10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38497

 

Talos Energy Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	82-3532642
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
333 Clay Street, Suite 3300 Houston, TX	77002
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (713) 328-3000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock	TALO	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 29, 2024, the registrant had 183,919,349 shares of common stock, $0.01 par value per share, outstanding.

TABLE OF CONTENTS

		Page
GLOSSARY		3
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		5
	PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	7
	Condensed Consolidated Balance Sheets	7
	Condensed Consolidated Statements of Operations	8
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	9
	Condensed Consolidated Statements of Cash Flows	10
	Notes to Condensed Consolidated Financial Statements	11
	Note 1 — Organization, Nature of Business and Basis of Presentation	11
	Note 2 — Acquisitions and Divestitures	12
	Note 3 — Property, Plant and Equipment	14
	Note 4 — Leases	14
	Note 5 — Financial Instruments	15
	Note 6 — Equity Method Investments	18
	Note 7 — Debt	18
	Note 8 — Asset Retirement Obligations	20
	Note 9 — Employee Benefits Plans and Share-Based Compensation	21
	Note 10 — Income Taxes	22
	Note 11 — Income (Loss) Per Share	22
	Note 12 — Related Party Transactions	23
	Note 13 — Commitments and Contingencies	23
	Note 14 — Segment Information	25
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37
	PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	39
	Signatures	42

2

GLOSSARY

The following are abbreviations and definitions of certain terms used in this document, which are commonly used in the oil and natural gas industry:

Barrel or Bbl — One stock tank barrel, or 42 United States gallons liquid volume.

Boe — One barrel of oil equivalent determined using the ratio of six Mcf of natural gas to one barrel of crude oil or condensate.

BOEM — Bureau of Ocean Energy Management.

BSEE — Bureau of Safety and Environmental Enforcement.

Boepd — Barrels of oil equivalent per day.

Btu — British thermal unit, which is the heat required to raise the temperature of a one-pound mass of water one degree Fahrenheit.

CCS — Carbon capture and sequestration.

CO2 — Carbon dioxide.

Completion — The installation of permanent equipment for the production of oil or natural gas.

Deepwater — Water depths of more than 600 feet.

Field — An area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological structural feature or stratigraphic condition.

GAAP — Accounting principles generally accepted in the United States of America.

MBbls — One thousand barrels of crude oil or other liquid hydrocarbons.

MBblpd — One thousand barrels of crude oil or other liquid hydrocarbons per day.

MBoe — One thousand barrels of oil equivalent.

MBoepd — One thousand barrels of oil equivalent per day.

Mcf — One thousand cubic feet of natural gas.

Mcfpd — One thousand cubic feet of natural gas per day.

MMBoe — One million barrels of oil equivalent.

MMBtu — One million British thermal units.

MMcf — One million cubic feet of natural gas.

MMcfpd — One million cubic feet of natural gas per day.

NGL — Natural gas liquid. Hydrocarbons which can be extracted from wet natural gas and become liquid under various combinations of increasing pressure and lower temperature. NGLs consist primarily of ethane, propane, butane and natural gasoline.

NYMEX — The New York Mercantile Exchange.

NYMEX Henry Hub — Henry Hub is the major exchange for pricing natural gas futures on the New York Mercantile Exchange. It is frequently referred to as the Henry Hub index.

OPEC — Organization of Petroleum Exporting Countries.

Proved reserves — Proved reserves are those quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs and under existing economic conditions, operating methods and government regulations — prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

Proved undeveloped reserves — In general, proved reserves that are expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion. The SEC provides a complete definition of undeveloped oil and gas reserves in Rule 4-10(a)(31) of Regulation S-X.

SEC — The U.S. Securities and Exchange Commission.

3

SEC pricing — The unweighted average first-day-of-the-month commodity price for crude oil or natural gas for each month within the 12-month period prior to the end of the reporting period, adjusted by lease for market differentials (quality, transportation, fees, energy content, and regional price differentials). The SEC provides a complete definition of prices in “Modernization of Oil and Gas Reporting” (Final Rule, Release Nos. 33-8995; 34-59192).

Shelf — Water depths of up to 600 feet.

Working interest — The operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and a share of production.

WTI or West Texas Intermediate — A light crude oil produced in the United States with an American Petroleum Institute gravity of approximately 38-40 and the sulfur content is approximately 0.3%.

4

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The information in this Quarterly Report on Form 10-Q (this “Quarterly Report”) includes “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 (the “Exchange Act”). All statements, other than statements of historical fact included in this Quarterly Report, 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 Quarterly Report, the words “will,” “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “forecast,” “may,” “objective,” “plan” 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. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events. Forward-looking statements may include statements about:

•business strategy;

•recoverable resources and reserves;

•drilling prospects, inventories, projects and programs;

•our ability to replace the reserves that we produce through drilling and property acquisitions;

•financial strategy, liquidity and capital required for our development program and other capital expenditures;

•realized oil and natural gas prices;

•risks related to future mergers and acquisitions and/or to realize the expected benefits of any such transaction;

•timing and amount of future production of oil, natural gas and NGLs;

•our hedging strategy and results;

•future drilling plans;

•availability of pipeline connections on economic terms;

•competition, government regulations, including financial assurance requirements, and legislative and political developments;

•our ability to obtain permits and governmental approvals;

•pending legal, governmental or environmental matters;

•our marketing of oil, natural gas and NGLs;

•our integration of acquisitions, including the QuarterNorth Acquisition (as defined herein), and the anticipated performance of the combined company;

•future leasehold or business acquisitions on desired terms;

•costs of developing properties;

•general economic conditions, including the impact of continued inflation and associated changes in monetary policy;

•political and economic conditions and events in foreign oil, natural gas and NGL producing countries and acts of terrorism or sabotage;

•credit markets;

•volatility in the political, legal and regulatory environments ahead of the upcoming domestic and foreign presidential elections;

•estimates of future income taxes;

•our estimates and forecasts of the timing, number, profitability and other results of wells we expect to drill and other exploration activities;

•our ongoing strategy with respect to our Zama asset;

•uncertainty regarding our future operating results and our future revenues and expenses;

5

•impact of new accounting pronouncements on earnings in future periods; and

•plans, objectives, expectations and intentions contained in this Quarterly Report that are not historical.

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; global demand for oil and natural gas; the ability or willingness of OPEC and other state-controlled oil companies (“OPEC Plus”) to set and maintain oil production levels and the impact of any such actions; the lack of a resolution to the war in Ukraine and increasing hostilities in the Middle East, and their impact on commodity markets; the impact of any pandemic, and governmental measures related thereto; lack of transportation and storage capacity as a result of oversupply, government and regulations; the effect of a possible U.S. government shutdown and resulting impact on economic conditions and delays in regulatory and permitting approvals; lack of availability of drilling and production equipment and services; adverse weather events, including tropical storms, hurricanes, winter storms and loop currents; cybersecurity threats; sustained inflation and the impact of central bank policy in response thereto; environmental risks; failure to find, acquire or gain access to other discoveries and prospects or to successfully develop and produce from our current discoveries and prospects; geologic risk; drilling and other operating risks; well control risk; regulatory changes, including the impact of financial assurance requirements; 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 competitive responses to our acquisitions and other transactions; the possibility that the anticipated benefits of our acquisitions are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of acquired assets and operations; and the other risks discussed in Part I, Item 1A. “Risk Factors” of Talos Energy Inc.’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”).

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 upward or downward 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 the risks or uncertainties described herein 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, included in this Quarterly Report 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, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.

6

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

TALOS ENERGY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

	March 31, 2024			December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	21,001		$	33,637
Accounts receivable:
Trade, net		248,892			178,977
Joint interest, net		143,801			79,337
Other, net		16,652			19,296
Assets from price risk management activities		18,753			36,152
Prepaid assets		75,776			64,387
Other current assets		16,036			10,389
Total current assets		540,911			422,175
Property and equipment:
Proved properties		9,268,050			7,906,295
Unproved properties, not subject to amortization		654,906			268,315
Other property and equipment		34,440			34,027
Total property and equipment		9,957,396			8,208,637
Accumulated depreciation, depletion and amortization		(4,383,970	)		(4,168,328	)
Total property and equipment, net		5,573,426			4,040,309
Other long-term assets:
Restricted cash		103,360			102,362
Assets from price risk management activities		5,355			17,551
Equity method investments		108,036			146,049
Other well equipment		63,507			54,277
Notes receivable, net		16,619			16,207
Operating lease assets		12,676			11,418
Other assets		10,494			5,961
Total assets	$	6,434,384		$	4,816,309
LIABILITIES AND STOCKHOLDERSʼ EQUITY
Current liabilities:
Accounts payable	$	136,833		$	84,193
Accrued liabilities		272,231			227,690
Accrued royalties		71,007			55,051
Current portion of long-term debt		—			33,060
Current portion of asset retirement obligations		71,799			77,581
Liabilities from price risk management activities		74,033			7,305
Accrued interest payable		21,106			42,300
Current portion of operating lease liabilities		3,543			2,666
Other current liabilities		46,310			48,769
Total current liabilities		696,862			578,615
Long-term liabilities:
Long-term debt		1,533,952			992,614
Asset retirement obligations		1,037,533			819,645
Liabilities from price risk management activities		3,747			795
Operating lease liabilities		18,271			18,211
Other long-term liabilities		391,834			251,278
Total liabilities		3,682,199			2,661,158
Commitments and contingencies (Note 13)
Stockholdersʼ equity:
Preferred stock; $0.01 par value; 30,000,000 shares authorized and zero shares issued or outstanding as of March 31, 2024 and December 31, 2023, respectively		—			—
Common stock; $0.01 par value; 270,000,000 shares authorized; 187,307,298 and 127,480,361 shares issued as of March 31, 2024 and December 31, 2023, respectively		1,873			1,275
Additional paid-in capital		3,257,972			2,549,097
Accumulated deficit		(460,156	)		(347,717	)
Treasury stock, at cost; 3,400,000 and 3,400,000 shares as of March 31, 2024 and December 31, 2023, respectively		(47,504	)		(47,504	)
Total stockholdersʼ equity		2,752,185			2,155,151
Total liabilities and stockholdersʼ equity	$	6,434,384		$	4,816,309

See accompanying notes.

7

TALOS ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended March 31,
	2024			2023
Revenues:
Oil	$	393,221		$	292,694
Natural gas		23,698			20,183
NGL		13,013			9,705
Total revenues		429,932			322,582
Operating expenses:
Lease operating expense		135,178			81,362
Production taxes		544			606
Depreciation, depletion and amortization		215,664			147,323
Accretion expense		26,903			19,414
General and administrative expense		69,841			63,187
Other operating (income) expense		(86,043	)		2,838
Total operating expenses		362,087			314,730
Operating income (expense)		67,845			7,852
Interest expense		(50,845	)		(37,581	)
Price risk management activities income (expense)		(87,062	)		58,937
Equity method investment income (expense)		(8,054	)		7,443
Other income (expense)		(55,896	)		6,666
Net income (loss) before income taxes		(134,012	)		43,317
Income tax benefit (expense)		21,573			46,543
Net income (loss)	$	(112,439	)	$	89,860
Net income (loss) per common share:
Basic	$	(0.71	)	$	0.85
Diluted	$	(0.71	)	$	0.84
Weighted average common shares outstanding:
Basic		158,490			105,634
Diluted		158,490			106,950

See accompanying notes.

8

TALOS ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(Unaudited)

	Common Stock				Additional Paid-In			Accumulated			Treasury Stock					Total Stockholdersʼ
	Shares Issued		Par Value		Capital			Deficit			Shares		Amount			Equity
Balance at December 31, 2022		82,570,328	$	826	$	1,699,799		$	(535,049	)		—	$	—		$	1,165,576
Equity-based compensation		—		—		7,232			—			—		—			7,232
Equity-based compensation tax withholdings		—		—		(7,378	)		—			—		—			(7,378	)
Equity-based compensation stock issuances		1,085,747		11		(11	)		—			—		—			—
Issuance of common stock for acquisitions (Note 2)		43,799,890		438		831,760			—			—		—			832,198
Purchase of treasury stock		—		—		—			—			1,900,000		(26,647	)		(26,647	)
Net income (loss)		—		—		—			89,860			—		—			89,860
Balance at March 31, 2023		127,455,965	$	1,275	$	2,531,402		$	(445,189	)		1,900,000	$	(26,647	)	$	2,060,841
Balance at December 31, 2023		127,480,361	$	1,275	$	2,549,097		$	(347,717	)		3,400,000	$	(47,504	)	$	2,155,151
Equity-based compensation		—		—		4,646			—			—		—			4,646
Equity-based compensation tax withholdings		—		—		(5,520	)		—			—		—			(5,520	)
Equity-based compensation stock issuances		977,485		10		(10	)		—			—		—			—
Issuance of common stock for acquisitions (Note 2)		24,349,452		243		322,387			—			—		—			322,630
Issuance of common stock		34,500,000		345		387,372			—			—		—			387,717
Net income (loss)		—		—		—			(112,439	)		—		—			(112,439	)
Balance at March 31, 2024		187,307,298	$	1,873	$	3,257,972		$	(460,156	)		3,400,000	$	(47,504	)	$	2,752,185

See accompanying notes.

9

TALOS ENERGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2024			2023
Cash flows from operating activities:
Net income (loss)	$	(112,439	)	$	89,860
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation, depletion, amortization and accretion expense		242,567			166,737
Amortization of deferred financing costs and original issue discount		2,598			4,148
Equity-based compensation expense		2,754			3,938
Price risk management activities (income) expense		87,062			(58,937	)
Net cash received (paid) on settled derivative instruments		(3,494	)		(12,323	)
Equity method investment (income) expense		8,054			(7,443	)
Loss (gain) on extinguishment of debt		60,256			—
Settlement of asset retirement obligations		(27,907	)		(10,113	)
Loss (gain) on sale of business		(86,940	)		—
Changes in operating assets and liabilities:
Accounts receivable		8,020			36,821
Other current assets		(5,818	)		7,735
Accounts payable		10,707			(4,894	)
Other current liabilities		(65,249	)		(116,637	)
Other non-current assets and liabilities, net		(23,745	)		(36,035	)
Net cash provided by (used in) operating activities		96,426			62,857
Cash flows from investing activities:
Exploration, development and other capital expenditures		(146,077	)		(103,962	)
Proceeds from (cash paid for) acquisitions, net of cash acquired		(916,045	)		17,617
Contributions to equity method investees		(17,519	)		(12,835	)
Investment in intangible assets		—			(7,796	)
Proceeds from sales of businesses		141,997			—
Net cash provided by (used in) investing activities		(937,644	)		(106,976	)
Cash flows from financing activities:
Issuance of common stock		387,717			—
Issuance of senior notes		1,250,000			—
Redemption of senior notes		(897,116	)		—
Proceeds from Bank Credit Facility		670,000			275,000
Repayment of Bank Credit Facility		(545,000	)		(110,000	)
Deferred financing costs		(25,505	)		(11,346	)
Other deferred payments		(672	)		—
Payments of finance lease		(4,324	)		(3,987	)
Purchase of treasury stock		—			(25,173	)
Employee stock awards tax withholdings		(5,520	)		(7,378	)
Net cash provided by (used in) financing activities		829,580			117,116
Net increase (decrease) in cash, cash equivalents and restricted cash		(11,638	)		72,997
Cash, cash equivalents and restricted cash:
Balance, beginning of period		135,999			44,145
Balance, end of period	$	124,361		$	117,142
Supplemental non-cash transactions:
Capital expenditures included in accounts payable and accrued liabilities	$	101,794		$	174,597
Supplemental cash flow information:
Interest paid, net of amounts capitalized	$	55,224		$	40,988

See accompanying notes.

