HOUSTON - Talos Energy Inc. (NYSE: NYSE:TALO), an independent energy company, has taken significant steps in its capital management strategy by updating its share repurchase program and reducing its debt.
The company repurchased approximately $43 million worth of its common stock, which equates to 3.8 million shares at an average price of $11.26 per share during the second quarter of 2024. Following this, Talos's Board of Directors approved an additional $150 million for the existing common stock repurchase program.
In addition to the stock repurchase, Talos has also decreased its borrowings under its Bank Credit Facility by $100 million, leaving $225 million outstanding and bringing its total debt to $1,475 million at the end of the second quarter.
Talos's President and CEO, Tim Duncan, commented on the company's financial maneuvers, stating that since the QuarterNorth acquisition in March 2024, Talos has repaid $325 million of debt. Duncan highlighted the company's commitment to using its free cash flow to reduce debt and achieve a long-term leverage ratio below 1.0x, while also maintaining a focus on executing its strategic plan.
The management of Talos is authorized to repurchase common stock opportunistically, which could occur in the open market, through privately negotiated transactions, or by other legal means, depending on market conditions and other factors. The share repurchase program does not commit Talos to any specific number of shares or dollar amount and can be altered, paused, or discontinued at any time.
Talos Energy is a technically driven energy company that focuses on exploration and production in the Gulf of Mexico and offshore Mexico. The company prides itself on technical expertise, safe and efficient operations, environmental responsibility, and community impact.
The information in this article is based on a press release statement from Talos Energy.
In other recent news, Talos Energy has been the subject of significant developments.
The Gulf of Mexico-focused exploration and production company has a market capitalization of approximately $2.2 billion and an enterprise value of $3.7 billion. Goldman Sachs initiated coverage on Talos Energy, giving it a Buy rating and setting a 12-month price target of $14.00. This valuation is based on a 2026 free cash flow yield methodology, with a predicted production of around 92 thousand barrels of oil equivalent per day in 2024.
On the other hand, Citi maintained a Buy rating on the company but reduced the price target to $14.50 from $16.50, following an update to their earnings estimates. The revised estimate predicts a discretionary cash flow of approximately $276.8 million for Talos Energy, slightly below the consensus of around $282.3 million.
Talos Energy has also reported a strong first quarter in 2024, with significant transactions such as the QuarterNorth acquisition and the divestment of their CCS business leading to an increase in production guidance.
The company aims for a $550 million debt reduction by the end of the year and plans to pay down its revolver debt completely by the end of 2024. Operational and cost synergies from the QuarterNorth acquisition are expected, with significant savings anticipated in 2025.
InvestingPro Insights
Talos Energy Inc. (NYSE: TALO) has made notable strides in its financial strategy, which is reflected in its recent market performance and financial metrics. According to InvestingPro Data, Talos Energy has a market capitalization of approximately $2.1 billion. Despite a challenging market, the company's stock has shown resilience with a price 64.98% of its 52-week high and closed at $11.43 in the previous session. This demonstrates a level of investor confidence in the company's long-term value proposition.
InvestingPro Tips highlight some areas of concern and potential for Talos Energy. The company operates with a significant debt burden, with a total debt of $1,475 million as of the end of the second quarter of 2024. This is a critical factor for investors to consider, especially since the company has been actively working to reduce this debt. Furthermore, analysts predict that the company will be profitable this year, which could signal an improving financial outlook and potential for growth.
InvestingPro Data also reveals that Talos Energy has a negative P/E ratio of -102.23, improving to -35.5 over the last twelve months as of Q1 2024. This suggests that while the company has not been profitable over the past year, there is an anticipated turnaround in its earnings. Additionally, the company's revenue growth on a quarterly basis for Q1 2024 stood at 33.36%, indicating a strong start to the year.
For investors seeking more comprehensive analysis and additional insights, there are 7 more InvestingPro Tips available for Talos Energy, which can be accessed at https://www.investing.com/pro/TALO. To enhance their investing experience, users can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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