Earnings call transcript: Talos Energy Q3 2025 beats EPS forecast

Talos Energy reported its third-quarter 2025 earnings, surprising analysts with a better-than-expected performance. The company posted an earnings per share (EPS) of -$0.19, significantly surpassing the forecasted -$0.36. Revenue also exceeded expectations, reaching $450 million against a forecast of $426 million. Despite these positive results, Talos Energy’s stock saw a slight decline of 1.46% in premarket trading, closing at $9.42.

Key Takeaways

• Talos Energy’s EPS outperformed forecasts by 47.22%.
• Revenue exceeded expectations by 5.66%, reaching $450 million.
• The company’s stock price decreased by 1.46% in premarket trading.
• Production and free cash flow significantly surpassed guidance.
• Continued focus on cost savings and operational efficiency.

Company Performance

Talos Energy demonstrated strong operational performance in Q3 2025, with production levels surpassing guidance at 95,000 barrels of oil equivalent per day, 70% of which was oil. The company generated $103 million in free cash flow, well above consensus estimates, and reported year-to-date free cash flow of approximately $400 million. Talos also successfully repurchased about 5 million shares for $48 million during the quarter, reflecting confidence in its financial position.

Financial Highlights

• Revenue: $450 million, up from forecasted $426 million.
• Earnings per share: -$0.19, beating the forecast of -$0.36.
• Free cash flow: $103 million, exceeding expectations.
• Cost savings: Over $40 million achieved, surpassing the $25 million year-end target.

Earnings vs. Forecast

Talos Energy’s actual EPS of -$0.19 was a significant improvement over the forecasted -$0.36, representing a surprise of 47.22%. Revenue also exceeded expectations by 5.66%, coming in at $450 million compared to the forecast of $426 million. This marks a positive deviation from previous quarters, where the company often met but did not exceed forecasts.

Market Reaction

Despite the strong earnings report, Talos Energy’s stock experienced a 1.46% decline in premarket trading, closing at $9.42. This movement contrasts with the company’s positive financial performance and may reflect broader market trends or investor caution regarding future guidance.

Outlook & Guidance

Looking ahead, Talos Energy expects full-year oil production to be 3% higher than previously guided. The company is also targeting flat year-over-year oil volumes for 2026. Additionally, Talos has hedged 24,000 barrels per day for Q4 at a $71 floor price and 25,000 barrels per day for the first half of 2026 with floors above $63, providing some revenue stability.

Executive Commentary

Paul Goodfellow, CEO, emphasized the company’s safety record, stating, "We’re pleased to report zero serious injuries or fatalities year to date." CFO Zack Daly highlighted the company’s financial strategy, noting, "We remain committed to a strong balance sheet, which provides the flexibility to execute our strategy."

Risks and Challenges

• Offshore E&P market challenges due to tightening surety bond market.
• Potential volatility in oil prices affecting revenue forecasts.
• Execution risks related to new exploration and development projects.
• Macroeconomic pressures that could impact capital allocation decisions.

Q&A

During the earnings call, analysts inquired about the potential expansion of the Tarantula facility’s throughput and the strategic implications of the Daenerys discovery. The management addressed ongoing cost optimization efforts and the exploration of potential mergers and acquisitions, highlighting the company’s proactive approach to growth and efficiency.

Full transcript - Talos Energy (TALO) Q3 2025:

Operator: Good morning, ladies and gentlemen, and welcome to the Talos Energy third quarter 2025 earnings call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, November 6th, 2025. I would now like to turn the conference over to Mr. Clay Jeanson, VP of Investor Relations.