10

TALOS ENERGY INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2024

(Unaudited)

Note 1 — Organization, Nature of Business and Basis of Presentation

Organization and Nature of Business

Talos Energy Inc. (the “Parent Company”) is a Delaware corporation originally incorporated on November 14, 2017. The Parent Company conducts all business operations through its operating subsidiaries, owns no operating assets and has no material operations, cash flows or liabilities independent of its subsidiaries. The Parent Company’s common stock is traded on The New York Stock Exchange under the ticker symbol “TALO.”

The Parent Company (including its subsidiaries, collectively “Talos” or the “Company”) is a technically driven independent exploration and production company focused on safely and efficiently maximizing long-term value through its operations, currently in the United States (“U.S.”) and offshore Mexico. The Company leverages decades of technical and offshore operational expertise towards the acquisition, exploration and development of assets in key geological trends that are present in many offshore basins around the world.

Basis of Presentation and Consolidation

The Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, certain information and disclosures normally included in complete financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, these financial statements include all adjustments, which unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, cash flows and changes in equity for the periods presented. The results for interim periods are not necessarily indicative of results for the entire year. The unaudited financial statements and related notes included in this Quarterly Report should be read in conjunction with the Company’s audited Consolidated Financial Statements and accompanying notes included in the 2023 Annual Report.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Segments

From January 1, 2024 through March 18, 2024, the Company had two operating segments: (i) exploration and production of oil, natural gas and NGLs (“Upstream Segment”) and (ii) CCS (“CCS Segment”), of which the Company’s only reportable segment was the Upstream Segment. Subsequent to the TLCS Divestiture (as defined herein) and sale of the Company’s entire CCS business, the Company had one operating segment. See additional information in Note 14 — Segment Information.

Summary of Significant Accounting Policies

The Company has provided a discussion of its significant accounting policies, estimates and judgments in Note 2 – Summary of Significant Accounting Policies included in the accompanying Notes to Consolidated Financial Statements in the 2023 Annual Report. The Company has not changed any of its significant accounting policies from those described in our 2023 Annual Report.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of the amount of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows (in thousands):

	March 31, 2024		December 31, 2023
Cash and cash equivalents	$	21,001	$	33,637
Restricted cash included in Other long-term assets		103,360		102,362
Total cash, cash equivalent and restricted cash	$	124,361	$	135,999

11

Note 2 — Acquisitions and Divestitures

Acquisitions — Business Combinations

Acquisitions qualifying as business combinations are accounted for under the acquisition method of accounting, which requires, among other items, that assets acquired and liabilities assumed be recognized on the Consolidated Balance Sheets at their fair values as of the acquisition date.

QuarterNorth Acquisition — The Company executed an agreement and plan of merger, dated as of January 13, 2024, by and among Talos, QuarterNorth Energy Inc. (“QuarterNorth”), Compass Star Merger Sub Inc. and the Equityholder Representatives named therein (the “QuarterNorth Merger Agreement”) to acquire QuarterNorth, a privately-held U.S. Gulf of Mexico exploration and production company (such acquisition, the “QuarterNorth Acquisition”). On March 4, 2024, the Company completed the QuarterNorth Acquisition for consideration consisting of (i) $1,247.4 million in cash and (ii) 24.3 million shares of the Company’s common stock valued at $322.6 million. The cash payment was partially funded with an upsized underwritten public offering of 34.5 million shares of the Company’s common stock, borrowings under the Bank Credit Facility and the New Senior Notes (as defined in Note 7 — Debt).

The following table summarizes the purchase price (in thousands except share and per share data):

Shares of Talos common stock		24,349,452
Talos common stock price(1)	$	13.25
Common stock value	$	322,630
Cash consideration	$	1,247,419
Total purchase price(2)	$	1,570,049

(1)Represents the closing price of the Company’s common stock on March 4, 2024, the date of the closing of the QuarterNorth Acquisition.

(2)Total purchase price net of $331.4 million cash and cash equivalents acquired at closing is $1,238.7 million.

The following table presents the preliminary allocation of the purchase price to the assets acquired and liabilities assumed, based on their fair values on March 4, 2024 (in thousands):

Cash and cash equivalents	$	331,374
Other current assets		160,978
Property and equipment		1,621,507
Other long-term assets		20,780
Current liabilities:
Current portion of asset retirement obligations		(6,748	)
Other current liabilities		(194,278	)
Long-term liabilities:
Asset retirement obligations		(192,771	)
Deferred tax liabilities		(168,481	)
Other long-term liabilities		(2,312	)
Allocated purchase price	$	1,570,049

The fair values determined for accounts receivable, accounts payable and other current assets and most current liabilities were generally equivalent to the carrying value due to their short-term nature.

The fair value of proved oil and natural gas properties as of the acquisition date is based on estimated proved oil, natural gas and NGL reserves and related discounted future net cash flows incorporating market participant assumptions. Significant inputs to the valuation include estimates of future production volumes, future operating, development and plugging and abandonment costs, future commodity prices, and a weighted average cost of capital discount rate. When estimating the fair value of proved and unproved properties, additional risk adjustments were applied to proved developed non-producing, proved undeveloped and probable reserves to reflect the relative uncertainty of each reserve class. These inputs are classified as Level 3 unobservable inputs, including the underlying commodity price assumptions which are based on the three-year NYMEX forward strip prices, escalated for inflation thereafter, and adjusted for price differentials.

The fair value of asset retirement obligations is determined by calculating the present value of estimated future cash flows related to the liabilities. The Company utilizes several assumptions, including a credit-adjusted risk-free interest rate, estimated costs of decommissioning services, estimated timing of when the work will be performed and a projected inflation rate.

The fair values of derivative instruments were estimated using a third-party industry standard pricing model which considers various inputs such as quoted forward commodity prices, discount rates, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant data.

12

The Company is still finalizing the fair value analysis related to the oil and natural gas properties, other well equipment, asset retirement obligations assumed, certain contingent liabilities and deferred tax liabilities arising from the assets acquired and liabilities assumed. The preliminary purchase price allocation will be subject to further refinement as the Company continues to refine its estimates and assumptions based on further information available at the acquisition date. These refinements may result in material changes to the estimated fair value of assets acquired and liabilities assumed. The Company anticipates finalizing the determination of fair values by December 31, 2024.

The Company incurred approximately $21.8 million of acquisition-related costs in connection with the QuarterNorth Acquisition exclusive of severance expense, of which $18.8 million was recognized during the three months ended March 31, 2024 and $3.0 million was recognized for the year ended December 31, 2023. These costs were reflected in “General and administrative expense” on the Condensed Consolidated Statements of Operations except for $4.9 million of fees associated with an unutilized bridge loan that was included in “Interest expense” on the Condensed Consolidated Statements of Operations during the three months ended March 31, 2024. Additionally, the Company incurred $14.2 million in severance expense in connection with the QuarterNorth Acquisition for the three months ended March 31, 2024. See Note 9 — Employee Benefits Plans and Share-Based Compensation for additional discussion.

The following table presents revenue and net income attributable to the QuarterNorth Acquisition for the period from March 4, 2024 to March 31, 2024:

	Three Months Ended March 31, 2024
Revenue	$	43,949
Net income (loss)	$	6,749

Pro Forma Financial Information (Unaudited) — The following supplemental pro forma financial information (in thousands, except per common share amounts), presents the condensed consolidated results of operations for the three months ended March 31, 2024 and 2023 as if the QuarterNorth Acquisition had occurred on January 1, 2023. The unaudited pro forma information was derived from historical statements of operations of the Company and QuarterNorth adjusted to include (i) depletion expense applied to the adjusted basis of the oil and natural gas properties acquired, (ii) interest expense to reflect borrowings under the Bank Credit Facility and New Senior Notes, (iii) general and administrative expense adjusted for transaction related costs incurred (including severance), (iv) weighted average basic and diluted shares of common stock outstanding from the issuance of 24.3 million shares of common stock to QuarterNorth and (v) weighted average basic and diluted shares of common stock outstanding from the issuance of 34.5 million shares of common stock from the upsized underwritten public offering in January 2024 that partially funded the cash portion of the QuarterNorth Acquisition. Supplemental pro forma earnings for the three months ended March 31, 2023 were adjusted to include $31.7 million of general and administrative expenses. Supplemental pro forma earnings for the three months ended March 31, 2024 were adjusted to exclude $25.0 million of general and administrative expenses. This information does not purport to be indicative of results of operations that would have occurred had the QuarterNorth Acquisition occurred on January 1, 2023, nor is such information indicative of any expected future results of operations.

	Three Months Ended March 31,
	2024			2023
Revenue	$	557,201		$	482,951
Net income (loss)	$	(110,459	)	$	74,320
Basic net income (loss) per common share	$	(0.60	)	$	0.45
Diluted net income (loss) per common share	$	(0.60	)	$	0.45

EnVen Acquisition — On February 13, 2023, the Company completed the acquisition of EnVen Energy Corporation (“EnVen”), a private operator in the Deepwater U.S. Gulf of Mexico (the “EnVen Acquisition,” and the merger agreement related thereto, the “EnVen Merger Agreement”) for consideration consisting of (i) $207.3 million in cash, (ii) 43.8 million shares of the Company’s common stock valued at $832.2 million and (iii) the effective settlement of an accounts receivable balance of $8.4 million. No gain or loss was recognized on settlement as the payable was effectively settled at the recorded amount. The cash payment was partially funded with borrowings under the Bank Credit Facility.

The Company incurred approximately $21.8 million of acquisition-related costs in connection with the EnVen Acquisition exclusive of severance expense, of which $12.6 million was recognized during the three months ended March 31, 2023 and reflected in “General and administrative expense” on the Condensed Consolidated Statements of Operations. Additionally, the Company incurred $22.6 million in severance expense in connection with the EnVen Acquisition for the three months ended March 31, 2023.

The following table presents revenue and net income (loss) attributable to the EnVen Acquisition for the period from February 13, 2023 to March 31, 2023 (in thousands):

	Three Months Ended March 31, 2023
Revenue	$	62,059
Net income (loss)	$	(6,090	)

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Pro Forma Financial Information (Unaudited) — The following supplemental pro forma financial information (in thousands, except per common share amounts), presents the condensed consolidated results of operations for the three months ended March 31, 2023 as if the EnVen Acquisition had occurred on January 1, 2022. The unaudited pro forma information was derived from historical statements of operations of the Company and EnVen adjusted to include (i) depletion expense applied to the adjusted basis of the oil and natural gas properties acquired, (ii) interest expense to reflect borrowings under the Bank Credit Facility and to adjust the amortization of the premium of the 11.75% Notes (as defined in Note 7 — Debt), (iii) general and administrative expense adjusted for transaction related costs incurred (including severance), (iv) other income (expense) to adjust the accretion of the discount on the two notes receivable to settle future asset retirement obligations and (v) weighted average basic and diluted shares of common stock outstanding from the issuance of 43.8 million shares of common stock to EnVen. Supplemental pro forma earnings for the three months ended March 31, 2023 were adjusted to exclude $62.6 million of general and administrative expenses. This information does not purport to be indicative of results of operations that would have occurred had the EnVen Acquisition occurred on January 1, 2022, nor is such information indicative of any expected future results of operations (in thousands, except for the per share data).

	Three Months Ended March 31, 2023
Revenue	$	374,625
Net income (loss)	$	118,090
Basic net income (loss) per common share	$	0.93
Diluted net income (loss) per common share	$	0.92

Divestiture

Talos Low Carbon Solutions Divestiture — On March 18, 2024, the Company entered into a definitive agreement relating to and subsequently completed the sale of its wholly owned subsidiary, Talos Low Carbon Solutions LLC to TotalEnergies E&P USA, Inc. for a purchase price of $125.0 million plus customary reimbursements and adjustments, combined totaling approximately $142.0 million (the “TLCS Divestiture”). The TLCS Divestiture includes the Company’s entire CCS business including its equity investments in three projects along the U.S. Gulf Coast: Bayou Bend CCS LLC, Harvest Bend CCS LLC, and Coastal Bend CCS LLC. A gain of $86.9 million was recognized on the TLCS Divestiture during the three months ended March 31, 2024, which is presented as “Other operating income (expense)” on the Condensed Consolidated Statements of Operations.

The Company incurred approximately $6.7 million of costs in connection with the TLCS Divestiture exclusive of severance expense, of which $6.1 million was recognized during the during the three months ended March 31, 2024 and reflected in “General and administrative expense” on the Condensed Consolidated Statements of Operations. Additionally, the Company incurred $3.7 million in severance expense in connection with the TLCS Divestiture for the three months ended March 31, 2024. See Note 9 — Employee Benefits Plans and Share-Based Compensation for additional discussion.

Note 3 — Property, Plant and Equipment

Proved Properties

During the three months ended March 31, 2024 and 2023, the Company’s ceiling test computations did not result in a write-down of its U.S. oil and natural gas properties. At March 31, 2024, the Company’s ceiling test computation was based on SEC pricing of $78.19 per Bbl of oil, $2.50 per Mcf of natural gas and $17.08 per Bbl of NGLs.

Note 4 — Leases

The Company has operating leases principally for office space, drilling rigs, compressors and other equipment necessary to support the Company’s operations. Additionally, the Company has a finance lease related to the use of the Helix Producer I (the “HP-I”), a dynamically positioned floating production facility that interconnects with the Phoenix Field through a production buoy. The HP-I is utilized in the Company’s oil and natural gas development activities and the right-of-use asset was capitalized and included in proved property and depleted as part of the full cost pool. Once items are included in the full cost pool, they are indistinguishable from other proved properties. The capitalized costs within the full cost pool are amortized over the life of the total proved reserves using the unit-of-production method, computed quarterly. Costs associated with the Company’s leases are either expensed or capitalized depending on how the underlying asset is utilized.

14

The lease costs described below are presented on a gross basis and do not represent the Company’s net proportionate share of such amounts. A portion of these costs have been or may be billed to other working interest owners. The Company’s share of these costs is included in property and equipment, lease operating expense or general and administrative expense, as applicable. The components of lease costs were as follows (in thousands):

	Three Months Ended March 31,
	2024			2023
Finance lease cost - interest on lease liabilities	$	3,372		$	3,708
Operating lease cost, excluding short-term leases(1)		897			908
Short-term lease cost(2)		12,652			32,985
Variable lease cost(3)		616			363
Variable and fixed sublease income		(359	)		—
Total lease cost	$	17,178		$	37,964

(1)Operating lease cost reflect a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a straight-line basis.

(2)Short-term lease costs are reported at gross amounts and primarily represent costs incurred for drilling rigs, most of which are short-term contracts not recognized as a right-of-use asset and lease liability on the Condensed Consolidated Balance Sheets.

(3)Variable lease costs primarily represent differences between minimum payment obligations and actual operating charges incurred by the Company related to its long-term leases.

