Executive Summary

Record quarter: Q4 production hit 98.7 MBoe/d (70% oil) and record Adjusted EBITDA of $361.8M; GAAP EPS was $(0.36) driven by derivative losses and high DD&A, but Adjusted EPS was $0.08 excluding CCS costs .
Balance sheet: Paid off the credit facility; year-end Net Debt fell to $1.14B (0.8x Net Debt/Pro Forma LTM Adjusted EBITDA), enhancing flexibility for 2025 capital returns and projects .
2025 outlook: Q1’25 production guided to 99–101 MBoe/d; FY’25 guided to 90–95 MBoe/d with heavy planned maintenance and weather risk; capex $500–$540M and P&A $100–$120M prioritize FCF and high-IRR projects .
Near-term catalysts: Sunspear and Katmai West #2 first oil targeted in late Q2’25; Daenerys high-impact exploration well to spud in Q2 with results expected late Q3/early Q4’25 .
Street context: S&P Global consensus estimates for Q4 were unavailable at retrieval time; management highlighted consistent outperformance vs internal/Street expectations during 2024 on production, EBITDA, and FCF (management claim) .

What Went Well and What Went Wrong

What Went Well

Record volumes and EBITDA with tighter cost control: Q4 production 98.7 MBoe/d and Adjusted EBITDA $361.8M; LOE per Boe fell to $12.14 from $18.40 in Q3, supporting margin expansion despite lower oil prices .
Drilling execution ahead of plan: Katmai West #2 drilled ~40 days ahead of schedule and under budget; management: “top quartile of similar wells” performance and “better than what we thought we were buying” (QuarterNorth) .
Deleveraging and liquidity: RBL repaid; Net Debt/Pro Forma LTM Adj. EBITDA at 0.8x with ~$865.8M liquidity at 12/31/24, positioning TALO for capital returns and optionality .

Quotes

“We reported record EBITDA of $362 million for the fourth quarter…record production totaling 98,700 boe/d” .
“Katmai West #2…under budget and approximately 40 days ahead of schedule” .
“We fully repaid our credit facility…reducing our leverage ratio to 0.8x” .

What Went Wrong

GAAP loss on non-cash/derivative items: Q4 GAAP net loss $(64.5)M (EPS $(0.36)) with $43M derivative fair value loss and $274.6M DD&A; Adjusted NI was $15.2M ($0.08) .
Realized pricing headwind: Q4 realized oil price fell to $69.03/bbl (from $74.72 in Q3), pressuring revenue ($485.2M vs $509.3M in Q3) .
2025 volume guide below current run-rate: FY’25 90–95 MBoe/d (vs Q4 98.7) reflecting numerous maintenance outages (Prince, Tarantula hookups; Brutus, Pompano) and weather/third-party downtime risk; cautious tone flagged by analysts .

Financial Results

Quarterly fundamentals (Q2–Q4 2024)

Metric	Q2 2024	Q3 2024	Q4 2024
Total Revenues ($M)	$549.2	$509.3	$485.2
GAAP Diluted EPS	$0.07	$0.49	$(0.36)
Adjusted EPS (reported basis)	$0.03	$(0.14)	$0.08 (ex-CCS)
Adjusted EBITDA ($M)	$344.0	$324.4	$361.8
Production (MBoe/d)	95.5	96.5	98.7
Oil mix (%)	73%	70%	70%
Upstream Capex ($M)	$122.8	$118.9	$133.2
Adjusted Free Cash Flow ($M)	$148.0	$121.5	$164.0

Notes: Adjusted EPS in Q4 excludes CCS; Q3 Adjusted EPS per company reconciliation .

Year-over-year (Q4 2023 vs Q4 2024)

Metric	Q4 2023	Q4 2024
Total Revenues ($M)	$385.0	$485.2
GAAP Diluted EPS	$0.69	$(0.36)
Adjusted EBITDA ($M)	$249.1	$361.8

Drivers: YOY revenue/EBITDA uplift reflects higher scale post-QuarterNorth and record volumes; GAAP EPS impacted by derivatives/DD&A in Q4’24 .