Clay Jeanson, VP of Investor Relations, Talos Energy: Thank you, Operator. Good morning, everyone, and welcome to our third quarter 2025 earnings conference call. Joining me today to discuss our results are Paul Goodfellow, President and Chief Executive Officer; Zack Daly, Executive Vice President, Chief Financial Officer; and Bill Langen, Executive Vice President, Exploration and Development. For our prepared remarks, please refer to our third quarter 2025 earnings presentation that is available on Talos’s website under the Investor Relations section for a more detailed look at our results and operational update. Before we start, I’d like to remind you that our remarks will include forward-looking statements subject to various cautionary statements identified in our presentation and earnings release. Actual results may differ materially from those contemplated by the company.

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 September 30, 2025, filed with the SEC. Forward-looking statements are based on assumptions as of today, and we undertake no obligations to update these statements as a result of new information or future events. During this call, we may present GAAP and non-GAAP financial measures. A reconciliation of certain non-GAAP to GAAP measures is included in yesterday’s press release, which is furnished with our Form 8K filed with the SEC and is available on our website. I would like to turn the call over to Paul.

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Thank you, Clay, and good morning. I would like to start by thanking the entire Talos team for their hard work, dedication, and unwavering commitment to safety and delivery of our business. The results we’ll discuss today are a direct result of their efforts. We’re pleased to report zero serious injuries or fatalities year to date, underscoring our steadfast commitment to the health and well-being of our employees and contractors. Additionally, our environmental stewardship remains a core focus, with the spill rates significantly below industry averages, exemplifying our commitment to protecting the community’s environment in which we live and operate. Our team has made significant progress since we announced our enhanced corporate strategy in June.

Our transformation into a leading pure-play offshore EMP company is centered around three strategic pillars: improving our business every day, growing production and profitability, and building a long-lived scaled portfolio, all underpinned by a disciplined capital allocation framework. Since our strategy announcement, we’ve taken decisive steps to execute on this vision. I’d like to highlight a few key actions we’ve taken so far. We’ve strengthened our leadership team with the appointments of Zack Daly as Executive Vice President and Chief Financial Officer and Bill Langen as Executive Vice President of Exploration and Development. Both bring deep oil and gas expertise and leadership to Talos. I want to welcome them to the Talos team.

We continue to drive progress through our Improving Our Business Every Day initiative, surpassing our 2025 Optimal Performance Plan targets during the quarter, further strengthening Talos’s position as the low-cost E&P operator in the Gulf of Mexico, and we’ve had a very promising exploration discovery at Daenerys. I’ll share more details on that shortly. Now turning to third quarter results, which represented another quarter of consistently delivering on our commitments and executing on our strategy, I’d like to highlight a few key takeaways. First, we delivered outstanding operational performance that translated into strong financial results. Production of over 95,000 barrels of oil equivalent per day exceeded the high end of our guidance range, with approximately 70% comprised of oil. The absence of storm activity, solid base performance from our assets, and high facility uptime drove this outperformance.

The team did an excellent job of operating our deepwater facilities, and huge recognition is deserved by all. A great example of operational excellence by our teams is the successful de-bottlenecking efforts at our Talos-operated Tarantula facility, which enabled production from the Katmai field to average over 36,000 barrels of oil equivalent per day. Additionally, we completed the Sunspear workover ahead of schedule and returned the well to production in late September. The well is back online and flowing to the Talos-owned Prince facility. The second key takeaway is the continued generation of free cash flow, underscoring the strength of our business model and the ability to convert operational success into meaningful free cash flow generation. During the quarter, we delivered $103 million in free cash flow, significantly exceeding consensus estimates. This performance reflects our disciplined capital allocation, great operational execution, and ongoing focus on cost management.

The substantial free cash flow enables us to return capital to our shareholders and maintain a strong balance sheet, positioning us well for the long term. Year to date, we’ve generated approximately $400 million in free cash flow. We also delivered on our commitment to return capital to our shareholders. The robust free cash flow generation allowed us to repurchase approximately 5 million shares for $48 million in the quarter, and Zack will provide more details on our return to capital program later on. Looking at slide eight, a key element of our strategy is driving continuous improvement across every part of our business. We set a year-end 2025 target of delivering an additional $25 million in free cash flow, and I’m proud to report that we have achieved that ahead of schedule during the third quarter, with over $40 million already realized.