The present value of the fixed lease payments recorded as the Company’s right-of-use (“ROU”) assets and lease liabilities, adjusted for initial direct costs and incentives were as follows (in thousands):

	March 31, 2024		December 31, 2023
Operating leases:
Operating lease assets	$	12,676	$	11,418
Current portion of operating lease liabilities	$	3,543	$	2,666
Operating lease liabilities		18,271		18,211
Total operating lease liabilities	$	21,814	$	20,877
Finance leases:
Proved properties	$	166,261	$	166,261
Other current liabilities	$	18,279	$	17,834
Other long-term liabilities		126,461		131,230
Total finance lease liabilities	$	144,740	$	149,064

The table below presents the supplemental cash flow information related to leases (in thousands):

	Three Months Ended March 31,
	2024		2023
Operating cash outflow from finance leases	$	3,372	$	3,708
Operating cash outflow from operating leases	$	1,217	$	1,265
ROU assets obtained in exchange for new operating lease liabilities(1)	$	1,601	$	12,971

(1)See QuarterNorth Acquisition and EnVen Acquisition each in Note 2 — Acquisitions and Divestitures.

Note 5 — Financial Instruments

As of March 31, 2024 and December 31, 2023, the carrying amounts of cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate their fair values because they are highly liquid or due to the short-term nature of these instruments.

15

Debt Instruments

The following table presents the carrying amounts, net of discount, premium and deferred financing costs, and estimated fair values of the Company’s debt instruments (in thousands):

	March 31, 2024				December 31, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
9.000% Second-Priority Senior Secured Notes – due February 2029	$	609,107	$	663,894	$	—	$	—
9.375% Second-Priority Senior Secured Notes – due February 2031	$	608,985	$	666,175	$	—	$	—
12.00% Second-Priority Senior Secured Notes – due January 2026	$	—	$	—	$	601,353	$	655,130
11.75% Senior Secured Second Lien Notes – due April 2026	$	—	$	—	$	234,221	$	233,410
Bank Credit Facility – matures March 2027	$	315,860	$	325,000	$	190,100	$	200,000

The carrying value of the senior notes are adjusted for discount, premium and deferred financing costs. Fair value is estimated (representing a Level 1 fair value measurement) using quoted secondary market trading prices and, where such prices are not available, other observable (Level 2) inputs are used such as quoted prices for similar liabilities in the active market.

The carrying amount of the Company’s bank credit facility, as amended and restated (the “Bank Credit Facility”), is presented net of deferred financing costs. The fair value of the Bank Credit Facility is estimated based on the outstanding borrowings since it is secured by the Company’s reserves and the interest rates are variable and reflective of market rates (representing a Level 2 fair value measurement).

Oil and Natural Gas Derivatives

The Company attempts to mitigate a portion of its commodity price risk and stabilize cash flows associated with sales of oil and natural gas production. The Company is currently utilizing oil and natural gas swaps, costless collars and put options. Swaps are contracts where the Company either receives or pays depending on whether the oil or natural gas floating market price is above or below the contracted fixed price. Costless collars consist of a purchased put option and a sold call option with no net premiums paid to or received from counterparties. Typical collar contracts require payments by the Company if the NYMEX average closing price is above the ceiling price or payments to the Company if the NYMEX average closing price is below the floor price (“two-way collar”). Put options give the owner the right but not the obligation, to sell the underlying commodity at a specified price (i.e. strike price) within a specific period. Certain of the Company’s put options have a deferred premium, which is presented net of the derivative asset. For the deferred premium puts, the Company agrees to pay a premium to the counterparty at the time of settlement. At settlement, if the applicable index price is below the strike price of the put, the Company receives the difference between the strike price and the applicable index price multiplied by the contract volumes less the premium. If the applicable index price settles at or above the strike price of the put, the Company pays only the premium at settlement.

The following table presents the impact that derivatives, not designated as hedging instruments, had on its Condensed Consolidated Statements of Operations (in thousands):

	Three Months Ended March 31,
	2024			2023
Net cash received (paid) on settled derivative instruments	$	(3,494	)	$	(12,323	)
Unrealized gain (loss)		(83,568	)		71,260
Price risk management activities income (expense)	$	(87,062	)	$	58,937

The following tables reflect the contracted average daily volumes and weighted average prices under the terms of the Company's derivative contracts as of March 31, 2024:

Swap Contracts
Production Period	Settlement Index	Volumes		Swap Price
Crude oil:		(Bbls)		(per Bbl)
April 2024 – December 2024	NYMEX WTI CMA		28,147	$	73.47
January 2025 – December 2025	NYMEX WTI CMA		19,679	$	73.19
Natural gas:		(MMBtu)		(per MMBtu)
April 2024 – December 2024	NYMEX Henry Hub		34,455	$	2.91
January 2025 – December 2025	NYMEX Henry Hub		38,644	$	3.60

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Two-Way Collar Contracts
Production Period	Settlement Index	Volumes		Floor Price		Ceiling Price
Crude oil:		(Bbls)		(per Bbl)		(per Bbl)
April 2024 – December 2024	NYMEX WTI CMA		1,000	$	70.00	$	75.00
January 2025 – March 2025	NYMEX WTI CMA		3,000	$	65.00	$	84.35
Natural gas:		(MMBtu)		(per MMBtu)		(per MMBtu)
April 2024 – December 2024	NYMEX Henry Hub		10,000	$	4.00	$	6.90

Long Puts
Production Period	Settlement Index	Volumes		Strike Price		Deferred Premium Price
Crude oil:		(Bbls)		(per Bbl)		(per Bbl)
April 2024 – December 2024	NYMEX WTI CMA		4,000	$	70.00	$	(6.28	)
Natural gas:		(MMBtu)		(per MMBtu)		(per MMBtu)
May 2024 – December 2024	NYMEX Henry Hub		13,660	$	2.90	$	(0.40	)

Swaps with Sold Puts
Production Period	Settlement Index	Volumes		Swap Price		Strike Price
Crude oil:		(Bbls)		(per Bbl)		(per Bbl)
April 2024 – December 2024	NYMEX WTI CMA		1,000	$	72.20	$	60.00

The following tables provide additional information related to financial instruments measured at fair value on a recurring basis (in thousands):

	March 31, 2024
	Level 1		Level 2			Level 3		Total
Assets:
Oil and natural gas derivatives	$	—	$	24,108		$	—	$	24,108
Liabilities:
Oil and natural gas derivatives		—		(77,780	)		—		(77,780	)
Total net asset (liability)	$	—	$	(53,672	)	$	—	$	(53,672	)

	December 31, 2023
	Level 1		Level 2			Level 3		Total
Assets:
Oil and natural gas derivatives	$	—	$	53,703		$	—	$	53,703
Liabilities:
Oil and natural gas derivatives		—		(8,100	)		—		(8,100	)
Total net asset (liability)	$	—	$	45,603		$	—	$	45,603

Financial Statement Presentation

Derivatives are classified as either current or non-current assets or liabilities based on their anticipated settlement dates. Although the Company has master netting arrangements with its counterparties, the Company presents its derivative financial instruments on a gross basis in its Condensed Consolidated Balance Sheets. The following table presents the fair value of derivative financial instruments as well as the potential effect of netting arrangements on the Company's recognized derivative asset and liability amounts (in thousands):

	March 31, 2024				December 31, 2023
	Assets		Liabilities		Assets		Liabilities
Oil and natural gas derivatives:
Current	$	18,753	$	74,033	$	36,152	$	7,305
Non-current		5,355		3,747		17,551		795
Total gross amounts presented on balance sheet		24,108		77,780		53,703		8,100
Less: Gross amounts not offset on the balance sheet		18,601		18,601		8,100		8,100
Net amounts	$	5,507	$	59,179	$	45,603	$	—

17

Credit Risk

The Company is subject to the risk of loss on its financial instruments as a result of nonperformance by counterparties pursuant to the terms of their contractual obligations. The Company has entered into International Swaps and Derivative Association agreements with counterparties to mitigate this risk. The Company also maintains credit policies with regard to its counterparties to minimize overall credit risk. These policies require (i) the evaluation of potential counterparties’ financial condition to determine their credit worthiness; (ii) the regular monitoring of counterparties’ credit exposures; (iii) the use of contract language that affords the Company netting or set off opportunities to mitigate exposure risk; and (iv) potentially requiring counterparties to post cash collateral, parent guarantees, or letters of credit to minimize credit risk. The Company’s assets and liabilities from commodity price risk management activities at March 31, 2024 represent derivative instruments from nine counterparties; all of which are registered swap dealers that have an “investment grade” (minimum Standard & Poor’s rating of BBB- or better) credit rating, and eight of which are parties under the Company’s Bank Credit Facility. The Company enters into derivatives directly with these counterparties and, subject to the terms of the Company’s Bank Credit Facility, is not required to post collateral or other securities for credit risk in relation to the derivative activities. Had the Company’s counterparties failed to perform under existing commodity derivative contracts the maximum loss at March 31, 2024 would have been $5.5 million.

Note 6 — Equity Method Investments

The following table presents the Company’s investments in unconsolidated affiliates by segment as of the dates indicated below. The Company accounts for these investments using the equity method of accounting.

	Ownership Interest at
	March 31, 2024			March 31, 2024		December 31, 2023
Upstream:
Talos Energy Mexico 7, S. de R.L. de C.V. (“Talos Mexico”)		50.1	%	$	106,922	$	107,259
SP 49 Pipeline LLC		33.3	%		1,114		861
CCS(1):
Bayou Bend CCS LLC		—	%		—		28,183
Harvest Bend CCS LLC		—	%		—		9,746
Coastal Bend CCS LLC		—	%		—		—
Total Equity Method Investments				$	108,036	$	146,049

(1)See TLCS Divestiture discussion in Note 2 — Acquisitions and Divestitures.

Talos Mexico is a variable interest entity. The Company’s maximum exposure to loss as a result of its involvement with Talos Mexico is the carrying amount of its investment.

Note 7 — Debt

A summary of the detail comprising the Company’s debt and the related book values for the respective periods presented is as follows (in thousands):

	March 31, 2024			December 31, 2023
9.000% Second-Priority Senior Secured Notes – due February 2029	$	625,000		$	—
9.375% Second-Priority Senior Secured Notes – due February 2031		625,000			—
12.00% Second-Priority Senior Secured Notes – due January 2026		—			638,541
11.75% Senior Secured Second Lien Notes – due April 2026		—			227,500
Bank Credit Facility – matures March 2027(1)		325,000			200,000
Total debt, before discount, premium and deferred financing cost		1,575,000			1,066,041
Unamortized discount, premium and deferred financing cost, net		(41,048	)		(40,367	)
Total debt(2)		1,533,952			1,025,674
Less: Current portion of long-term debt		—			33,060
Long-term debt	$	1,533,952		$	992,614

(1)As of March 31, 2024, the Company had outstanding borrowings at a weighted average interest rate of 8.42%.

(2)As of March 31, 2024, the Company was in compliance with all debt covenants.

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9.000% Second-Priority Senior Secured Notes—due February 2029

The 9.000% Second-Priority Senior Secured Notes due 2029 (the “9.000% Notes”) were issued pursuant to an indenture dated February 7, 2024, by and among the Company, Talos Production Inc. (the “Issuer”), the subsidiary guarantors party thereto (together with the Company, the “Guarantors”) and Wilmington Trust, National Association, as trustee and collateral agent. The 9.000% Notes are secured on a second-priority senior secured basis by liens on substantially the same collateral as the collateral securing the Issuer’s existing first-priority obligations under its Bank Credit Facility. The 9.000% Notes rank equally in right of payment with all of the Issuer’s and the Guarantors’ existing and future senior obligations, are senior in right of payment to any obligations of the Issuer and the Guarantors future debt that is, by its term, expressly subordinated in right of payment to the 9.000% Notes and, to the extent of the value of the collateral, are effectively senior to all existing and future unsecured obligations of the Issuer and the Guarantors (other than the Company) and any future obligations of the Issuer and the Guarantors that are secured by the collateral on a junior-priority basis. The 9.000% Notes are effectively pari passu with all of the Issuer’s and the Guarantors’ existing and future obligations that are secured by the collateral on a second-priority basis including the 9.375% Notes (as defined below) and are effectively junior to any existing and future obligations of the Issuer and the Guarantors that are secured by the collateral on a senior-priority basis to the 9.000% Notes including indebtedness under the Bank Credit Facility. The 9.000% Notes mature on February 1, 2029 and have interest payable semi-annually each February 1 and August 1, commencing August 1, 2024.

At any time prior to February 1, 2026, the Company may redeem up to 40% of the principal amount of the 9.000% Notes at a redemption rate of 109.00% of the principal amount plus accrued and unpaid interest. At any time prior to February 1, 2026, the Company may also redeem some or all of the 9.000% Notes, plus a “make-whole premium,” together with accrued and unpaid interest, if any, to, but excluding, the date of redemption. Thereafter, the Company may redeem all or a portion of the 9.000% Notes in whole at any time or in part from time to time at the following redemption prices (expressed as percentages of the principal amount) plus accrued and unpaid interest if redeemed during the period commencing on February 1 of the years set forth below:

Period	Redemption Price
2026		104.500	%
2027		102.250	%
2028 and thereafter		100.000	%

As of March 31, 2024, the Company has incurred debt issuance costs of $16.2 million related to the 9.000% Notes issued as part of the debt offering that partially funded the cash portion of the QuarterNorth Acquisition. The debt issue costs reduced the proceeds from the debt issued. See Note 2 — Acquisitions and Divestitures for further discussion on the QuarterNorth Acquisition.

9.375% Second-Priority Senior Secured Notes—due February 2031

The 9.375% Second-Priority Senior Secured Notes due 2031 (the “9.375% Notes” and, together with the 9.000% Notes, the “New Senior Notes”) were issued pursuant to an indenture dated February 7, 2024, by and among the Company, the Issuer, the Guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent. The 9.375% Notes are secured on a second-priority senior secured basis by liens on substantially the same collateral as the collateral securing the Issuer’s existing first-priority obligations under its Bank Credit Facility. The 9.375% Notes rank equally in right of payment with all of the Issuer’s and the Guarantors’ existing and future senior obligations, are senior in right of payment to any obligations of the Issuer and the Guarantors future debt that is, by its term, expressly subordinated in right of payment to the 9.375% Notes and, to the extent of the value of the collateral, are effectively senior to all existing and future unsecured obligations of the Issuer and the Guarantors (other than the Company) and any future obligations of the Issuer and the Guarantors that are secured by the collateral on a junior-priority basis. The 9.375% Notes are effectively pari passu with all of the Issuer’s and the Guarantors’ existing and future obligations that are secured by the collateral on a second-priority basis including the 9.000% Notes and are effectively junior to any existing and future obligations of the Issuer and the Guarantors that are secured by the collateral on a senior-priority basis to the 9.375% Notes including indebtedness under the Bank Credit Facility. The 9.375% Notes mature on February 1, 2031 and have interest payable semi-annually each February 1 and August 1, commencing August 1, 2024.

