HOUSTON, July 19, 2018 /PRNewswire/ -- Talos Energy Inc. ("Talos" or the "Company") (NYSE: TALO) today announced that the Mt. Providence well began producing on July 10, 2018, approximately 60 days ahead of the originally scheduled completion date in early September. Current gross production of 3,850 barrels of oil equivalent per day ("Boe/d"), which is near the top of the previously announced guidance range of 2,000 to 4,000 Boe/d.
The Mt. Providence well was successfully drilled in January 2018 by Stone Energy Corporation after entering into, but before closing, the combination with Talos. The combined Talos team completed the well and hooked it up to the 100% Talos owned Pompano platform in the Company's Mississippi Canyon complex within six months of concluding drilling operations.
President and Chief Executive Officer Timothy S. Duncan commented, "We are extremely pleased with the results achieved in the Mt. Providence well. It was nice to see the production rate come at the high end of our expectations. Our team's preparation allowed us to take advantage of earlier rig availability to exceed expectations on timing. With a six month turnaround from completing drilling operations to first production, the team executed this project well ahead of schedule. Using active subsea infrastructure and flowing back to our owned deepwater facility also helped generate attractive economics with very little incremental operating costs. We will continue to focus on safely and efficiently executing other opportunities in on our subsea tieback portfolio."
About Mt. Providence and the Pompano Field
Mt. Providence is a subsea well drilled in the Mississippi Canyon Block 028 (MC 028) at a water depth of approximately 1,850 ft.
Gross production from Mt. Providence is 3,850 Boe/d (3,370 Boe/d net of royalties), of which 88% is oil with an API gravity of 33º
Talos owns 100% of the Mt. Providence subsea well, which is tied into the existing Pompano Phase II subsea template located approximately 5 miles from the Pompano platform, which is also owned 100% owned by Talos
The expected IRR from Mt. Providence is 93%, assuming a $60 per barrel of oil flat
The Pompano field began production in 1994 and has produced over 190 million barrels of oil equivalent ("MMBoe") of gross production to date. Mt. Providence is one of several drilling locations being developed through our team's efforts utilizing sophisticated reservoir modeling and recent vintage wide azimuth 3D seismic that has undergone proprietary reprocessing
Production from Pompano, including the Mt. Providence well, is sold on the High Louisiana Sweet ("HLS") market, which currently sells approximately at $4.00 per barrel premium to WTI pricing
ABOUT TALOS ENERGY
Talos is a technically driven independent exploration and production company with operations in the United StatesGulf of Mexico and in the shallow waters off the coast of Mexico. Our focus in the United StatesGulf of Mexico is the exploration, acquisition, exploitation and development of shallow and deepwater assets near existing infrastructure. The shallow waters off the coast of Mexico provide us high impact exploration opportunities in an emerging basin. The Company's website is located at www.talosenergy.com.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This communication may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included in this communication, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this communication, the words "could," "believe," "anticipate," "intend," "estimate," "expect," "project" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events.
We caution you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, potential adverse reactions or changes to business or employee relationships resulting from the business combination between Talos Energy LLC and Stone Energy Corporation, competitive responses to such business combination, the possibility that the anticipated benefits of such business combination are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies, litigation relating to the business combination, and other factors that may affect our future results and business, generally, including those discussed under the heading "Risk Factors" in our final consent solicitation statement/prospectus, dated April 9, 2018, filed with the Securities and Exchange Commission pursuant to Rule 424(b)(3) under the Securities Act.
Reserve engineering is a process of estimating underground accumulations of oil, natural gas and NGLs that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil, natural gas and NGLs that are ultimately recovered.
Should one or more of these risks occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, to reflect events or circumstances after the date of this communication.
Free cash flow after debt service is a supplemental non-GAAP financial measure used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines free cash flow after debt service as net cash from operations less capital expenditures, dividends and cash interest paid.