Talos Energy today provided operational updates related to ongoing and future drilling and completions projects as well as recent weather event impacts. The Company also provided updates to its financial guidance.

The Company's 2020 capital program has been successful with all drilling and completions projects working as expected or better, most recently including positive results from the Kaleidoscope well at Green Canyon 18. In spite of numerous external challenges, including COVID-19 driven commodity price impacts and the most active weather season of the last 15 years, the Company has continued to deliver solid results in controllable categories, such as realizing substantial cost reductions across both lease operating and general and administrative expenses. The Company's robust production exit rate, cost control efforts and solid balance sheet position Talos well for 2021 and beyond.

Operational Updates

• Kaleidoscope Drilling Success: The Kaleidoscope well was successfully drilled and is in active completion operations. Results exceeded pre-drill estimates and included the logging of approximately 325 feet of net true vertical pay across four zones. Talos holds a 100.0% working interest in the well. As a result of success across multiple targets, Talos has elected a dual completion to allow for simultaneous production of multiple sands. The well will produce through the Company's Green Canyon 18 platform with first production expected in November 2020.
• Tornado Water Flood Initiation: Following successful drilling of the Tornado IV well, the Company has begun the process of inter-well flow, or injection, of over 20,000 barrels of water per day from the shallower and higher pressure B-4 aquifer into the deeper and lower pressured B-6 oil reservoir. The Tornado IV well was drilled in a downdip position of the reservoir allowing the water flood to better manage field production trends and to maximize ultimate recovery from updip wells. Talos holds a 65.0% working interest in the Tornado field and is the operator, with Kosmos Energy holding a 35.0% working interest.
• Bulleit First Oil: Completion and hook-up operations of the successful Bulleit subsea well are expected to be finalized with first oil to be achieved in October 2020 following numerous weather-related delays, including Hurricane Delta. The Bulleit discovery will also produce through the Company's Green Canyon 18 platform. Talos holds a 50.0% working interest and is the operator, with EnVen and Otto Energy holding 33.3% and 16.7% working interests, respectively.
• Ram Powell Production Restart: Talos has received final regulatory approvals and is in the process of completing repairs to the Ram Powell production platform, which was producing approximately 4.8 MBoe/d net to Talos prior to the shut-in. The Company plans to restart production from the Ram Powell field as well as third-party production handling from the Stonefly field in October 2020. Talos holds a 100.0% working interest in Ram Powell.
• Acceleration of Puma West Drilling: Following a temporary suspension of operations earlier this year, bp, as operator and in consultation with the joint venture partners, plans to resume drilling of the Puma West exploration prospect in the fourth quarter of 2020. The well was temporarily halted in January 2020 in order to modify the well's casing design prior to drilling through the Middle and Lower Miocene main objectives. bp holds a 50.0% working interest and Talos and Chevron each hold a 25.0% working interest.

External Event Impacts: Talos experienced significant production shut-ins and operational delays in the third quarter as a result of several material, uncontrollable weather events in the Gulf of Mexico, third-party downtime and COVID-19 related challenges, which led to the following:

• Weather-Driven Deferrals: Talos shut-in production for a combined total of 28 days in the third quarter as a result of Hurricanes Hanna, Laura, Marco and Sally as well as Tropical Storm Beta, including, to varying extents, each of the Company's major operated and non-operated facilities. Thus far in the fourth quarter, shut-ins of most of the Company's production associated with Hurricane Delta are expected to remain in effect for approximately one week with an associated impact on fourth quarter production.
• Third-Party Downtime: In the third quarter, a flow line maintenance issue was encountered downstream of the non-operated Delta House facility that also required the shut-in of the Company's Pompano facility due to a shared midstream trunk line system. As a result, the Company incurred significant downtime on the wells that flow through both platforms. Additional planned downtime and repairs were also completed during the quarter at the Delta House facility subsequent to remediating the flow line issue. Both platforms were returned to production during the quarter.
• COVID-19 and Weather-Related Drilling Delays: Drilling, completions and other production start-up activities were delayed by multiple weather related evacuations resulting from the aforementioned named storms, including the Bulleit, Tornado and Kaleidoscope wells as well as the Ram Powell repairs. Additionally, increased staffing rotations and delays as a result of COVID-19 precautionary measures slowed operations on active drilling and completions projects during the quarter. These delays resulted in longer-than-expected time to first oil for those projects and additional capital expenditures.

President and Chief Executive Officer Timothy S. Duncan commented: 
"This year has brought many external challenges with seven named storms, including Tropical Storm Cristobal in the second quarter, five named storms in the third quarter and Hurricane Delta, which is currently moving through the Gulf. The first six storms did not cause material infrastructure damage and we're hopeful that this will also be the case with Hurricane Delta; however, what has been more pronounced were the significant shut-ins we began experiencing in August and continue to experience today, which will have a material impact on our third and fourth quarter results. We also managed through appropriate storm-related evacuations and other COVID-19-related challenges to both our production and drilling operations, which impact the delivery of first production from key projects."

Duncan continued, "However, despite these challenges, we've continued to drive solid performance for the items that are in our control, most importantly continued outperformance on operating costs and general and administrative expense reductions. On the drilling front, we are pleased to see success on all projects, including our redevelopment efforts in the Green Canyon 18 field. We are also excited to see operations recommence at Puma West, a project that, if successful, could add significant value for our shareholders. The Tornado water flood project is a great operational and environmental achievement, as we have been able to execute this project sourcing zero external water and using only the existing aquifer above the producing oil reservoir – everything is self-contained in the subsea environment, minimizing our footprint compared to traditional water flood projects. As we look toward year-end, we have added to our 2021 hedge book and are focused on finishing the year with a strong production exit rate, continuing to drive down costs and sustaining our strong credit profile, all of which will provide a solid foundation for 2021."

KeyFacts Energy: Talos Energy US Gulf of Mexico country profile