At any time prior to February 1, 2027, the Company may redeem up to 40% of the principal amount of the 9.375% Notes at a redemption rate of 109.375% of the principal amount plus accrued and unpaid interest. At any time prior to February 1, 2027, the Company may also redeem some or all of the 9.375% Notes, plus a “make-whole premium,” together with accrued and unpaid interest, if any, to, but excluding, the date of redemption. Thereafter, the Company may redeem all or a portion of the 9.375% Notes in whole at any time or in part from time to time at the following redemption prices (expressed as percentages of the principal amount) plus accrued and unpaid interest if redeemed during the period commencing on February 1 of the years set forth below:

Period	Redemption Price
2027		104.688	%
2028		102.344	%
2029 and thereafter		100.000	%

19

As of March 31, 2024, the Company has incurred debt issuance costs of $16.2 million related to the 9.375% Notes issued as part of the debt offering that partially funded the cash portion of the QuarterNorth Acquisition. The debt issue costs reduced the proceeds from the debt issued. See Note 2 — Acquisitions and Divestitures for further discussion on the QuarterNorth Acquisition.

12.00% Second-Priority Senior Secured Notes

On February 7, 2024, the Company redeemed $638.5 million aggregate principal amount of the 12.00% Second-Priority Senior Secured Notes due 2026 (the “12.00% Notes”) at 103.000% plus accrued and unpaid interest using the proceeds from the issuance of the New Senior Notes. The debt redemption resulted in a loss on extinguishment of debt of $54.9 million, which is presented as “Other income (expense)” on the Condensed Consolidated Statements of Operations.

11.75% Senior Secured Second Lien Notes

The Company redeemed $227.5 million aggregate principal amount of the 11.75% Senior Secured Second Lien Notes due 2026 (the “11.75% Notes”) at 102.938% plus accrued and unpaid interest using the proceeds from the issuance of the New Senior Notes. On February 7, 2024, the Company irrevocably deposited funds with the trustee sufficient to satisfy and discharge the 11.75% Notes until redeemed on April 15, 2024 with the funds deposited with the trustee. As a result, the transferred assets and long-term debt were derecognized from the balance sheet as of February 7, 2024. On April 15, 2024, the 11.75% Notes were redeemed using the funds irrevocably deposited in the trust with the trustee on February 7, 2024. The debt redemption resulted in a loss on extinguishment of debt of $5.4 million, which is presented as “Other income (expense)” on the Condensed Consolidated Statements of Operations.

Bank Credit Facility

The Company maintains the Bank Credit Facility with a syndicate of financial institutions. The Bank Credit Facility provides for the determination of the borrowing base based on the Company’s proved producing reserves and a portion of the Company's proved undeveloped reserves. The borrowing base is redetermined by the lenders at least semi-annually during the second quarter and fourth quarter of each year. On January 13, 2024, the Company entered into the Tenth Amendment to Credit Agreement (the “Tenth Amendment”). The Tenth Amendment, among other things, (i) permitted the incurrence of additional indebtedness in order to fund the QuarterNorth Acquisition, with such indebtedness excluded from any reduction of the borrowing base that would otherwise result from such incurrence, (ii) reaffirmed the borrowing base at approximately $1.1 billion and (iii) reaffirmed commitments at $965.0 million effective upon the amendment effective date.

Note 8 — Asset Retirement Obligations

The asset retirement obligations included in the Condensed Consolidated Balance Sheets in current and non-current liabilities, and the changes in that liability were as follows (in thousands):

Asset retirement obligations at December 31, 2023	$	897,226
Obligations assumed(1)		199,519
Obligations incurred		36
Obligations settled		(27,907	)
Accretion expense		26,903
Changes in estimate		13,555
Asset retirement obligations at March 31, 2024	$	1,109,332
Less: Current portion at March 31, 2024		71,799
Long-term portion at March 31, 2024	$	1,037,533

(1)Assumed in connection with the QuarterNorth Acquisition. See further discussion in Note 2 — Acquisitions and Divestitures.

At March 31, 2024, the Company has (1) restricted cash of $103.4 million held in escrow and (2) two notes receivable with an aggregated face value of $66.2 million to settle future asset retirement obligations. A discussion of these assets is included in the accompanying Notes to the Consolidated Financial Statements in the 2023 Annual Report.

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Note 9 — Employee Benefits Plans and Share-Based Compensation

Severance

The following table summarizes severance accrual activity in connection the EnVen Acquisition, QuarterNorth Acquisition and TLCS Divestiture included in “Other current liabilities” and “Other long-term liabilities” on the Condensed Consolidated Balance Sheets as of March 31, 2024 (in thousands):

Severance accrual at December 31, 2023	$	6,295
Accrual additions		17,914
Benefit payments		(10,258	)
Severance accrual at March 31, 2024		13,951
Less: Current portion at March 31, 2024		13,876
Long-term portion at March 31, 2024	$	75

The above table includes involuntary termination benefits that are being provided pursuant to a one-time benefit arrangement that is being spread over the future service period through the termination date. The Company expects to incur an additional $7.4 million in severance expense related to the QuarterNorth Acquisition. Involuntary termination benefits are also being provided pursuant to contractual termination benefits required by the terms of existing employment agreements. Severance costs are reflected in “General and administrative expense” on the Condensed Consolidated Statements of Operations.

Long Term Incentive Plans

Restricted Stock Units (“RSUs”) — The following table summarizes RSU activity under the Talos Energy Inc. 2021 Long Term Incentive Plan (the “2021 LTIP”) for the three months ended March 31, 2024:

	Restricted Stock Units			Weighted Average Grant Date Fair Value
Unvested RSUs at December 31, 2023		2,306,361		$	14.89
Granted		1,435,516		$	13.27
Vested		(1,357,605	)	$	13.56
Forfeited		(41,691	)	$	15.14
Unvested RSUs at March 31, 2024(1)		2,342,581		$	14.66

(1)As of March 31, 2024, 32,213 of the unvested RSUs were accounted for as liability awards in “Accrued liabilities” on the Condensed Consolidated Balance Sheets.

Performance Share Units (“PSUs”) — The following table summarizes PSU activity under the 2021 LTIP for the three months ended March 31, 2024:

	Performance Share Units			Weighted Average Grant Date Fair Value
Unvested PSUs at December 31, 2023		1,016,649		$	21.30
Forfeited		(48,995	)	$	20.16
Unvested PSUs at March 31, 2024		967,654		$	21.36

Share-based Compensation Costs

Share-based compensation costs associated with RSUs, PSUs and other awards are reflected as “General and administrative expense,” on the Condensed Consolidated Statements of Operations, net amounts capitalized to “Proved Properties,” on the Condensed Consolidated Balance Sheets. Because of the non-cash nature of share-based compensation, the expensed portion of share-based compensation is added back to net income in arriving at “Net cash provided by (used in) operating activities” on the Condensed Consolidated Statements of Cash Flows.

The following table presents the amount of costs expensed and capitalized (in thousands):

	Three Months Ended March 31,
	2024		2023
Share-based compensation costs	$	4,615	$	7,191
Less: Amounts capitalized to oil and gas properties		1,861		3,253
Total share-based compensation expense	$	2,754	$	3,938

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Note 10 — Income Taxes

The Company is a corporation that is subject to U.S. federal, state and foreign income taxes.

For the three months ended March 31, 2024, the Company recognized an income tax benefit of $21.6 million for an effective tax rate of 16.1%. The Company’s effective tax rate of 16.1% is different than the U.S. federal statutory income tax rate of 21% primarily due to permanent differences. For the three months ended March 31, 2023, the Company recognized an income tax benefit of $46.5 million for an effective tax rate of -107.4%. The Company’s effective tax rate of -107.4% is different than the U.S. federal statutory income tax rate of 21% primarily due to a non-cash benefit discrete item of $54.9 million related to the partial release of its valuation allowance on its federal deferred tax assets not subject to separate return limitations. The release of the valuation allowance was a result of the deferred tax liabilities acquired with the EnVen Acquisition.

The Company evaluates and updates the estimated annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. Consequently, based upon the mix and timing of the Company’s actual earnings compared to annual projections, the effective tax rate may vary quarterly and may make quarterly comparisons not meaningful. The quarterly income tax provision is generally comprised of tax expense on income or benefit on loss at the most recent estimated annual effective tax rate. The tax effect of discrete items is recognized in the period in which they occur at the applicable statutory rate.

Deferred income tax assets and liabilities are recorded related to net operating losses and temporary differences between the book and tax basis of assets and liabilities expected to produce deductions and income in the future. The deferred tax asset estimates are subject to revision, either up or down, in future periods based on new facts or circumstances. The Company reduces deferred tax assets by a valuation allowance when, based on estimates, it is more likely than not that a portion of those assets will not be realized in a future period. In evaluating the Company’s valuation allowance, the Company considers cumulative losses, the reversal of existing temporary differences, the existence of taxable income in carryback years, tax optimization planning and future taxable income for each of its taxable jurisdictions. The Company assesses the realizability of its deferred tax assets quarterly; changes to the Company’s assessment of its valuation allowance in future periods could materially impact its results of operations. The Company’s valuation allowance primarily relates to various state operating loss carryforwards. A deferred tax liability of $240.6 million and $92.2 million is included in “Other long-term liabilities” on the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023, respectively.

QuarterNorth Acquisition

On March 4, 2024, the Company completed the QuarterNorth Acquisition, which is further discussed in Note 2 — Acquisitions and Divestitures. The Company recognized a net deferred tax liability of $168.5 million in its purchase price allocation as of the acquisition date to reflect differences between tax basis and the fair value of QuarterNorth’s assets acquired and liabilities assumed. The deferred tax balance is based on preliminary calculations and on information available to management at the time such estimates were made. The Company recorded a current tax payable of $11.9 million related to QuarterNorth’s 2023 U.S. federal income tax liability, which is included in “Accounts payable” on the Condensed Consolidated Balance Sheets.

Note 11 — Income (Loss) Per Share

Basic earnings per common share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Except when the effect would be antidilutive, diluted earnings per common share includes the impact of RSUs and PSUs.

The following table presents the computation of the Company’s basic and diluted income (loss) per share were as follows (in thousands, except for the per share amounts):

	Three Months Ended March 31,
	2024			2023
Net income (loss)	$	(112,439	)	$	89,860
Weighted average common shares outstanding — basic		158,490			105,634
Dilutive effect of securities		—			1,316
Weighted average common shares outstanding — diluted		158,490			106,950
Net income (loss) per common share:
Basic	$	(0.71	)	$	0.85
Diluted	$	(0.71	)	$	0.84
Anti-dilutive potentially issuable securities excluded from diluted common shares		2,789			983

22

Note 12 — Related Party Transactions

Registration Rights Agreements

Adage Capital Partners, L.P. (“Adage”) and affiliated entities of Bain Capital, LP (“Bain”) are parties to a registration rights agreement entered into in connection with the EnVen Acquisition relating to the registered resale of the Company’s common stock owned by such parties, a discussion of which is included in the accompanying Notes to the Consolidated Financial Statements in the 2023 Annual Report. Bain held approximately 8.2% of the Company’s outstanding shares of common stock as of March 31, 2024 based on SEC beneficial ownership reports filed by Bain. Adage ceased being a beneficial owner of more than five percent of the Company’s common stock as of December 31, 2023 based on a SEC beneficial ownership report filed by Adage in February 2024.

In connection with the Company’s entry into the QuarterNorth Merger Agreement, on March 4, 2024, the Company entered into a registration rights agreement (the “QNE Registration Rights Agreement”) with certain stockholders of QuarterNorth listed on Schedule A attached thereto (collectively, the “RRA Holders”). Pursuant to the QNE Registration Rights Agreement, the Company granted the RRA Holders certain demand, “piggy-back” and shelf registration rights with respect to the shares of the Company’s common stock received in connection with the QuarterNorth Acquisition, subject to certain customary thresholds and conditions. The shelf registration statement on Form S-3 (File No 333-277867), including the prospectus forming part thereof, was filed with the SEC shortly after the closing of the QuarterNorth Acquisition. The selling stockholders named in the prospectus collectively beneficially owned approximately 13.5% of the Company’s common stock outstanding as of March 8, 2024, a majority of which was held by the RRA Holders. No individual selling stockholder named in the prospectus owned more than five percent of the Company’s common stock.

The Company will bear all of the expenses incurred in connection with any offer and sale, while the selling stockholders will be responsible for paying underwriting fees, discounts and selling commissions. For the three months ended March 31, 2024 and 2023, the Company did not incur any such fees.

Slim Family

Carlos Slim Helú, Carlos Slim Domit, Marco Antonio Slim Domit, Patrick Slim Domit, María Soumaya Slim Domit, Vanessa Paola Slim Domit and Johanna Monique Slim Domit (collectively, the “Slim Family”) are beneficiaries of a Mexican trust which in turn owns all of the outstanding voting securities of Control Empresarial de Capitales S.A. de C.V. (“Control Empresarial” together with the Slim Family, the “Slim Family Office”). Control Empresarial, a sociedad anónima de capital variable organized under the laws of the United Mexican States, is a holding company with portfolio investments in various companies. Control Empresarial and the Slim Family became related parties on November 7, 2023 when they accumulated greater than ten percent of the Company’s outstanding shares of common stock. In connection with the Company’s upsized underwritten public offering during January 2024 of 34.5 million shares of the Company’s common stock, Control Empresarial increased their holding of the Company’s outstanding stock. Control Empresarial held approximately 19.5% of the Company’s outstanding shares of common stock as of March 31, 2024 based on SEC beneficial ownership reports filed by Control Empresarial.

In connection with the Debt Offering in February 2024, the Company consummated a firm commitment debt offering consisting of $1,250.0 million in aggregate principal amount of second-priority senior secured notes in a private offering to eligible purchasers that was exempt from registration under the Securities Act. In connection with the Debt Offering, and after expressing a non-binding indication of interest after commencement of the offering, entities and/or persons related to the Slim Family Office purchased an aggregate principal amount of $312.5 million of such notes from the initial purchasers of such offering. In connection with such transaction, the Company expects to pay Inbursa, a banking institution controlled by the Slim Family Office, an advisory fee of approximately $2.7 million. See Note 7 – Debt for additional information regarding the Debt Offering.

The Slim Family own a majority stake in Grupo Carso, which indirectly has an ownership interest in Talos Mexico. The Company had no related party receivable from affiliates of the Slim Family as of March 31, 2024.

Equity Method Investments

The Company had a $2.3 million and $5.5 million related party receivable from various equity method investments as of March 31, 2024 and December 31, 2023, respectively. This is reflected as “Other, net” within “Accounts Receivable” on the Consolidated Balance Sheets. See Note 6 – Equity Method Investments for additional information on the Company’s equity method investments.

Note 13 — Commitments and Contingencies

Performance Obligations

Regulations with respect to the Company's operations govern, among other things, engineering and construction specifications for production facilities, safety procedures, plugging and abandonment of wells and removal of facilities in the U.S. Gulf of Mexico.

23

As of March 31, 2024, the Company had secured performance bonds from third party sureties totaling $1.5 billion. The cost of securing these bonds is reflected as “Interest expense” on the Condensed Consolidated Statements of Operations. Additionally, as of March 31, 2024, the Company had secured letters of credit issued under its Bank Credit Facility totaling $10.8 million. Letters of credit that are outstanding reduce the available revolving credit commitments. See Note 7 — Debt for further information on the Bank Credit Facility.

Firm Transportation Commitments

In connection with the QuarterNorth Acquisition, the Company assumed a firm transportation agreement with a pipeline carrier for future transportation of oil production from the Katmai Field. Under the firm agreement, we are obligated to transport a minimum monthly oil volume or pay for any deficiencies. The future minimum transportation under the Company’s commitment totals approximately $22.0 million for years 2025 through 2028. Our production is currently expected to exceed the minimum monthly volume in the periods provided in the agreement.