The team is actively working on incremental opportunities for the balance of 2025, and we look forward to sharing a further update on this at the end of the year. The accelerated delivery, combined with outstanding execution in exceeding our 2025 target, gives us excellent momentum towards achieving our annualized $100 million target in 2026 and beyond. Now I’d like to turn your attention to slide nine. Our advantaged cost structure continues to differentiate us from our offshore peers. Year to date, we’ve successfully lowered our operating expenses by almost 10% from just under $17 a barrel in 2024 to $15.27 a barrel in the third quarter of this year. We’ve achieved these results by maintaining a laser focus on continuous improvement across our operations.

This progress is driven by more than 60 initiatives implemented company-wide to reduce costs and enhance efficiency, all aligned with our commitment to improving the business every single day. These outcomes are especially noteworthy given the extensive facility turnarounds and maintenance activities carried out throughout 2025. Over the past three years, while the industry trend for E&Ps in the Gulf of Mexico has been an increased cost structure, Talos’s relentless efforts on proactively managing the cost base has resulted in a reduction in operating costs on a unit basis. In fact, for the first half of this year, our operating costs are, on average, 40% lower than those of the peer group. This advantaged cost structure has helped us to generate top decile EBITDA margins in the E&P sector for this year.

While commodity price volatility remains an ongoing challenge across the industry, we remain focused on projects that offer low break-even economics and more stable production profiles. Looking ahead to the fourth quarter and into early 2026, our teams will commence drilling activity at the Talos-operated Brutus, Cardona, and CPM projects, and the non-operated Manta Ray and Monument projects. These development projects have break-evens in the $30-$40 a barrel. We’ve improved our 2025 operational and financial outlook, reflecting continued progress in driving efficiency and disciplined capital execution. We now expect full-year oil and oil equivalent production to be approximately 3% higher than prior guidance. For the fourth quarter, we anticipate a production mix averaging 72% oil. In addition, we’ve further reduced our full-year operating expense and capital guidance by 2%, driven by the structural cost savings from our optimal performance plan efforts.

As we approach the end of 2025 and look ahead to 2026, we will exit the year with strong operational momentum. While it is still early to talk about 2026 in detail, we expect our 2026 program to deliver flat year-over-year oil volumes while investing in both near-term development and longer cycle projects that will come online over the next couple of years. Our focus remains on delivering strong financial outcomes while continuing to invest in high-quality development projects for our future. At Talos, we remain laser-focused on improving our business every day through driving efficiencies and further optimizing our advantaged cost structure. Now I’d like to provide a brief update on our successful discovery at Daenerys. The well was drilled to a total vertical depth of approximately 33,200 feet and confirmed oil pay in multiple high-quality subsalt Miocene sands validating our geological models.

We drilled the well ahead of schedule and under budget, demonstrating that we can deliver solid operational performance to underpin our growth strategy. We’ve temporarily suspended the wellbore to preserve its future utility and are now planning an appraisal well, which we expect to spud in the second quarter of 2026. The appraisal program is designed to test the northern part of the prospect. It is strategically planned to penetrate multiple prospective intervals, enabling a thorough assessment of reservoir and fluid properties. Additionally, the well has been engineered to support multiple future side tracks, allowing for further appraisal and development. As part of our balanced capital program, exploration remains a vital element of Talos’s strategy. We’re committed to driving sustainable growth and value creation over time while maintaining strong operational execution underpinning near-term financial delivery.

Successful exploration discoveries have the ability to add reserves, extend production horizons, and ultimately enhance shareholder returns. The Daenerys discovery is a prime example of our second strategic pillar continuing to pursue organic growth opportunities in the Gulf of Mexico. Finally, we will continue to advance the third strategic pillar by selectively evaluating projects with significant potential in the Gulf of Mexico and other conventional basins that align with our technical capabilities to ensure we are building a long-lived scaled portfolio. With that, I’d like to turn it over to Zack.