Realized prices

Metric	Q2 2024	Q3 2024	Q4 2024
Oil ($/Bbl)	$80.50	$74.72	$69.03
Gas ($/Mcf)	$2.59	$2.39	$2.60
NGL ($/Bbl)	$22.33	$19.42	$21.18
Avg Realized ($/Boe)	$63.22	$57.37	$53.43

Costs and margins proxies

Metric	Q2 2024	Q3 2024	Q4 2024
LOE per Boe ($/Boe)	$18.11	$18.40	$12.14
Adj. G&A per Boe ($/Boe)	$4.10	$3.70	$3.84 (ex-CCS)

Balance sheet KPIs

Metric	Q2 2024	Q3 2024	Q4 2024
Net Debt ($M)	$1,437.2	$1,329.5	$1,141.8
Net Debt / Pro Forma LTM Adj. EBITDA (x)	1.0x	0.9x	0.8x

Production by area (Q4 2024)

Area	Production (MBoe/d)	% Oil	% Liquids	% Operated
Deepwater	85.6	72%	82%	83%
Shelf & Gulf Coast	13.1	54%	62%	74%
Total	98.7	70%	79%	82%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Production (MBoe/d)	Q1 2025	N/A	99.0–101.0 (68% oil)	New
Production (MBoe/d)	FY 2025	N/A	90.0–95.0 (69% oil, 79% liquids)	New
Cash Operating Expenses & Workovers ($M)	FY 2025	N/A	$580–$610	New
G&A ($M)	FY 2025	N/A	$120–$130	New
Capital Expenditures ($M)	FY 2025	N/A	$500–$540	New
P&A, Decommissioning ($M)	FY 2025	N/A	$100–$120	New
Interest Expense ($M)	FY 2025	N/A	$155–$165	New

Management attributes the lower FY’25 production guide vs current run-rate to planned maintenance (Prince and Tarantula hookups; Brutus/Pompano work), weather and third‑party downtime risk; they expect meaningful FCF again in 2025 .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
Drilling cadence (Katmai, Sunspear, Daenerys)	West Vela to drill Katmai West #2; Sunspear completion in 1H25; Daenerys to spud Q1’25	Rig delays; still mid‑’25 first oil for Katmai; Sunspear completion with Conqueror; Daenerys after Katmai	Katmai West #2 drilled ahead of schedule, complete after Sunspear; first oil for both late Q2’25; Daenerys spud Q2’25, results late Q3/early Q4	Execution ahead of plan on Katmai; schedule consolidated to one rig
Balance sheet and buybacks	Leverage at 1.0x; $43M buybacks; additional $150M authorization	Leverage 0.9x; intent to repay revolver by YE; Board evaluating returns	RBL fully repaid; 0.8x leverage; buyback acceleration under strategic review with new CEO	Improving leverage; capital returns under review
Monument (Wilcox)	Acquired 21.4% WI; late ’26 first oil; ~$160M 2025–26 net capex	Added color; benefits to NAV; flexible capex timing	Increased WI to 29.76%; modest 2025 spend (long-leads) with heavier 2026 drill/complete	Growing stake; 2026 spend ramps
Maintenance/operational risk	HP‑I dry dock impacted Q2; waterflood program	Multiple hurricanes managed; Tarantula turnaround; cautious 4Q storms	2025 guide includes planned outages (Prince/Tarantula hookups, Brutus/Pompano) and weather/third‑party risk	Elevated 2025 maintenance headwind
Governance/rights plan	—	Rights plan adopted 10/1 to address 24% holder	12/17: Zama stake sale and cooperation agreement; rights plan terminated upon agreement	Shareholder overhang mitigated

Management Commentary

“We have consistently exceeded quarterly expectations on production, EBITDA and free cash flow every quarter throughout 2024…fully repay our credit facility…leverage ratio to 0.8x” .
“Katmai West #2…under budget and approximately 40 days ahead of schedule…top quartile of similar wells” with initial IP potential 15–20 Mboe/d; Sunspear gross 8–10 Mboe/d; both targeting late Q2’25 first oil .
“2025…invest $500–$540 million…full year production 90–95 Mboe/d…allocate $100–$120 million to P&A and decommissioning” .
“Incremental Monument WI increase to 29.76%…first production late 2026…additional 25–35 MMBoe nearby potential” .