Legal Proceedings and Other Contingencies

From time to time, the Company is involved in litigation, regulatory examinations and administrative proceedings primarily arising in the ordinary course of business in jurisdictions in which the Company does business. Although the outcome of these matters cannot be predicted with certainty, the Company’s management believes none of these matters, either individually or in the aggregate, would have a material effect upon the Company’s financial position; however, an unfavorable outcome could have a material adverse effect on the Company’s results from operations for a specific interim period or year.

U.S. Specialty Insurance Company (“USSI”) has issued approximately $80.0 million in surety bonds on behalf of QuarterNorth, as Principal. USSI claims that collateral equivalent to the amount of the bonds is now required due to the merger of QuarterNorth into the Company. On March 20, 2024, USSI filed suit to require QuarterNorth to provide collateral in the amount of the bonds to secure QuarterNorth’s alleged obligations owed to USSI. Furthermore, USSI has notified certain purchasers of QuarterNorth’s production that USSI believes QuarterNorth is in default of its obligations and has requested that payment for production that is owed to QuarterNorth be made to USSI. Certain buyers of QuarterNorth’s production have withheld payment to QuarterNorth until this matter is resolved. The Company expects to replace most or all of the bonds issued by USSI during the second quarter of 2024, which will substantially or fully resolve this matter.

In June 2019, David M. Dunwoody, Jr., former President of EnVen, filed a lawsuit against EnVen in Texas District Court alleging that the circumstances of his resignation entitled him to the severance payments and benefits under his employment agreement dated as of November 6, 2015 as a resignation for “Good Reason.” The litigation was assumed as part of the EnVen Acquisition. The Company paid the judgment of $14.4 million, inclusive of Mr. Dunwoody’s legal fees and interest, during the three months ended March 31, 2024.

Decommissioning Obligations

The Company, as a co-lessee or predecessor-in-interest in oil and natural gas leases located in the U.S. Gulf of Mexico, is in the chain of title with unrelated third parties either directly or by virtue of divestiture of certain oil and natural gas assets previously owned and assigned by our subsidiaries. Certain counterparties in these divestiture transactions or third parties in existing leases have filed for bankruptcy protection or undergone associated reorganizations and may not be able to perform required abandonment obligations. Regulations or federal laws could require the Company to assume such obligations. The Company reflects such costs as “Other operating (income) expense” on the Condensed Consolidated Statements of Operations.

The decommissioning obligations are included in the Condensed Consolidated Balance Sheets as “Other current liabilities” and “Other long-term liabilities” and the changes in that liability were as follows (in thousands):

	March 31, 2024			December 31, 2023
Balance, beginning of period	$	15,564		$	54,269
Additions		—			266
Obligations assumed		1,326			—
Changes in estimate		855			11,613
Settlements		(3,506	)		(50,584	)
Balance, end of period	$	14,239		$	15,564
Less: Current portion		4,000			3,280
Long-term portion	$	10,239		$	12,284

Although it is reasonably possible that the Company could receive state or federal decommissioning orders in the future or be notified of defaulting third parties in existing leases, the Company cannot predict with certainty, if, how or when such orders or notices will be resolved or estimate a possible loss or range of loss that may result from such orders. However, the Company could incur judgments, enter into settlements or revise its opinion regarding the outcome of certain notices or matters, and such developments could have a material adverse effect on its results of operations in the period in which the amounts are accrued and its cash flows in the period in which the amounts are paid.

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Note 14 — Segment Information

From January 1, 2024 through March 18, 2024, the Company’s operations were managed through two operating segments: (i) Upstream Segment and (ii) CCS Segment. The CCS Segment was divested in March 2024. The Upstream Segment was the Company’s only reportable segment. The Company’s chief operating decision-maker (“CODM”) is the President and Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company. A reportable segment is an operating segment that meets materiality thresholds. The 10% tests, as prescribed by the segment reporting accounting guidance, are based on the reported measures of revenue, profit, and assets that are used by the CODM to assess performance and allocate resources. During the quarter ended March 31, 2024, the CCS Segment did not meet any of the reportable segment quantitative thresholds. The profit or loss metric used to evaluate segment performance was Adjusted EBITDA, which is defined by the Company as net income (loss) plus interest expense; income tax expense (benefit); depreciation, depletion, and amortization; accretion expense; non-cash write-down of oil and natural gas properties; transaction and other (income) expenses; decommissioning obligations; the net change in the fair value of derivatives (mark to market effect, net of cash settlements and premiums related to these derivatives); (gain) loss on debt extinguishment; non-cash write-down of other well equipment; and non-cash equity-based compensation expense.

Corporate general and administrative expense includes certain shared costs such as finance, accounting, tax, human resources, information technology and legal costs that are not directly attributable to each operating segment. A portion of these expenses were allocated based on the percentage of employees dedicated to each operating segment. The remaining expenses are included in the reconciliation of reportable segment Adjusted EBITDA to consolidated pre-tax net income (loss) as an unallocated corporate general and administrative expense. From January 1, 2024 through March 18, 2024, the accounting policies of the segments were the same as those described in Note 2 – Summary of Significant Accounting Policies included in the accompanying Notes to Consolidated Financial Statements in the 2023 Annual Report.

The Company’s CODM does not review assets by segment as part of the financial information provided and therefore, no asset information is provided in the table below.

The following table presents selected segment information for the periods indicated (in thousands):

	Upstream			All Other(1)			Total
Revenues from External Customers:
Three Months Ended March 31, 2024	$	429,932		$	—		$	429,932
Three Months Ended March 31, 2023		322,582			—			322,582
Equity in the Net Income (Loss) of Investees Accounted for by the Equity Method:
Three Months Ended March 31, 2024	$	(84	)	$	(7,970	)	$	(8,054	)
Three Months Ended March 31, 2023		132			(1,277	)		(1,145	)
Adjusted EBITDA:
Three Months Ended March 31, 2024	$	269,334		$	(9,872	)	$	259,462
Three Months Ended March 31, 2023		210,483			(6,157	)		204,326
Segment Expenditures:
Three Months Ended March 31, 2024	$	143,848		$	17,519		$	161,367
Three Months Ended March 31, 2023		190,024			21,189			211,213

(1)The CCS Segment is included in the “All Other” category. The CCS Segment was an emerging business in the start-up phase of operations and the business did not generate any revenues. The CCS Segment’s business activities were conducted through both wholly owned subsidiaries and equity method investments with industry partners. CCS equity method investments was a business strategy that enabled us to achieve favorable economies of scale relative to the level of investment and business risk assumed.

25

Reconciliations

The following table presents the reconciliation of Adjusted EBITDA to the Company’s consolidated totals (in thousands):

	Three Months Ended March 31,
	2024			2023
Adjusted EBITDA:
Total for reportable segments	$	269,334		$	210,483
All other		(9,872	)		(6,157	)
General and administrative expense		(1,786	)		(1,263	)
Interest expense		(50,845	)		(37,581	)
Depreciation, depletion and amortization		(215,664	)		(147,323	)
Accretion expense		(26,903	)		(19,414	)
Transaction and other income (expenses)(1)		49,157			(22,009	)
Decommissioning obligations(2)		(855	)		(741	)
Derivative fair value gain (loss)(3)		(87,062	)		58,937
Net cash (received) paid on settled derivative instruments (3)		3,494			12,323
Gain (loss) on debt extinguishment		(60,256	)		—
Non-cash equity-based compensation expense		(2,754	)		(3,938	)
Income (loss) before income taxes	$	(134,012	)	$	43,317

(1)For the three months ended March 31, 2024, transaction expenses include $28.1 million in costs related to the QuarterNorth Acquisition, inclusive of $14.2 million in severance expense and $9.8 million in costs related to the TLCS Divestiture, inclusive of $3.7 million in severance expense. For the three months ended March 31, 2023, transaction expenses included $35.2 million in costs related to the EnVen Acquisition, inclusive of $22.6 million in severance expense. See further discussion in Note 2 — Acquisitions and Divestitures and Note 9 — Employee Benefits Plans and Share-Based Compensation. Other income (expense) includes other miscellaneous income and expenses that we do not view as a meaningful indicator of our operating performance. For the three months ended March 31, 2024, it includes a gain of $86.9 million related to the TLCS Divestiture. See further discussion in Note 2 — Acquisitions and Divestitures. For the three months ended March 31, 2023, it includes a $8.6 million gain on the funding of the capital carry of its investment in Bayou Bend by Chevron.

(2)Estimated decommissioning obligations were a result of working interest partners or counterparties of divestiture transactions that were unable to perform the required abandonment obligations due to bankruptcy or insolvency. See Note 13 — Commitments and Contingencies for additional information on decommissioning obligations.

(3)The adjustments for the derivative fair value (gains) losses and net cash receipts (payments) on settled commodity derivative instruments have the effect of adjusting net loss for changes in the fair value of derivative instruments, which are recognized at the end of each accounting period because we do not designate commodity derivative instruments as accounting hedges. This results in reflecting commodity derivative gains and losses within Adjusted EBITDA on an unrealized basis during the period the derivatives settled.

The following table presents the reconciliation of Segment Expenditures to the Company’s consolidated totals (in thousands):

	Three Months Ended March 31,
	2024			2023
Segment Expenditures:
Total reportable segments	$	143,848		$	190,024
All other		17,519			21,189
Change in capital expenditures included in accounts payable and accrued liabilities		34,262			(55,969	)
Plugging & abandonment		(27,907	)		(10,113	)
Decommissioning obligations settled		(3,506	)		(708	)
Investment in CCS intangibles and equity method investees		(17,519	)		(21,189	)
Deferred Payments		(672	)		—
Non-cash well equipment transfers		—			(19,402	)
Other		52			130
Exploration, development and other capital expenditures	$	146,077		$	103,962

26

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless otherwise indicated or the context otherwise requires, references in this Quarterly Report to “us,” “we,” “our,” “Talos” or the “Company” are to Talos Energy Inc. and its wholly-owned subsidiaries.

The following discussion and analysis of our financial condition and results of operations is based on, and should be read in conjunction with, our Condensed Consolidated Financial Statements and notes thereto in Part I, Item 1. “Financial Statements” of this Quarterly Report, as well as our audited Consolidated Financial Statements and the notes thereto in our 2023 Annual Report and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2023 Annual Report.

Our Business

We are a technically driven independent exploration and production company focused on safely and efficiently maximizing long-term value through our operations, currently in the United States (“U.S.”) and offshore Mexico. We leverage decades of technical and offshore operational expertise towards the acquisition, exploration and development of assets in key geological trends that are present in many offshore basins around the world.

We have historically focused our oil and gas exploration and production operations in the U.S. Gulf of Mexico because of our deep experience and technical expertise in the basin, which maintains favorable geologic and economic conditions, including multiple reservoir formations, comprehensive geologic and geophysical databases, extensive infrastructure and an attractive and robust asset acquisition market. Additionally, we have access to state-of-the-art three-dimensional seismic data, some of which is aided by new and enhanced reprocessing techniques that have not been previously applied to our current acreage position. We use our broad regional seismic database and our reprocessing efforts to generate a large and expanding inventory of high-quality prospects, which we believe greatly improves our development and exploration success. The application of our extensive seismic database, coupled with our ability to effectively reprocess this seismic data, allows us to both optimize our organic drilling program and better evaluate a wide range of business development opportunities, including acquisitions and collaborative arrangement opportunities, among others.

In order to determine the most attractive returns for our drilling program, we employ a disciplined portfolio management approach to stochastically evaluate all of our drilling prospects, whether they are generated organically from our existing acreage, an acquisition or joint venture opportunities. We add to and reevaluate our inventory in order to deploy capital as efficiently as possible.

From January 1, 2024 through March 18, 2024, we had two operating segments: (i) exploration and production of oil, natural gas and NGLs (“Upstream Segment”) and (ii) CCS (“CCS Segment”), of which the Company’s only reportable segment was the Upstream Segment. Subsequent to the TLCS Divestiture (as defined herein) and our sale of the entire CCS business, we had one operating segment. See additional information in Part I, Item 1. “Financial Statements — Note 14 — Segment Information.”

Significant Developments

The following significant developments have occurred since the filing of our 2023 Annual Report.

Talos Low Carbon Solutions Divestiture— On March 18, 2024, we entered into a definitive agreement relating to and subsequently completed the sale of our wholly owned subsidiary, Talos Low Carbon Solutions LLC, to TotalEnergies E&P USA, Inc. for a purchase price of $125.0 million plus customary reimbursements and adjustments, combined totaling approximately $142.0 million (the “TLCS Divestiture”). The TLCS Divestiture includes Talos’s entire CCS business, including its equity investments in three projects along the U.S. Gulf Coast: Bayou Bend CCS LLC; Harvest Bend CCS LLC; and Coastal Bend CCS LLC. See Part I, Item 1. “Financial Statements — Note 2 — Acquisitions and Divestitures” for more information.

QuarterNorth Acquisition — We executed an agreement and plan of merger, dated as of January 13, 2024, by and among Talos, QuarterNorth Energy Inc. (“QuarterNorth”), Compass Star Merger Sub Inc. and the Equityholder Representatives named therein (the “QuarterNorth Merger Agreement”) to acquire QuarterNorth, a privately-held U.S. Gulf of Mexico exploration and production company (such acquisition, the “QuarterNorth Acquisition”). On March 4, 2024, the Company completed the QuarterNorth Acquisition for consideration consisting of (i) $1,247.4 million in cash and (ii) 24.3 million shares of the Company’s common stock valued at $322.6 million. The cash payment was partially funded with an upsized underwritten public offering of 34.5 million shares of the Company’s common stock, borrowings under the Bank Credit Facility and the New Senior Notes (each as defined below). See Part I, Item 1. “Financial Statements — Note 2 — Acquisitions and Divestitures” for more information.

Factors Affecting the Comparability of our Financial Condition and Results of Operations

The following items affect the comparability of our financial condition and results of operations for periods presented herein and could potentially continue to affect our future financial condition and results of operations.

QuarterNorth Acquisition — On March 4, 2024, we acquired QuarterNorth, a private operator in the Deepwater U.S. Gulf of Mexico. See Part I, Item 1. “Financial Statements — Note 2 — Acquisitions and Divestitures” for more information.

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EnVen Acquisition — On February 13, 2023, we acquired EnVen Energy Corporation (“EnVen”), a private operator in the Deepwater U.S. Gulf of Mexico (the “EnVen Acquisition”). See Part I, Item 1. “Financial Statements — Note 2 — Acquisitions and Divestitures” for more information.

Known Trends and Uncertainties

See Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report for a detailed discussion of known trends and uncertainties. The following carries forward or provides an update to known trends and uncertainties discussed in our 2023 Annual Report.

Volatility in Oil, Natural Gas and NGL Prices — Historically, the markets for oil, natural gas and NGLs have been volatile. Oil, natural gas and NGL prices are subject to wide fluctuations in supply and demand. Our revenue, profitability, access to capital and future rate of growth depends upon the price we receive for our sales of oil, natural gas and NGL production.