Zack Daly, Executive Vice President and Chief Financial Officer, Talos Energy: Thanks, Paul, and thanks for the introduction. Talos is a great company with a bright future ahead, and I’m excited to join the team. The strategy Paul laid out a few months ago to be the leading pure-play offshore E&P is well underway, and the company delivered measurable results against that strategy during the third quarter. As Talos’s new CFO, I’ll continue to focus on our disciplined capital allocation framework, maintaining a resilient balance sheet that prioritizes financial flexibility and returning capital to our shareholders. I’ll now walk through a few key takeaways from our Q3 results and provide an update on other financial matters. During the third quarter, we returned $48 million, or 47% of our free cash flow, to shareholders via share repurchases. Year to date, we’ve returned over $100 million to shareholders, reducing our outstanding share count by 6%.

Going forward, we continue to see share repurchases as the preferred return vehicle, as there is compelling upside to our equity valuation. Briefly addressing the balance sheet, as of the end of the third quarter, we held $333 million in cash and maintained a leverage ratio of just 0.7 times. With an undrawn credit facility and approximately $1 billion in total liquidity at quarter end, we’re well positioned to navigate the current oil price environment. We remain committed to a strong balance sheet, which provides the flexibility to execute our strategy, invest in high-return projects, and remain resilient through the commodity price cycle. During the quarter, we recorded a non-cash impairment of $60 million related to the full cost ceiling test under the SEC guidelines.

As a reminder, this test primarily compares the net capitalized cost of our oil and gas properties to the present value of future net cash flows from our proved reserves using a trailing 12-month pricing, which we expect to continue lower in the fourth quarter of the year. Next, I want to highlight what I think is a positive and innovative development for Talos related to the offshore surety bond market in the Gulf of Mexico. Recently, we’ve seen the surety market tighten substantially with reduced bond capacity and lower risk tolerance of surety providers, which has resulted in some offshore Gulf of Mexico companies facing collateral calls from their surety providers. As a reminder, our surety bond agreements give our surety providers the right to demand collateral up to the full amount of the bond at any time.

In response to the rapidly evolving surety market, we worked proactively with our surety providers to develop a practical solution where they have agreed to forego their right to demand additional collateral in exchange for Talos agreeing to post collateral of approximately 3% of our outstanding surety bond portfolio each year through 2031. This equates to approximately $40-$45 million per year. The first year will be funded with a letter of credit, and we have the option over the next several years to fund the commitment with either LCs or cash. This novel approach, signed earlier this week, provides us with certainty amid volatility in the surety market. Finally, let me share a quick overview of our hedge positions. For the fourth quarter, we’ve hedged approximately 24,000 barrels of oil per day with a floor price of $71 per barrel.

Looking ahead to the first half of 2026, we’ve hedged roughly 25,000 barrels per day with floors above $63 per barrel. These hedge positions are an important component of our risk management strategy, providing cash flow protection and helping ensure stability in a volatile commodity price environment. Finally, our disciplined approach to capital allocation and strong balance sheet are the foundation for our high-performing business that is well positioned for the future. With that, I’ll turn it over to Paul for his closing comments.

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Thank you, Zack. In closing, our continued focus on capital discipline, operational excellence, and generating free cash flow has driven meaningful success throughout 2025. These efforts directly support our clear vision for Talos to become a leading pure-play offshore E&P, well positioned to benefit from the growing importance of offshore resources in meeting global energy demand. We believe Talos is uniquely equipped to capitalize on this opportunity, and we look forward to keeping you updated on our progress. With that, we’ll open the line for Q&A. Thank you.

Operator: Thank you, gentlemen. We will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Tim Resban with KeyBank Capital Markets. Please go ahead, Tim.