Q&A Highlights

Production cadence and shape: Heavier planned downtime in Q2 and some in Q3 (plus hurricane risk), easing in Q4; Q1’25 guided to 99–101 Mboe/d .
Capex philosophy: 2025 capex not dramatically above 2024 due to drilling efficiencies on West Vela; focus on FCF and “right level of investment” .
Shareholder returns: With leverage at 0.8x and cash on hand, buyback acceleration to be addressed after new CEO’s strategic review .
Monument WI cost: ~+$12M plus closing adjustments for the incremental WI; 2025 spend primarily long-leads; heavier drilling/completions in 2026 .
Project specifics: Daenerys to spud Q2’25 with ~100–120 day drill; results likely by Q3/Q4 earnings; Helm’s Deep remains a candidate pending commercial terms .
Planned outages detail: Prince and Tarantula shut-ins for Sunspear/Katmai hookups; other maintenance includes Brutus and Pompano .
Tarantula capacity: Recently expanded to 35 mboe/d; further debottlenecking would require loop line and topsides work if additional wells succeed .
Regulatory: Expect more frequent lease sales vs prior administration; no permitting issues reported .

Estimates Context

S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable at the time of retrieval due to provider limits; as such, we cannot quantify beat/miss vs consensus at this time (S&P Global data unavailable). Management indicated outperformance vs expectations on production, EBITDA, and FCF through 2024 (management statement) .

Key Takeaways for Investors

Operational momentum: Record volumes and EBITDA with materially lower LOE/boe underpin stronger unit economics despite softer Q4 oil prices .
FCF and leverage: Q4 Adjusted FCF ~$164M; RBL fully repaid and leverage at 0.8x create room for buybacks or opportunistic A&D as strategy is refined under new CEO .
2025 setup: Expect lower average production vs Q4 run-rate due to planned work and risk adjustments, but Q1 guide steady at ~100 Mboe/d; cost and capex guidance supports another year of FCF .
Near-term catalysts: Late Q2’25 first oil from Sunspear and Katmai West #2; Daenerys results late Q3/early Q4’25 could be a major swing factor .
Portfolio depth: Larger, more oil‑weighted reserve base (194 MMBoe proved, PV‑10 ~$4.2B) plus probable PV‑10 ~$3.0B offer underpin to equity value (SEC pricing) .
Watch risks: Weather/third‑party downtime, maintenance execution, commodity prices, and decommissioning obligations (P&A $100–$120M guide) .
Strategic overlays: Monument WI increase and Mexico Zama monetization/agreements streamline focus, reduce governance overhang, and clarify optionality into 2026 .

Appendix: Additional Detail

Non‑GAAP reconciliation drivers in Q4: $42.989M derivative fair value loss and $41.536M interest expense impacted GAAP earnings; Adjusted metrics back out mark‑to‑market and specified items per company methodology .
Hedging snapshot (as of 2/20/25): 2025 WTI swaps ~38–20.7 kbbl/d across quarters at ~$72–$73; 2025 gas swaps 65–40k MMBtu/d at ~$3.38–$3.53 support cash flow stability .

Sources: Q4’24 press release and exhibits ; Form 8‑K Item 2.02 and Exhibit 99.1 ; Q4’24 earnings call transcript ; Q3’24 press release and call ; Q2’24 press release and call ; Rights plan and Zama stake sale press releases .

TALOS ENERGY INC. (TALO)·Q4 2024 Earnings Summary