During the period January 1, 2024 through March 31, 2024, the daily spot prices for NYMEX WTI crude oil ranged from a high of $84.39 per Bbl to a low of $70.62 per Bbl, and the daily spot prices for NYMEX Henry Hub natural gas ranged from a high of $13.20 per MMBtu to a low of $1.25 per MMBtu. Although we cannot predict the occurrence of events that may affect future commodity prices or the degree to which these prices will be affected, the prices we realize for any commodity that we produce will generally approximate current market prices in the geographic region of production. We hedge a portion of our commodity price risk to mitigate the impact of price volatility on our business. See Part I, Item 1. “Financial Statements — Note 5 — Financial Instruments” for additional information regarding our commodity derivative positions as of March 31, 2024.

The U.S. Energy Information Administration (“EIA”) published its April 2024 Short-Term Energy Outlook on April 9, 2024. The EIA expectations for global oil prices have increased since its last short-term energy outlook report reflecting its expectation of strong global oil inventory draws during the second quarter of 2024 and ongoing geopolitical risks. Oil prices continued to increase in March because of heightened geopolitical risk related to the attacks targeting commercial ships transiting the Red Sea shipping channel and general elevated tensions around the region, including the Israel-Hamas war. In addition, the recent extension of OPEC Plus voluntary production cuts, which expire at the end of June 2024, add to upward price pressure at a time of the year when oil demand typically increases because of the spring and summer driving seasons in the Northern Hemisphere. The EIA expects the NYMEX WTI spot price will average $85.30 per Bbl in the second quarter of 2024 and $83.78 per Bbl for all of 2024. The U.S. winter natural gas withdrawal season ended with more natural gas in storage compared with the five-year average. The large storage surplus contributed to low natural gas prices throughout the first quarter of 2024. From April through October this year, the EIA forecasts less natural gas will be injected into storage than is typical, largely because they expect the United States will produce less natural gas on average in the second and third quarter of 2024 compared with the first quarter of 2024. Despite lower production, the EIA still expects the United States will have the most natural gas in storage on record when the winter withdrawal season begins in November 2024. As a result of high inventories, the EIA expects spot natural gas prices to average less than $2.00 per MMBtu in the second quarter of 2024 and $2.15 per MMBtu for all of 2024.

Inflation of Cost of Goods, Services and Personnel — Due to the cyclical nature of the oil and gas industry, fluctuating demand for oilfield goods and services can put pressure on the pricing structure within our industry. As commodity prices rise, the cost of oilfield goods and services generally also increases, while during periods of commodity price declines, oilfield costs typically lag and do not adjust downward as fast as oil prices. In addition, the U.S. inflation rate began increasing in 2021, peaked in the middle of 2022 and began to gradually decline in the second half of 2022. These inflationary pressures may also result in increases to the costs of our oilfield goods, services and personnel, which would in turn cause our capital expenditures and operating costs to rise. Sustained levels of high inflation could likely cause the U.S. Federal Reserve (the “Fed”) and other central banks to further increase interest rates, which could have the effects of raising the cost of capital and depressing economic growth, either or both of which could hurt our business. In 2022 and 2023, the Fed raised its benchmark interest rate 11 times. The latest interest rate hike in July 2023 increased the federal funds rate to a range of 5.25%-5.50%, its highest level since 2001. The Fed wants inflation to return to its 2% goal over time and it is still high in absolute terms. Future changes to the benchmark interest rate remain uncertain.

Impairment of Oil and Natural Gas Properties — Under the full cost method of accounting, the “ceiling test” under SEC rules and regulations specifies that evaluated and unevaluated properties’ capitalized costs, less accumulated amortization and related deferred income taxes (the “Full Cost Pool”), should be compared to a formulaic limitation (the “Ceiling”) each quarter on a country-by-country basis. If the Full Cost Pool exceeds the Ceiling, an impairment must be recorded. For the three months ended March 31, 2024 and 2023, we did not recognize an impairment based on the ceiling test computations. At March 31, 2024 our ceiling test computation was based on SEC pricing of $78.19 per Bbl of oil, $2.50 per Mcf of natural gas and $17.08 per Bbl of NGLs.

If the unweighted average first-day-of-the-month commodity price for crude oil or natural gas for the period beginning April 1, 2023 and ending March 1, 2024 used in the determination of the SEC pricing was 10% lower, resulting in $70.45 per Bbl of oil, $2.25 per Mcf of natural gas and $15.37 per Bbl of NGLs, while all other factors remained constant, our oil and natural gas properties would have been impaired by $446.5 million.

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There is a significant degree of uncertainty with the assumptions used to estimate the present value of future net cash flows from estimated production of proved oil and gas reserves due to, but not limited to the risk factors referred to in Part I, Item 1A. “Risk Factors” included in our 2023 Annual Report. The discounted present value of our proved reserves is a major component of the Ceiling calculation. Any decrease in SEC pricing or increase in capital or operating costs could negatively impact the estimated future discounted net cash flows related to our proved oil and natural gas properties.

Third Party Planned Downtime — Since our operations are offshore, we are vulnerable to third party downtime events impacting the transportation, gathering and processing of production. We produce the Phoenix Field through the HP-I that is operated by Helix Energy Solutions Group, Inc. (“Helix”). Helix is required to disconnect and dry-dock the HP-I every two to three years for inspection as required by the U.S. Coast Guard, during which time we are unable to produce the Phoenix Field. The next dry-dock is scheduled for the second quarter of 2024 with an estimated shut-in lasting approximately 55 days.

BOEM Bonding Rule — On April 15, 2024, BOEM issued its final rule, entitled “Risk Management and Financial Assurance for OCS Lease and Grant Obligations,” which significantly increases the amount of new supplemental financial assurance required from lessees and grant holders conducting operations on the federal outer continental shelf (“OCS”). The final rule replaces the prior five-point test in determining whether an OCS lessee or grant holder is required to obtain supplemental financial assurance and instead requires lessees to meet one of two criteria based on: (1) the credit rating of the lessee or (2) the ratio of the value of proved oil and gas reserves of the lease to the estimated decommissioning liability associated with the reserves. As a result of the new rule, BOEM will no longer consider or rely upon the financial strength of predecessors in determining whether, or how much, supplemental financial assurance will be required by current lessees and grant holders. The final rule, effective 60 days following publication in the Federal Register, adopts a three-year phased compliance period for full payment of a supplemental financial assurance demand.

As discussed in our 2023 Annual Report, including under Part I, Item 1A. “Risk Factors — Risks Related to Our Business and the Oil and Natural Gas Industry, We may be unable to provide the financial assurances in the amounts and under the time periods required by the new rule. If we are unable to comply with these requirements, the BOEM could elect to take actions that would materially adversely impact our operations and our properties, including assessing civil penalties, commencing proceedings to suspend our production and other operations or cancelling our affected federal offshore leases. In addition, as a result of continuing adverse developments in restructurings and bankruptcies of companies operating in the OCS, a number of bonding companies have left the offshore surety market over the last nine months, which has materially reduced the availability of surety bonds for projects in the OCS. As a result, there may not be sufficient surety bonds capacity available for companies in the OCS to comply with the new financial assurances rule. Our inability to obtain adequate supplemental financial assurance in order to comply with BOEM’s final rule, including the future cost of compliance with respect to supplemental bonding, could materially and adversely affect our financial condition, cash flows, business, properties, liquidity and results of operations.

Deepwater Operations — We have interests in Deepwater fields in the U.S. Gulf of Mexico. Operations in Deepwater can result in increased operational risks as has been demonstrated by the Deepwater Horizon disaster in 2010. Despite technological advances since this disaster, liabilities for environmental losses, personal injury and loss of life and significant regulatory fines in the event of a disaster could be well in excess of insured amounts and result in significant current losses on our statements of operations as well as going concern issues.

Oil Spill Response Plan — We maintain a Regional Oil Spill Response Plan that defines our response requirements, procedures and remediation plans in the event we have an oil spill. Oil spill response plans are generally approved by the BSEE biennially, except when changes are required, in which case revised plans are required to be submitted for approval at the time changes are made. Additionally, these plans are tested and drills are conducted periodically at all levels.

Hurricanes, Tropical Storms and Loop Currents — Since our operations are in the U.S. Gulf of Mexico, we are particularly vulnerable to the effects of hurricanes, tropical storms and loop currents on production and capital projects. Significant impacts could include reductions and/or deferrals of future production and revenues and increased lease operating expenses for evacuations and repairs.

Five-Year Offshore Oil and Gas Leasing Program Update — Under the Outer Continental Shelf Lands Act (“OCSLA”), as amended, BOEM prepares and maintains forward-looking five-year plans—referred to by BOEM as national programs or five-year programs—to schedule proposed oil and gas lease sales on the U.S. Outer Continental Shelf. As required by the Inflation Reduction Act of 2022, BOEM held Lease Sale 261 under the 2017-2022 national program on December 20, 2023, in which we were the high bidder on thirteen offshore blocks and QuarterNorth was the high bidder on four offshore blocks. We and QuarterNorth were awarded leases on all seventeen of these high-bid blocks.

The 2024-2029 national program starts on July 1, 2024, and continues through June 30, 2029. It is possible, however, that the final program could be delayed by opposing lawsuits that were filed on February 12, 2024, by the American Petroleum Institute and by Earthjustice representing multiple environmental groups, both of which are challenging BOEM’s actions. Despite these challenges, on April 1, 2024, BOEM announced the availability of the Area Identification for proposed lease sales 262, 263 and 264 pursuant to the 2024-2029 national program. Lease Sale 262 is tentatively scheduled for 2025.

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How We Evaluate Our Operations

We use a variety of financial and operational metrics to assess the performance of our oil and natural gas operations, including:

•production volumes;

•realized prices on the sale of oil, natural gas and NGLs, including the effect of our commodity derivative contracts;

•lease operating expenses;

•capital expenditures; and

•Adjusted EBITDA, which is discussed under “—Supplemental Non-GAAP Measure” below.

Results of Operations

Revenue

The information below provides a discussion of, and an analysis of significant variance in, our oil, natural gas and NGL revenues, production volumes and sales prices (in thousands, except per unit data):

	Three Months Ended March 31,
	2024		2023		Change
Revenues:
Oil	$	393,221	$	292,694	$	100,527
Natural gas		23,698		20,183		3,515
NGL		13,013		9,705		3,308
Total revenues	$	429,932	$	322,582	$	107,350
Production Volumes:
Oil (MBbls)		5,173		4,106		1,067
Natural gas (MMcf)		8,659		7,127		1,532
NGL (MBbls)		632		429		203
Total production volume (MBoe)		7,248		5,723		1,525
Daily Production Volumes by Product:
Oil (MBblpd)		56.8		45.6		11.2
Natural gas (MMcfpd)		95.2		79.2		16.0
NGL (MBblpd)		6.9		4.8		2.1
Total production volume (MBoepd)		79.6		63.6		16.0
Average Sale Price Per Unit:
Oil (per Bbl)	$	76.02	$	71.28	$	4.74
Natural gas (per Mcf)	$	2.74	$	2.83	$	(0.09	)
NGL (per Bbl)	$	20.59	$	22.62	$	(2.03	)
Price per Boe	$	59.32	$	56.37	$	2.95
Price per Boe (including realized commodity derivatives)	$	58.84	$	54.21	$	4.63

The information below provides an analysis of the change in our oil, natural gas and NGL revenues in our Upstream Segment due to changes in sales prices and production volumes (in thousands):

	Three Months Ended March 31, 2024 vs 2023
	Price			Volume		Total
Revenues:
Oil	$	24,471		$	76,056	$	100,527
Natural gas		(821	)		4,336		3,515
NGL		(1,284	)		4,592		3,308
Total revenues	$	22,366		$	84,984	$	107,350

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Three Months Ended March 31, 2024 and 2023 Volumetric Analysis — Production volumes increased by 16.0 MBoepd to 79.6 MBoepd. The increase was primarily due to 7.4 MBoepd of production from the oil and natural gas assets acquired from the QuarterNorth Acquisition that closed in early March 2024 as well as 6.9 MBoepd from the EnVen Acquisition that closed mid-first quarter of 2023. Additionally, there was 10.2 MBoepd production from the Venice and Lime Rock wells, which tie back to our Ram Powell facility, which commenced initial production late in the fourth quarter of 2023. These increases were partially offset by a decrease of 6.9 MBoepd due to well performance and natural production declines. Additionally, there was approximately 2.0 MBoepd of deferred production resulting from third party infrastructure downtime primarily from our Lobster Field located in our Mississippi Canyon core area.

Operating Expenses

Lease Operating Expense

The following table highlights lease operating expense items in total and on a cost per Boe production basis to our Upstream Segment. The information below provides the financial results and an analysis of significant variances in these results (in thousands, except per Boe data):

	Three Months Ended March 31,
	2024		2023
Lease operating expenses	$	135,178	$	81,362
Lease operating expenses per Boe	$	18.65	$	14.22

Three Months Ended March 31, 2024 and 2023 — Lease operating expense for the three months ended March 31, 2024 increased by approximately $53.8 million, or 66%. This was related to an increase of $34.0 million primarily due to major well workover expenses at the Phoenix Field and the Garden Banks 506 Field. Additionally, there was a $12.8 million increase in lease operating expenses incurred in connection with assets acquired from the QuarterNorth Acquisition as well as a $8.8 million increase in direct lease operating expenses due to the EnVen Acquisition that closed mid-first quarter of 2023.

Depreciation, Depletion and Amortization

The following table highlights depreciation, depletion and amortization items. The information below provides the financial results and an analysis of significant variances in these results (in thousands):

	Three Months Ended March 31,
	2024		2023
Depreciation, depletion and amortization	$	215,664	$	147,323

Three Months Ended March 31, 2024 and 2023 — Depreciation, depletion and amortization expense for the three months ended March 31, 2024 increased by approximately $68.3 million, or 46% due to increased production volumes, which are described above. Additionally, the depletion rate increased by $4.07 per Boe, or 16%, on our proved oil and natural gas properties.

General and Administrative Expense

The following table highlights general and administrative expense items in total and on a cost per Boe production basis for the Upstream Segment. The information below provides the financial results and an analysis of significant variances in these results (in thousands, except per Boe data):

	Three Months Ended March 31,
	2024		2023
Upstream Segment	$	56,082	$	58,355
CCS Segment		1,965		3,329
Unallocated corporate		11,794		1,503
Total general and administrative expense	$	69,841	$	63,187
Upstream general and administrative expense per Boe	$	7.74	$	10.20

Three Months Ended March 31, 2024 and 2023 — General and administrative expense for the three months ended March 31, 2024 increased by approximately $6.7 million, or 11%. This increase was primarily related to first quarter 2024 Upstream Segment transaction costs, severance costs and additional general and administrative expenses related to the QuarterNorth Acquisition of $30.6 million or $4.22 per Boe. Additionally, unallocated corporate had an increase during the first quarter 2024 in transaction costs and severance costs of $9.8 million related to the TLCS Divestiture. These increases were partially offset by a decrease in the Upstream Segment transaction costs for the EnVen Acquisition of $35.4 million or $6.19 per Boe. Additionally, the CCS Segment expenses decreased by $1.4 million due to the TLCS Divestiture. See Part I, Item 1. “Financial Statements — Note 2 — Acquisitions and Divestitures” for further discussion.