Tim Resban, Analyst, KeyBank Capital Markets: Good morning, folks. Thank you for taking my questions. I wanted to start digging into the strong run rate at Tarantula. Paul, your predecessor had talked in 2024 about options to kind of expand throughput, maybe closer to 40,000 a day. I think you sort of teased this option yourself last quarter. As we look at this run rate, was this just one-off strong execution, or is this maybe the start of efforts to kind of grow that throughput?

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Yeah, thanks, Tim. It’s very much the latter. As I think mentioned in the last quarter, we’ve had really strong performance from the CapMai wells. We start to look at what is the best way to optimize that, fully in alignment with sort of the strategic pillars that we have laid out. We want to work our way into it. What you’ve seen in the third quarter is the first step of that, which is maximizing throughput with the facility base that we have without actually injecting any sort of additional capital to it.

The second phase that we’re looking and studying at the moment is, let’s say, an expansion of about 20% capacity that will be through a larger de-bottlenecking study that we do in the first part of 2026, with sort of execution throughout the remainder of 2026 into the start of 2027. The third phase of that, which we’re also studying at the moment, is much larger and linked to the CapMai North opportunity and prospect that we have, where we have proprietary seismic, very high-quality seismic, using latest technology such as the OBN technology to actually look at that opportunity. That broader expansion, which could be significant, would then be as a result or in combination with the drilling and exploitation of CapMai North, if that’s where we choose to go towards the end of 2026 and 2027.

It is very much a structured approach, very much sort of fits in. The fair way of sort of improving our business each and every day by, yes, having a clear view and line on sort of the end price, but working our way into it and making sure that each day we are that little bit better.

Tim Resban, Analyst, KeyBank Capital Markets: Okay. So is it fair to assume we may get an update on your course or next steps with the 2026 guidance?

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: We’ll certainly give an update on where we are in that process as we talk about the 2026 plan.

Tim Resban, Analyst, KeyBank Capital Markets: Okay. I appreciate that. We’ll stay tuned. As my follow-up, I know the West Vela rig is scheduled to go back to Daenerys in the second quarter. You gave some context on what you’re trying to do. Given that you had one penetration there, how do you think about the cost and maybe the timing of this second well relative to what you did the first time? Because your first well did come in under budget and quicker than expected. Any context on what you’re doing there would be helpful. Thank you.

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: No, thanks, Tim. Let me pass that over to Bill, who’s joined us today, and he can provide some comments on that.

Bill Langen, Executive Vice President, Exploration and Development, Talos Energy: Yeah. Thanks, Tim, and thanks, Paul. I would say we’re really proud of the teams here at Talos for the way the subsurface teams characterized the opportunity pre-drill, and then the drilling organization for delivering really outstanding performance as they delivered that first well. At the moment, yeah, we are targeting a second quarter of next year’s spud of the appraisal well to test a separate fault block to the north. We’ll penetrate multiple objective sections that we think have the opportunity to really push our decision forward on whether this is ultimately a development for us or not. Obviously, we’ll target the same outstanding performance that the teams have delivered in the past to continue to demonstrate that as we seek to grow, we can underpin that growth with outstanding performance.

Tim Resban, Analyst, KeyBank Capital Markets: Thank you.

Operator: Okay. Thank you very much, Tim. Our next question comes from Ms. Greta Drewski with Goldman Sachs. Please go ahead.

Greta Drewski, Analyst, Goldman Sachs: Good morning, and thank you for taking my questions. I was wondering if you could provide a bit more color on the near-term opportunities remaining for the $100 million in savings plan beyond the $40 million that you’ve already executed on. Where do you think you have the clearest line of sight from here before year-end?

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Thanks, Greta. Look, let me start by saying we’re incredibly proud of the organization in terms of how they’ve taken the challenge and not just delivered on it, but exceeded on it. I think when we started, many would have said it’s an incredibly high bar that we’ve set. I think the organization has shown that through working in an integrative way, really sort of challenging each other on where the opportunities are, that they’ve been able to deliver on that. Now it’s about us sort of building on that momentum as we go into 2026. I think, as I’ve said before, there’s no one simple and clear area where we see the biggest opportunity. The reality is we see opportunities across the totality of all that we do. Clearly, there’s a big focus on the capital expenditure.

