Talos Energy Inc. this week announced second quarter results and provided an update on operations in the Gulf of Mexico.

Drilling and Exploration Activities – U.S. Gulf of Mexico 

Deepwater
Bulleit Prospect: Drilling operations are concluding on the Green Canyon 21 Bulleit prospect. The well encountered approximately 140 feet of net true vertical depth ("TVD") oil pay in the shallow target, the DTR-10 Sand, and approximately 110 feet of net TVD oil pay in the deeper MP Sand. Talos experienced delays and additional costs during drilling due to difficult hole conditions below the DTR-10 Sand that necessitated a side track of the original well path to a new directional plan. Additionally, the rig was moved off location to ensure safe operations during Hurricane Barry. The well will be completed in the first half of 2020 and then tied back to the Talos-owned and operated Green Canyon 18 ("GC 18") facility located approximately 10 miles west of Bulleit. The Bulleit prospect, originally generated by EnVen Energy ("EnVen"), is now 50.0% owned and operated by Talos, with EnVen and Otto Energy owning 33.3% and 16.7%, respectively.

Orlov Prospect: The Green Canyon 200 Orlov prospect initially encountered approximately 100 feet of net true vertical thickness ("TVT") oil pay in the main target Aspen J sand, as well as additional pay sands in shallower zones along the same trap. The operator, Fieldwood Energy ("Fieldwood"), currently has a rig on location and will soon commence an operation to re-enter the well and drill an appraisal sidetrack to optimize the well location in relation to the discovered resources. Initial production from Orlov is expected in the first quarter of 2020 and will be tied back to the Fieldwood-operated Bullwinkle facility. Talos owns a 30% working interest in the Orlov project.

Shallow Water

Ewing Bank 306 A-2 ST-2: Production was brought online via a dual completion in the deepest two of five hydrocarbon-bearing zones in the first week of May of 2019 at a production rate of approximately 1.3 MBoe/d gross, 1.0 MBoe/d net to Talos. Subsequently, the well reached a production rate of approximately 1.7 MBoe/d gross, 1.4 MBoe/d net to Talos. Talos owns a 100% working interest in the project.

Ewing Bank 306 A-10 ST-2: The A-10 ST-2 was successfully drilled in the second quarter, finding approximately 95 feet of net TVD pay in the Miocene geological section that was first discovered in the A-20 ST well drilled in 2018. Production was brought online on July 24 of 2019 and reached a production rate of approximately 2.6 MBoe/d gross, 2.1 MBoe/d net to Talos. Talos owns a 100% working interest in the project.

Grand Isle 82 A-22: Drilling commenced on July 2 and will target a series of Miocene sands at approximately 14,600 feet TVD. If successful, Talos expects the well to generate an initial production rate of 2.5 – 3.5 MBoe/d gross, 2.2 – 3.1 MBoe/d net to Talos, with first production expected in the fourth quarter of 2019. Talos owns a 100% working interest in the project.

Drilling and Exploration Activities – Mexico 

Block 7 – Zama Appraisal Program
Completion of Appraisal Program: Talos has concluded its three-well appraisal of the Zama discovery with highly encouraging results. The Zama-3 well was drilled to test the southern extent of the reservoir. Well results included the logging of approximately 1,000 feet of gross TVD sand and 748 feet of gross TVD oil pay, with better than expected net-to-gross ratios across the pay sections and the capture of a new record whole core (717 feet). The Zama appraisal program was completed 39 days ahead of schedule and under budget. Appraisal operations were successfully completed with zero lost-time incidents or environmental issues.

Appraisal Data: Throughout the appraisal program, Talos collected a substantial amount of data, including approximately 1,450 feet of whole core, 59 fluid samples from the reservoir, over 200 pressure points, 25 logging runs and two extended flow tests. This data will be incorporated into an independent, third party resource estimate to be prepared by Netherland, Sewell & Associates, Inc. by year end 2019. Talos expects updated resource guidance to fall in the upper half of its previously disclosed pre-appraisal estimated range of gross recoverable resources of 400 – 800 MMBoe.

Progress to FID: Front-End Engineering & Design ("FEED") work is advancing via an engagement with io Oil & Gas Consulting (a joint venture between Baker Hughes GE and McDermott International, Inc.) to optimize the recovery and economic development of the field. Talos has significantly narrowed the number of potential development concepts and the prevailing concept design will be the basis for development. Additionally, unitization discussions with Petróleos Mexicanos ("Pemex") are ongoing with the goal of reaching a Final Investment Decision ("FID") in 2020.

Block 2 and Block 31 Exploration Program

In October of 2018, Talos announced a cross-assignment transaction with a subsidiary of Pan American Energy ("PAE"), pursuant to which Talos conveyed a 25% participation interest (i.e. half of its interest) in Block 2 to PAE in exchange for a 25% participation interest from PAE in Block 31, resulting in a four well program consisting of two wells on each of Blocks 2 and 31.

Block 2: The Yaluk-1EXP, the second well on Block 2, was drilled in the second quarter of 2019 and encountered a non-commercial quantity of hydrocarbons. Net costs to Talos were approximately $8.0 million.

Block 31: The first project on Block 31, the Xaxamani-2EXP well, spud in July and reached total depth ("TD") in early August with encouraging results. It is the first well in the Olmeca project area, which is a shallow oil project set up by the Xaxamani-1 exploratory well drilled in 2003, which logged oil pay in several intervals. PAE expects to perform a drill stem test in the Xaxamani-2EXP before moving to the Tolteca well, which has similar objectives. The project is located in very shallow waters (approximately 60 feet) and less than two miles from shore. Talos will provide more details at the conclusion of the program.

Link to Talos Energy US Gulf of Mexico country profile   l   Link to Talos Energy Mexico country profile