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Miscellaneous

The following table highlights miscellaneous items in total. The information below provides the financial results and an analysis of significant variances in these results (in thousands):

	Three Months Ended March 31,
	2024			2023
Accretion expense	$	26,903		$	19,414
Other operating (income) expense	$	(86,043	)	$	2,838
Interest expense	$	50,845		$	37,581
Price risk management activities (income) expense	$	87,062		$	(58,937	)
Equity method investment (income) expense	$	8,054		$	(7,443	)
Other (income) expense	$	55,896		$	(6,666	)
Income tax (benefit) expense	$	(21,573	)	$	(46,543	)

Three Months Ended March 31, 2024 and 2023 —

Accretion Expense — During the three months ended March 31, 2024, we recorded $26.9 million of accretion expense compared to $19.4 million during the three months ended March 31, 2023. The change is primarily the result of a $4.2 million increase in accretion associated with the asset retirement obligations assumed as part of the QuarterNorth Acquisition and EnVen Acquisition. See Part I, Item 1. “Financial Statements — Note 2 — Acquisitions and Divestitures.”

Other Operating (Income) Expense — During the three months ended March 31, 2024, we recognized a gain of $86.9 million on the TLCS Divestiture. See Part I, Item 1. “Financial Statements — Note 2 — Acquisitions and Divestitures” for further discussion.

Interest Expense — During the three months ended March 31, 2024, we recorded $50.8 million of interest expense compared to $37.6 million during the three months ended March 31, 2023. The change is primarily the result of an increase in incremental debt outstanding offset by a lower rate of interest on these instruments. See Part I, Item 1. “Financial Statements — Note 7 — Debt” for more information. Additionally, there was an increase of $4.9 million of fees associated with the unutilized bridge loan. See Part I, Item 1. “Financial Statements — Note 2 — Acquisitions and Divestitures” for more information.

Price Risk Management Activities — The expense of $87.1 million for the three months ended March 31, 2024 consists of $83.6 million in non-cash losses from the decrease in the fair value of our open derivative contracts and $3.5 million in cash settlement losses. The income of $58.9 million for the three months ended March 31, 2023 consists of $71.3 million in non-cash gains from the increase in the fair value of our open derivative contracts partially offset by $12.3 million in cash settlement losses.

These unrealized gains or losses on open derivative contracts relate to production for future periods; however, changes in the fair value of all of our open derivative contracts are recorded as a gain or loss on our Condensed Consolidated Statements of Operations at the end of each month. As a result of the derivative contracts we have on our anticipated production volumes through December 2025, we expect these activities to continue to impact net income (loss) based on fluctuations in market prices for oil and natural gas. See Part I, Item 1. “Financial Statements — Note 5 — Financial Instruments.”

Equity Method Investment Income — During the three months ended March 31, 2024, we recorded equity losses of $8.1 million. During the three months ended March 31, 2023, we recorded equity losses of $1.1 million offset by an $8.6 million gain on the funding of the capital carry of our investment in Bayou Bend by Chevron.

Other (Income) Expense — During the three months ended March 31, 2024, we recorded a $60.3 million loss on extinguishment of debt because of the redemption of the 12.00% Second-Priority Senior Secured Notes due 2026 (the “12.00% Notes”) and 11.75% Senior Secured Second Lien Notes due 2026 (the “11.75% Notes”). See Part I, Item 1. “Financial Statements — Note 7 — Debt” for more information.

Income Tax (Benefit) Expense — During the three months ended March 31, 2024, we recorded $21.6 million of income tax benefit primarily due to current year activity inclusive of permanent differences compared to $46.5 million of income tax benefit during the three months ended March 31, 2023. The income tax benefit recorded during the three months ended March 31, 2023 is primarily due to a non-cash tax benefit related to the partial release of the valuation allowance on our U.S. federal deferred tax assets. See additional information on the valuation allowance as described in Part I, Item 1. “Financial Statements — Note 10 — Income Taxes.”

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Supplemental Non-GAAP Measure

EBITDA and Adjusted EBITDA

“EBITDA” and “Adjusted EBITDA” are non-GAAP financial measures used to provide management and investors with (i) additional information to evaluate, with certain adjustments, items required or permitted in calculating covenant compliance under our debt agreements, (ii) important supplemental indicators of the operational performance of our business, (iii) additional criteria for evaluating our performance relative to our peers and (iv) supplemental information to investors about certain material non-cash and/or other items that may not continue at the same level in the future. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP or as alternatives to net income (loss), operating income (loss) or any other measure of financial performance presented in accordance with GAAP.

We define these as the following:

•EBITDA — Net income (loss) plus interest expense, income tax expense (benefit), depreciation, depletion and amortization, and accretion expense.

•Adjusted EBITDA — EBITDA plus non-cash write-down of oil and natural gas properties, transaction and other (income) expenses, decommissioning obligations, the net change in the fair value of derivatives (mark to market effect, net of cash settlements and premiums related to these derivatives), (gain) loss on debt extinguishment, non-cash write-down of other well equipment and non-cash equity-based compensation expense.

The following table presents a reconciliation of the GAAP financial measure of net income (loss) to Adjusted EBITDA for each of the periods indicated (in thousands):

	Three Months Ended March 31,
	2024			2023
Net income (loss)	$	(112,439	)	$	89,860
Interest expense		50,845			37,581
Income tax (benefit) expense		(21,573	)		(46,543	)
Depreciation, depletion and amortization		215,664			147,323
Accretion expense		26,903			19,414
EBITDA		159,400			247,635
Transaction and other (income) expenses(1)		(49,157	)		22,009
Decommissioning obligations(2)		855			741
Derivative fair value (gain) loss(3)		87,062			(58,937	)
Net cash received (paid) on settled derivative instruments(3)		(3,494	)		(12,323	)
(Gain) loss on debt extinguishment		60,256			—
Non-cash equity-based compensation expense		2,754			3,938
Adjusted EBITDA	$	257,676		$	203,063

(1)For the three months ended March 31, 2024, transaction expenses include $28.1 million in costs related to the QuarterNorth Acquisition, inclusive of $14.2 million in severance expense and $9.8 million in costs related to the TLCS Divestiture, inclusive of $3.7 million in severance expense. For the three months ended March 31, 2023, transaction expenses included $35.2 million in costs related to the EnVen Acquisition, inclusive of $22.6 million in severance expense. See further discussion in Part I, Item 1. “Financial Statements — Note 2 — Acquisitions and Divestitures” and “Note 9 — Employee Benefits Plans and Share-Based Compensation.” Other income (expense) includes other miscellaneous income and expenses that we do not view as a meaningful indicator of our operating performance. For the three months ended March 31, 2024, it includes a gain of $86.9 million related to the TLCS Divestiture. See further discussion in Part I, Item 1. “Financial Statements — Note 2 — Acquisitions and Divestitures.” For the three months ended March 31, 2023, it includes an $8.6 million gain on the funding of the capital carry of our investment in Bayou Bend by Chevron.

(2)Estimated decommissioning obligations were a result of working interest partners or counterparties of divestiture transactions that were unable to perform the required abandonment obligations due to bankruptcy or insolvency. See Part I, Item 1. “Financial Statements — Note 13 — Commitments and Contingencies.”

(3)The adjustments for the derivative fair value (gains) losses and net cash receipts (payments) on settled commodity derivative instruments have the effect of adjusting net loss for changes in the fair value of derivative instruments, which are recognized at the end of each accounting period because we do not designate commodity derivative instruments as accounting hedges. This results in reflecting commodity derivative gains and losses within Adjusted EBITDA on an unrealized basis during the period the derivatives settled.

Liquidity and Capital Resources

Our primary sources of liquidity are cash generated by our operations and borrowings under our Bank Credit Facility. Our primary uses of cash are for capital expenditures, working capital, debt service, share repurchases and for general corporate purposes. The cost of borrowings under our Bank Credit Facility has increased. By raising its federal funds rate, the Fed made it more expensive to borrow money. As of March 31, 2024, our available liquidity (cash plus available capacity under the Bank Credit Facility) was $650.2 million.

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We fund drilling, completions and development activities primarily through operating cash flows, cash on hand and through borrowings under the Bank Credit Facility, if necessary. Historically, we have funded significant acquisitions with the issuance of senior notes, borrowings under the Bank Credit Facility and through additional equity issuances. We occasionally adjust our capital budget in response to changing operating cash flow forecasts and market conditions, including the prices of oil, natural gas and NGLs, acquisition opportunities and the results of our exploration and development activities.

Our liquidity could be impacted in the future by financial assurance requirements. See “Known Trends and Uncertainties — BOEM Bonding Rule.”

Capital Expenditures — The following is a table of our capital expenditures, excluding acquisitions, for the three months ended March 31, 2024 (in thousands):

U.S. drilling & completions	$	44,081
Asset management(1)		24,982
Seismic and G&G, land, capitalized G&A and other		43,372
Total Upstream capital expenditures		112,435
Plugging & abandonment		27,907
Decommissioning obligations settled(2)		3,506
Total Upstream		143,848
Investment in CCS		17,519
Total	$	161,367

(1)Asset management consists of capital expenditures for development-related activities primarily associated with recompletions and improvements to our facilities and infrastructure.

(2)Settlement of decommissioning obligations as a result of working interest partners or counterparties of divestiture transactions that were unable to perform the required abandonment obligations due to bankruptcy or insolvency. See Part I, Item 1. “Financial Statements — Note 13 — Commitments and Contingencies.”

Based on our current level of operations and available cash, we believe our cash flows from operations, combined with availability under the Bank Credit Facility, provide sufficient liquidity to fund the remaining portion of our 2024 Upstream capital spending program of $570.0 million to $600.0 million and plugging & abandonment and decommissioning obligations of $90.0 million to $100.0 million. However, our ability to (i) generate sufficient cash flows from operations or obtain future borrowings under the Bank Credit Facility, and (ii) repay or refinance any of our indebtedness on commercially reasonable terms or at all for any potential future acquisitions, joint ventures or other similar transactions, depends on various operating and economic conditions, many of which are beyond our control. To the extent possible, we have attempted to mitigate certain of these risks (e.g., by entering into oil and natural gas derivative contracts to reduce the financial impact of downward commodity price movements on a substantial portion of our anticipated production), but we could be required to, or we or our affiliates may from time to time, take additional future actions on an opportunistic basis. To address further changes in the financial and/or commodity markets, future actions may include, without limitation, issuing debt, including secured debt, or issuing equity to directly or independently repurchase or refinance our outstanding indebtedness.

Common Stock Repurchase Program — Our Board of Directors authorized a stock repurchase program on March 20, 2023 with an approved limit of $100.0 million and no set term limits. There were no shares of common stock repurchased during the three months ended March 31, 2024. As of March 31, 2024, there is $52.5 million remaining under the authorized program. All repurchased shares are held in treasury. The 1% U.S. federal excise tax on certain repurchases of stock by publicly traded U.S. corporations enacted as part of the Inflation Reduction Act of 2022 applies to our share repurchase program.

Repurchases may be made from time to time in the open market, in privately negotiated transactions, or by such other means as will comply with applicable state and federal securities laws. The timing of any repurchases under the share repurchase program will depend on market conditions, contractual limitations and other considerations. The program may be extended, modified, suspended or discontinued at any time, and does not obligate the Company to repurchase any dollar amount or number of shares.

Overview of Cash Flow Activities — The following table summarizes cash flows provided by (used in) by type of activity, for the following periods (in thousands):

	Three Months Ended March 31,
	2024			2023
Operating activities	$	96,426		$	62,857
Investing activities	$	(937,644	)	$	(106,976	)
Financing activities	$	829,580		$	117,116

Operating Activities — Net cash provided by operating activities increased $33.6 million in the three months ended March 31, 2024 compared to the corresponding period in 2023 primarily attributable to an increase from revenues offset with an increase in lease operating expense of $53.5 million. Additionally, there was an increase in settlements of asset retirement obligations of $17.8 million.

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Investing Activities — Net cash used in investing activities increased $830.7 million in the three months ended March 31, 2024 compared to the corresponding period in 2023 primarily due to cash paid for the QuarterNorth Acquisition of $916.0 million, net of cash acquired. This was offset by cash proceeds of $142.0 million from the TLCS Divestiture. See Part I, Item 1. “Financial Statements — Note 2 — Acquisitions and Divestitures” for additional information. Additionally, there was an increase in capital expenditures of $42.1 million.

Financing Activities — Cash flow from financing activities changed $712.5 million in the three months ended March 31, 2024 compared to the corresponding period in 2023. During the three months ended March 31, 2024, the issuance of the New Senior Notes in February 2024 generated $1,224.5 million after deferred financing costs. The net proceeds from the New Senior Notes funded the $897.1 million redemption of the 12.00% Notes and the 11.75% Notes and partially funded the cash portion of the QuarterNorth Acquisition. See Part I, Item 1. “Financial Statements — Note 7 — Debt” for additional information. Additionally, on January 17, 2024, we entered into upsized underwritten public offering of 34.5 million shares of our common stock, which generated net proceeds of $387.7 million. The net proceeds from this equity offering partially funded the cash portion of the QuarterNorth Acquisition.

Overview of Debt Instruments

9.000% Second-Priority Senior Secured Notes — due February 2029 — The 9.000% Second-Priority Senior Secured Notes due 2029 (the “9.000% Notes”) were issued pursuant to an indenture dated February 7, 2024, by and among the Company, Talos Production Inc. (the “Issuer”), the subsidiary guarantors party thereto (together with the Company, the “Guarantors”) and Wilmington Trust, National Association, as trustee and collateral agent. The 9.000% Notes are secured on a second-priority senior secured basis by liens on substantially the same collateral as the collateral securing the Issuer’s existing first-priority obligations under its Bank Credit Facility. The 9.000% Notes rank equally in right of payment with all of the Issuer’s and the Guarantors’ existing and future senior obligations, are senior in right of payment to any obligations of the Issuer and the Guarantors future debt that is, by its term, expressly subordinated in right of payment to the 9.000% Notes and, to the extent of the value of the collateral, are effectively senior to all existing and future unsecured obligations of the Issuer and the Guarantors (other than the Company) and any future obligations of the Issuer and the Guarantors that are secured by the collateral on a junior-priority basis. The 9.000% Notes are effectively pari passu with all of the Issuer’s and the Guarantors’ existing and future obligations that are secured by the collateral on a second-priority basis including the 9.375% Notes (as defined below) and are effectively junior to any existing and future obligations of the Issuer and the Guarantors that are secured by the collateral on a senior-priority basis to the 9.000% Notes including indebtedness under the Bank Credit Facility. The 9.000% Notes mature on February 1, 2029 and have interest payable semi-annually each February 1 and August 1, commencing August 1, 2024. See Part I, Item 1. “Financial Statements — Note 7 — Debt” for more information.

9.375% Second-Priority Senior Secured Notes — due February 2031 — The 9.375% Second-Priority Senior Secured Notes due 2031 (the “9.375% Notes” and, together with the 9.000% Notes, the “New Senior Notes”) were issued pursuant to an indenture dated February 7, 2024, by and among the Company, the Issuer, the Guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent. The 9.375% Notes are secured on a second-priority senior secured basis by liens on substantially the same collateral as the collateral securing the Issuer’s existing first-priority obligations under its Bank Credit Facility. The 9.375% Notes rank equally in right of payment with all of the Issuer’s and the Guarantors’ existing and future senior obligations, are senior in right of payment to any obligations of the Issuer and the Guarantors future debt that is, by its term, expressly subordinated in right of payment to the 9.375% Notes and, to the extent of the value of the collateral, are effectively senior to all existing and future unsecured obligations of the Issuer and the Guarantors (other than the Company) and any future obligations of the Issuer and the Guarantors that are secured by the collateral on a junior-priority basis. The 9.375% Notes are effectively pari passu with all of the Issuer’s and the Guarantors’ existing and future obligations that are secured by the collateral on a second-priority basis including the 9.000% Notes and are effectively junior to any existing and future obligations of the Issuer and the Guarantors that are secured by the collateral on a senior-priority basis to the 9.375% Notes including indebtedness under the Bank Credit Facility. The 9.375% Notes mature on February 1, 2031 and have interest payable semi-annually each February 1 and August 1, commencing August 1, 2024. See Part I, Item 1. “Financial Statements — Note 7 — Debt” for more information.