You just heard Bill talk about the drive we have to not only sort of match the performance on the Daenerys Discovery Well, but to sort of try and beat that as we go into the appraisal mode, whether it’s on how we sort of think about the gathering of data from a seismic point of view. We’ve seen great progress on the operational front, both in terms of availability, uptime, cost of the maintenance, etc., etc. We also see, as I think I’ve mentioned before, opportunities in the supply chain space to actually work maybe more collaboratively against common outcomes with our great supply chain partners. There is not one particular line that we are driving against. We’re looking at all our spend and all the opportunities for sort of volume and value enhancement and production enhancement as well.

As we look into 2026, it is across that broad waterfront that we see the opportunities. I think the split I have mentioned before, roughly a third, a third, a third between sort of production enhancement, the capital uplift or the capital efficiency, and then sort of commercial opportunities, probably still holds true, Greta.

Greta Drewski, Analyst, Goldman Sachs: Makes a lot of sense. Thank you very much. Just to follow up on costs, you outlined Talos’ operating cost structure in your slide deck and how it compares to some of the peers in the Gulf of Mexico. Can you speak a bit about what the key drivers are, in your view, that allow for your lower cost structure? I would appreciate your view on the durability of that moat.

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Yeah. I think the answer to the second part of your question is we’re building this as the normal way that we do work. This is how we do work. It is not special for this quarter, which is why I think you’ve seen us build off the very sort of strong foundation we had coming out of 2024 as we have driven through 2025. Clearly, it’s about having that ownership mentality, which is sort of core to everybody at Talos, that we act like an owner as we think about where to spend money and making sure we spend money that has a return on it.

Whether that is for an operator as in a facility, making sure that we are sort of driving maintenance from a proactive point of view, i.e., sort of look after it versus fix it when it breaks, or whether it is in the development teams thinking about how we can actually get more throughput through the facility. It really is that sort of building that culture of excellence and always looking to be a little bit better tomorrow that, as a leadership team, we are trying to drive.

Greta Drewski, Analyst, Goldman Sachs: Thank you very much.

Operator: Thank you.

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Thanks, Greta.

Operator: Our next question comes from Michael Shala with Stevens. Please go ahead.

Michael Shala/Phu Pham/Nate Pendleton, Analysts, Stevens/ROTH Capital/Texas Capital: Hey, good morning. I wanted to see if you could make a few more comments on Daenerys. You did not give us any indication on the pay that was found with the Discovery Well. Any changes to the prospect size there? I guess, based on Bill’s comments, it sounds like the northern fault block needs to work for you to feel like you have a commercial discovery there. Is that fair?

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Thanks, Michael. Let me pass it to Bill again.

Bill Langen, Executive Vice President, Exploration and Development, Talos Energy: Sure. We found pay in three separate zones in Daenerys, all of which we think have the potential to exist across the fault to the north. As we have seen repeatedly in the Gulf of Mexico over the past 10 years, we need to confirm the presence of those as we cross different geological boundaries. As we drill the fault block to the north, we need to test for the existence of those pay intervals and the fluid quality that exists there as well. There is an additional prospective interval that we see as well. We are hoping to see similar and, if not better, results as we penetrate that other fault block.

Michael Shala/Phu Pham/Nate Pendleton, Analysts, Stevens/ROTH Capital/Texas Capital: Okay. Is it reading too much into it that that fault block really needs to pan out before you would pursue a development? Or is there still enough resource there potentially to where you could have a commercial discovery even if you did not find what you’re looking for with the northern fault block?

