'll have some updates on that as we get into the second half of the year. So, you know, really all that is less related to the politics and more related to just new partnerships, compromise, field development plans, putting that into a feed study and then ultimately getting a closer to FID. So I really unrelated to the politics.

Unknown Executive: Thank you.

Unknown Executive: Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star one on your telephone keypad. If you're using a speaker phone, please make sure to lift the handset before pressing any keys.

Noel Parks: Your next question comes from the line of no parks from two e brothers. Please go ahead. Hi, good morning. Just had a couple. You know, one listening to the discussion and sort of what you laid out in your presentation. It sort of got me thinking maybe as a reality check. Do you see, I guess in one of you're seeing the same signs I am, are you getting any signs of investor awareness of just creating values through conventional geology in AMP.

Noel Parks: And another thing that makes me wonder about this is we've seen some sort of out of the blue. I'm sure AMD in basins, you know, looking to redevelop conventional conventional targets. And I'm in sort of discussion about, you know, looking at looking beyond proof reserves to possible and probable. They seem like sort of positive throwback. So I just wonder if you're if you're seeing any any appetite out there for just people seeing value creation through geology.

Noel Parks: You know, I think that's a tough. I look at the great question. I frankly love the question. It's tough when the answer. You know, it's not when we talk to the to somebody's investors, we try not to say, hey, look, why don't you focus on more on us in a way from whatever you're doing, you know, from time to time. We understand, you know, the views of thinking about multi-year inventory and tills and how that fits across the acreage set.

Noel Parks: They have all that fits into a shareholder return model. Look, we aspire to get this company to a place, you know, where it's got the scale and diversity to deliver on those things as well and doing the buybacks. I think it's important for a step for us. But I do think one thing we try to always emphasize about this basement. It's been the second biggest producing oil basin in the country for a long time and for a sustainable amount of time is that some of the things that we talk about when we think about onshore, share inventory, ie, the next one is the next best one because the geology so described and the technology so well understood that that's what you should assume.

Noel Parks: You should not have those assumptions in the Gulf of Mexico. We reinvent this basin over and over again. The technology here is really about drilling applications, subsidy applications and seismic applications and we, we, you know, kind of illuminate things this year that we just couldn't see 10 years ago. So I think it's an opportunity to bring investors back to the basin and say, hey, wait a minute. Somebody assumptions that I just presumed to make when I look at some of my onshore, you know, candidates of things to go by when I go offshore.

Noel Parks: These guys have been able to put drilling campaigns together again and reinvent themselves and utilize that infrastructure. They have the benefit of the pricing that benefit of being oil weighted. One thing we didn't talk about monument is 91% oil weighted. That's going to lead to significant netback margins. So, you know, there are some things that we think the boxes that this basin still checks that you can't always check is easily on somebody onshore plays, recognizing there's some really interesting plays there.

Noel Parks: We're not trying to push away from that. But we're trying to reintroduce and provide that optionality in someone's portfolio, what our company and what our assets can bring to bear. And frankly, the fact that they're undervalued right now, it's a great opportunity to enter, you know, kind of introduce. Right, absolutely. And you hit right on where I was going, which is sooner or later, depending, you know, all whether new player or rediscovered play, you do run off against inventory.

Noel Parks: And that's very much on the driver of consolidation, I'm sure. So, you know, sort of well, the same before recognizing value in, in basis that, that for technology do, you know, can go a lot further. And it, it does seem that the long period with capital investment kind of on a global level of under investment in new exploration. And, and, you know, a top of that for more this running season, the on the horizon, the maybe really serious issues with fighting based decline that, again, sort of a dull long term topic.

Noel Parks: But it's, it's kind of, you know, once again, we're sort of right back, right back there. And inventory is just kind of the latest sort of symptom of it. Yeah, yeah. Look, and I think again, some of the onshore plays are in your inquiry areas. Now look, let's not underscore that their completions are more efficient, and they're being more efficient with that acreage. They're finding new benches. So I, again, I'm not going to try to paint again.

Noel Parks: I appreciate it there, but I do think when you go offshore and you go to conventional geology, if you can find the right mix of risk and reward, you can bring in some assets and look, we obviously have confidence and hope catmice one of them. They just have a different decline profile. Now, offset that you don't get as many shots on goal and deep water. But then you do have an opportunity to find material things and put those into your portfolio, and those are differentiating.

Noel Parks: And, you know, geology lay down asymmetric. It's a long, normal distribution of outcomes that ultimately to drive this cuteness. You have to have some really interesting big projects and the portfolio and conventional geology, offshore operations, and allows you to introduce those from time to time. And frankly, when you step back from that and put it on a global scale, I think big offshore projects has differentiated a lot of otherwise onshore way to companies.

Noel Parks: And we can think about things happening in Guiana and Trinidad and Tobago and, and maybe as though absolutely early in our journey, but, but I think we've got the right mix of skills and the company to build something from here. Great. Thanks a lot. All right. Thanks.

Unknown Executive: Here are no further questions at this time.

Timothy Duncan: I'll have to call back over to team Duncan for closing remarks. Sir, please go ahead. All right. Thanks. Look, we appreciate everybody joining the call. It's great quarter for the company. It's great quarter for everybody involved and how hard we've been working to show the market that this collective set of assets can be differentiating for us and generate some cash flow. It's also, you know, kind of a turning point on where we're trying to take the company, the execution we're trying to deliver and the value we're trying to add. So really appreciate everyone's attendance. And we look forward to visiting you guys after to their quarter.

Unknown Executive: Ladies and gentlemen, this concludes today's conference. Thank you very much for your perspective participation. You may now disconnect. .

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