Bill Langen, Executive Vice President, Exploration and Development, Talos Energy: It depends on the outcome, right? There are multiple opportunity options for development. If we were to see a significantly positive outcome in that northern fault block, it would dictate a very different development concept than if we were to see an average or more negative outcome. On the more negative side, we look to potentially combine with other opportunities in the area to create enough economic synergy to proceed as well. At this point, it is not an on-off switch by any stretch. It will be highly dependent on what we see, not just in Daenerys, but how that neighborhood develops.

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: I think Michael may be too added to that. This is the art of exploration, which is very seldom is it a one penetration and all decisions become clear. We have a very sort of clear roadmap dependent on how the next well goes. We may need subsequent appraisal beyond that, dependent on what we find. Clearly, we look at other opportunities within sort of the local geological environment as well. We appreciate the question, but we’ll drill the appraisal well in the second quarter of next year. We’ll update from that. I think at that point, we’ll have a much clearer picture along with our partners in terms of which is the pathway that we think is the best pathway for commerciality.

Michael Shala/Phu Pham/Nate Pendleton, Analysts, Stevens/ROTH Capital/Texas Capital: Appreciate the details there and understood it’s early days. I wanted to ask on your CapEx guide, you’ve got a range in there still of $40 million. Difference between the low end and the high end, and we’re two months away from the end of the year. Anything you could say on the difference between the activity or events between the low and the high end?

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Yeah. I mean, look, as you come towards the end of the year, of course, there are projects that may start just in year or may slip into the early part of 2026. Some of those in the non-operated space, it’s reliant on other projects that are preceding them. It really is looking to give a guide around that uncertainty of that arbitrary sort of line that’s called December the 31st.

Michael Shala/Phu Pham/Nate Pendleton, Analysts, Stevens/ROTH Capital/Texas Capital: Really just timing. You’re not contemplating any different.

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Correct.

Michael Shala/Phu Pham/Nate Pendleton, Analysts, Stevens/ROTH Capital/Texas Capital: Any changes to the program at this point?

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: No. No. Not at all.

Michael Shala/Phu Pham/Nate Pendleton, Analysts, Stevens/ROTH Capital/Texas Capital: Very good. Thank you.

Operator: Thank you, Michael.

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Thank you.

Operator: Our next question will be with Phu Pham from ROTH Capital. Please go ahead.

Michael Shala/Phu Pham/Nate Pendleton, Analysts, Stevens/ROTH Capital/Texas Capital: Hi. My first question is about the M&A. Last week, we saw a private US Gulf producer, LLOG, installed a potential sale for $3 billion. I just want to hear your thoughts about deals and about the M&A environment in general. Thank you.

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Thanks, Phu Pham. You’re a little bit difficult to hear, but I think you’re asking about the M&A environment on the back of LLOG. Look, I think, as we sort of said in our remarks, clearly, we keep an eye on what is happening in the market. We set ourselves a very high bar that we need to sort of pass to sort of go beyond looking. We look both within the Gulf of Mexico as well as basins outside of that. I’m not going to speculate beyond that in terms of what we may or may not be looking at. I just reiterate the same as we sort of think about.

Capital discipline and execution discipline, the way that we’ll look at any inorganic opportunities, be it from the lease sale to anything that might be at the asset or the corporate side, will be with that same sort of high bar of discipline and rigor.

Michael Shala/Phu Pham/Nate Pendleton, Analysts, Stevens/ROTH Capital/Texas Capital: Paul, if I might complement, the thing I’d add on top of that is any M&A opportunity, just like any exploration opportunity in or outside of the Gulf of Mexico, we look for things that really complement our existing advantaged skill sets in the subsurface and our low-cost operations that we could bring to bear. Whether it’s in exploration or on the M&A front, we think those are the types of opportunities that ultimately create value for our shareholders. Thank you. My second question maybe about the productions. We saw that this quarter, we did not have any storms, and I think the production was better even if we anticipated downtimes. You said part of the performance was the uptimes was better. Was there anything new, and are we going to continue to see that in the future?

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Yes, so clearly, we benefited from a quiet storm season through the third quarter. If you look at the sort of the beat, we have that probably accounted for two-thirds-ish of the beat, two-thirds to three-quarters of the production beat. Of course, the fact that we had really well-run operations where we’re executing as planned allowed us to take advantage of that lack of storm. The two are somewhat interdependent. Yes, we had the tailwind of no storms, but the sort of self-help of building a really robust, excellent operating organization allowed us to take advantage of that. On top of that, we saw a further uplift because of the throughput that we had, the debottlenecking that we’d done, the excellent operational-based performance that the team here has delivered.

Michael Shala/Phu Pham/Nate Pendleton, Analysts, Stevens/ROTH Capital/Texas Capital: All right. Thank you.

Operator: Thank you.

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Thanks, Phu Pham.

Operator: Okay. Our last question for today will be with Nate Pendleton from Texas Capital. Please go ahead.

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Good morning, and congrats on this strong quarter. While I understand that you’ve not officially guided to 2026 yet, looking at the schedule outline on slide 10, it seems that you’ll have a nice cadence of projects coming online with first oil on four of these projects in the second half of 2026. With that in mind, how should we think about the shape of that production next year, given the commentary about the flat year-over-year outlook?

Thanks, Nathan. Thanks for the comments. I mean, look, we’re still in the process of building out the plan. There’s a lot more that goes around the new oil projects that you’re referring to on the slide there in terms of how we think about turnarounds and the maintenance that we need, how we think about the optimization activities that we’ll take on an asset-by-asset type of basis, and of course, how we will plan around the hurricane period of the year. Again, I think the overall shape from a planning perspective will look sort of similar to this year, which is you will see a dip in the middle of the year, primarily related to potential weather and some of the turnaround activities that we do, with new oil being added in sort of the first half from.

Those first few projects that are out on the schedule with sort of a further uptake towards the back end of the year, as projects such as the non-operated Monument field sort of come online. I think the key is to think about the way we’re framing it, which is driving towards flat oil production year on year.

Got it. I appreciate that color, Paul. Perhaps for Zack here, regarding the surety agreement that you talked about in the prepared remarks, is this an arrangement that you plan to use on future bonds? Can you provide some context on the outlook for the surety market, given it has been a point of focus for other industry peers as well?

Michael Shala/Phu Pham/Nate Pendleton, Analysts, Stevens/ROTH Capital/Texas Capital: Yeah. Thanks, Nate. Appreciate the question. This really is a positive development for Talos, and I’m glad you asked about it. Like you said, the offshore surety bond market has tightened over the last year or so. I think part of it is a lower risk tolerance from the sureties. There’s been some reduced bond capacity. Like I said in my comments, other Gulf of Mexico companies have faced collateral calls on their bonds. What we’ve done is proactively engaged our sureties and entered into a pretty unique agreement that’s beneficial to both sides. Ultimately, it gives us certainty to plan our business amidst that volatile environment. We’re excited about putting that together. It’s positive for us.

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Got it. Thanks for taking my questions.

Michael Shala/Phu Pham/Nate Pendleton, Analysts, Stevens/ROTH Capital/Texas Capital: You bet. Thank you, Nate.

Operator: Thank you. Ladies and gentlemen, that was our last question for today. I will now turn the call back to Paul Goodfellow for closing comments. Please go ahead, Paul.

Paul Goodfellow, President and Chief Executive Officer, Talos Energy: Thank you, Emma. Thank you all for joining today and your interest in Talos. I’d like to close by, again, just recognizing our dedicated teams and their commitment to provide safe, reliable, and responsible energy. That is vital to power the world. We look forward to updating you at the end of the year on our progress to the strategic plan that we’ve laid out. As always, very, very much appreciate the questions and the interest that you show. Thank you all.

Operator: Thank you very much, Paul. Ladies and gentlemen, this concludes today’s conference call. Thank you for your time.

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