Bank Credit Facility — matures March 2027 — We maintain a Bank Credit Facility with a syndicate of financial institutions (the “Bank Credit Facility”). The Bank Credit Facility provides for determination of the borrowing base based on our proved producing reserves and a portion of our proved undeveloped reserves. The borrowing base is redetermined by the lenders at least semi-annually during the second quarter and fourth quarter each year. See Part I, Item 1. “Financial Statements — Note 7 — Debt” for more information.

Redemption of the 12.00% Second-Priority Senior Secured Notes — due January 2026 — On February 7, 2024, we redeemed $638.5 million aggregate principal amount of the 12.00% Notes using the proceeds from the issuance of the New Senior Notes. See Part I, Item 1. “Financial Statements — Note 7 — Debt” for more information.

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Redemption of the 11.75% Senior Secured Second Lien Notes — due April 2026 — We redeemed $227.5 million aggregate principal amount of the 11.75% Notes using the proceeds from the issuance of the New Senior Notes. On February 7, 2024, the Company irrevocably deposited funds with the trustee sufficient to satisfy and discharge the 11.75% Notes until redeemed on April 15, 2024 with the funds deposited with the trustee. Concurrently, the Company elected to satisfy and discharge the 11.75% Notes in accordance with its terms and the trustee acknowledged such discharge and satisfaction. See Part I, Item 1. “Financial Statements — Note 7 — Debt” for more information.

Material Cash Requirements

We have various contractual obligations in the normal course of our operations. Some of these obligations may be reflected in our accompanying Condensed Consolidated Financial Statements, while other obligations, such as certain operating leases and capital commitments, are not reflected on our accompanying Condensed Consolidated Financial Statements.

The following table and discussion summarize our material cash requirements from known contractual obligations as of March 31, 2024 (in thousands):

	2024		2025		2026		2027		2028		Thereafter		Total(4)
Long-term financing obligations:
Debt principal	$	—	$	—	$	—	$	325,000	$	—	$	1,250,000	$	1,575,000
Debt interest		85,569		144,904		144,904		122,359		114,844		174,609		787,189
Vessel commitments(1)		35,748		14,210		—		—		—		—		49,958
Derivative liabilities		63,991		13,789		—		—		—		—		77,780
Operating lease obligations		4,220		5,531		4,983		4,753		4,610		4,583		28,680
Finance lease(2)		35,136		19,520		—		—		—		—		54,656
Purchase obligations(3)		118,251		550		—		—		—		—		118,801
Other commitments		2,108		—		—		—		—		—		2,108
Total contractual obligations(4)	$	345,023	$	198,504	$	149,887	$	452,112	$	119,454	$	1,429,192	$	2,694,172

(1)Includes vessel commitments we will utilize for certain Deepwater well intervention, drilling operations and decommissioning activities. These commitments represent gross contractual obligations and accordingly, other joint owners in the properties operated by us will be billed for their working interest share of such costs.

(2)Lease agreement for the HP-I floating production facility in the Phoenix Field.

(3)Includes committed purchase orders to execute planned future drilling activities.

(4)This table does not include our estimated discounted liability for dismantlement, abandonment and restoration costs of oil and natural gas properties of $1,109.3 million as of March 31, 2024. For additional information regarding these liabilities, please see Part I, Item 1. “Financial Statements — Note 8 — Asset Retirement Obligations.” Additionally, this table does not include liabilities associated with our decommissioning obligations. For additional information regarding our decommissioning obligations, please see Part I, Item 1. “Financial Statements — Note 13 — Commitments and Contingencies.”

Performance Obligations — As of March 31, 2024, we had secured performance bonds totaling $1.5 billion primarily related to plugging and abandonment of wells and removal of facilities in the U.S. Gulf of Mexico. Additionally, we had secured letters of credit issued under our Bank Credit Facility totaling $10.8 million. Letters of credit that are outstanding reduce the available revolving credit commitments. See the subsection entitled “— Known Trends and Uncertainties — BOEM Bonding Requirements” for additional information on the future cost of compliance with respect to BOEM supplemental bonding requirements that could have a material adverse effect on our business, properties, results of operations and financial condition. See Part I, Item 1. “Financial Statements — Note 7 — Debt” for further information on the Bank Credit Facility.

Critical Accounting Estimates

We consider accounting policies related to oil and natural gas properties, proved reserve estimates, fair value measure of financial instruments, asset retirement obligations, revenue recognition, imbalances and production handling fees and income taxes as critical accounting policies. The policies include significant estimates made by management using information available at the time the estimates are made. However, these estimates could change materially if different information or assumptions were used. There have been no changes to our critical accounting estimates from those disclosed in our 2023 Annual Report under Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates.”

Recently Adopted Accounting Standards

None.

Recently Issued Accounting Standards

No recently issued accounting standards were material to us.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

For information regarding our exposures to certain market risks, refer to Part II, Item 7A. “Quantitative and Qualitative Disclosures about Market Risk” in our 2023 Annual Report. Except as discussed below, there have been no material changes from the disclosures presented in our 2023 Annual Report regarding our exposures to certain market risks.

Price Risk Management Activities

We had commodity derivative instruments in place to reduce the price risk associated with future production of 16,569 MBbls of crude oil and 29,677 MMBtu of natural gas at March 31, 2024, with a net derivative liability position of $53.7 million. For additional information regarding our commodity derivative instruments, see Part I, Item 1. “Financial Statements — Note 5 — Financial Instruments,” included elsewhere in this Quarterly Report. The table below presents the hypothetical sensitivity of our commodity price risk management activities to changes in fair values arising from immediate selected potential changes in oil and natural gas prices at March 31, 2024 (in thousands):

				Oil and Natural Gas Derivatives
				Ten Percent Increase						Ten Percent Decrease
	Fair Value			Fair Value			Change			Fair Value		Change
Price impact(1)	$	(53,672	)	$	(175,027	)	$	(121,355	)	$	68,688	$	122,360

(1)Presents the hypothetical sensitivity of our commodity price risk management activities to changes in fair values arising from changes in oil and natural gas prices.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, our principal executive officer and principal financial officer have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report. Our disclosure controls and procedures are designed to ensure that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and to ensure that the information we are required to disclose in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 2024.

Internal Control over Financial Reporting

On March 4, 2024, we completed the QuarterNorth Acquisition. Other than integrating the acquired operations of QuarterNorth into our overall internal control over financial reporting and related processes, there were no other changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended March 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

U.S. Specialty Insurance Company (“USSI”) has issued approximately $80.0 million in surety bonds on behalf of QuarterNorth, as Principal. USSI claims that collateral equivalent to the amount of the bonds is now required due to the merger of QuarterNorth into the Company. On March 20, 2024, USSI filed suit to require QuarterNorth to provide collateral in the amount of the bonds to secure QuarterNorth’s alleged obligations owed to USSI. Furthermore, USSI has notified certain purchasers of QuarterNorth’s production that USSI believes QuarterNorth is in default of its obligations and has requested that payment for production that is owed to QuarterNorth be made to USSI. Certain buyers of QuarterNorth’s production have withheld payment to QuarterNorth until this matter is resolved. The Company expects to replace most or all of the bonds issued by USSI during the second quarter of 2024, which will substantially or fully resolve this matter.

In June 2019, David M. Dunwoody, Jr., former President of EnVen, filed a lawsuit against EnVen in Texas District Court alleging that the circumstances of his resignation entitled him to the severance payments and benefits under his employment agreement dated as of November 6, 2015 as a resignation for “Good Reason.” The litigation was assumed as part of the EnVen Acquisition. The Company paid the judgment of $14.4 million, inclusive of Mr. Dunwoody’s legal fees and interest, during the three months ended March 31, 2024.

There have been no additional material developments with respect to the information previously reported under Part I, Item 3. “Legal Proceedings” of our 2023 Annual Report.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under Part I, Item 1A. “Risk Factors” included in our 2023 Annual Report and the risk factors and other cautionary statements contained in our other SEC filings, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. There have been no material changes in our risk factors from those described in our 2023 Annual Report or our other SEC filings.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Our Board of Directors authorized a stock repurchase program on March 20, 2023 with an approved limit of $100.0 million and no set term limits. Repurchases may be made from time to time in the open market, in a privately negotiated transaction, or by such other means as will comply with applicable state and federal securities laws. The timing of any repurchases under the share repurchase program will depend on market conditions, contractual limitations and other considerations. The program may be extended, modified, suspended or discontinued at any time, and does not obligate the Company to repurchase any dollar amount or number of shares. There were no shares of common stock repurchased during the three months ended March 31, 2024. As of March 31, 2024, there is $52.5 million remaining under the authorized program.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits

Exhibit Number	Description
2.1#	Agreement and Plan of Merger, dated as of September 21, 2022, by and among Talos Energy Inc., Talos Production Inc., Tide Merger Sub I Inc., Tide Merger Sub II LLC, Tide Merger Sub III LLC, BCC EnVen Investments, L.P. and EnVen Energy Corporation (incorporated by reference to Exhibit 2.1 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on September 22, 2022).
2.2#	Agreement and Plan of Merger, dated as of January 13, 2024, by and among Talos Energy Inc., QuarterNorth Energy Inc., Compass Star Merger Sub Inc. and the Equityholder Representatives named therein (incorporated by reference to Exhibit 2.1 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on January 16, 2024).
3.1	Second Amended and Restated Certificate of Incorporation of Talos Energy Inc. (incorporated by reference to Exhibit 3.1 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on February 14, 2023).
3.2	Second Amended and Restated Bylaws of Talos Energy Inc. (incorporated by reference to Exhibit 3.2 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on February 14, 2023).
4.1	Indenture, dated as of January 4, 2021, by and among Talos Production Inc., the Guarantors named therein and Wilmington Trust, National Association, as trustee and as collateral agent (incorporated by reference to Exhibit 4.1 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on January 8, 2021).
4.2	First Supplemental Indenture, dated as of January 14, 2021, by and among Talos Production Inc., the Guarantors named therein and Wilmington Trust, National Association, as trustee and as collateral agent (incorporated by reference to Exhibit 4.3 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on January 14, 2021).
4.3	Indenture, dated as of February 7, 2024, and by and among Talos Production Inc., the Guarantors named therein and Wilmington Trust, National Association, as trustee, pursuant to which the 2029 Notes were issued. (incorporated by reference to Exhibit 4.1 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on February 7, 2024).
4.4	First Supplemental Indenture, dated as of March 4, 2024, by and among Talos Production Inc., each of the guarantors party thereto and Wilmington Trust, National Association, as trustee and as collateral agent (9.000% Senior Notes) (incorporated by reference to Exhibit 4.2 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on March 5, 2024).
4.5	Indenture, dated as of February 7, 2024, and by and among Talos Production Inc., the Guarantors named therein and Wilmington Trust, National Association, as trustee, pursuant to which the 2031 Notes were issued. (incorporated by reference to Exhibit 4.1 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on February 7, 2024).
4.6	First Supplemental Indenture, dated as of March 4, 2024, by and among Talos Production Inc., each of the guarantors party thereto and Wilmington Trust, National Association, as trustee and as collateral agent (9.375% Senior Notes) (incorporated by reference to Exhibit 4.3 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on March 5, 2024).
4.7	Form of 12.00% Second-Priority Senior Secured Note due 2026 (included as Exhibit A to Exhibit 4.1 hereto) (incorporated by reference to Exhibit 4.1 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on January 8, 2021).
4.8	Form of 9.000% Second-Priority Senior Secured Note due 2029 (included as Exhibit A to Exhibit 4.4 hereto) (incorporated by reference to Exhibit 4.2 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on February 7, 2024).
4.9	Form of 9.375% Second-Priority Senior Secured Note due 2031 (included as Exhibit A in Exhibit 4.5 hereto) (incorporated by reference to Exhibit 4.4 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on February 7, 2024).
4.10	Registration Rights Agreement, dated as of January 4, 2021, by and among Talos Production Inc., the Guarantors named therein and J.P. Morgan Securities LLC, as representative of the initial purchasers of the 2026 Notes (incorporated by reference to Exhibit 4.3 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on January 8, 2021).
4.11	Registration Rights Agreement, dated as of January 14, 2021, by and among Talos Production Inc., the Guarantors named therein and J.P. Morgan Securities LLC, as representative of the initial purchasers of the 2026 Notes (incorporated by reference to Exhibit 4.4 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on January 14, 2021).

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4.12	Registration Rights Agreement, dated September 21, 2022, by and among Talos Energy Inc. and the Persons listed on Schedule A thereto (incorporated by reference to Exhibit 4.1 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on September 22, 2022).
4.13	Second Supplemental Indenture, dated as of October 27, 2022, among Talos Production Inc., the Guarantors named therein and Wilmington Trust National Association, as trustee and as collateral agent (incorporated by reference to Exhibit 4.1 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on October 28, 2022).
4.14	Indenture, dated as of April 15, 2021, by and among Energy Ventures GoM LLC, EnVen Finance Corporation, Talos Production Inc. (as successor in interest to EnVen Energy Corporation), the other guarantors party thereto and Wilmington Trust, National Association, as trustee and as collateral agent (incorporated by reference to Exhibit 4.1 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on February 14, 2023).
4.15	Second Supplemental Indenture, dated as of February 13, 2023, among Talos Production Inc., each of the other guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent (incorporated by reference to Exhibit 4.2 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on February 14, 2023).
4.16	Third Supplemental Indenture, dated as of February 13, 2023, among Talos Production Inc., Energy Ventures GoM LLC, EnVen Finance Corporation, each of the other guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent (incorporated by reference to Exhibit 4.4 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on February 14, 2023).
4.17	Registration Rights Agreement, dated as of March 4, 2024, by and among Talos Energy Inc. and each of the persons listed on Schedule A thereto (incorporated by reference to Exhibit 4.1 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on March 5, 2024).
10.1#	Form of QuarterNorth Support Agreement, by and among QuarterNorth Energy Inc., Talos Energy Inc. and the other parties thereto (incorporated by reference to Exhibit 10.1 to Talos Energy Inc.’s Form 8-K (File No. 001-38497) filed with the SEC on January 16, 2024).
10.2†	Form of Indemnification Agreement (Directors and Officers) (incorporated by reference to Exhibit 10.12 to Talos Energy’s Inc. 10-K (File No. 001-38497) filed with the SEC on February 28, 2024).
10.3	Tenth Amendment to Credit Agreement, dated January 13, 2024, by and among Talos Energy Inc., as Holdings and a Guarantor, Talos Production Inc., as the Borrower, the other Guarantors party thereto, JPMorgan Chase, N.A., as the Administrative Agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.33 to Talos Energy’s Inc. 10-K (File No. 001-38497) filed with the SEC on February 28, 2024).
10.4†*	Form of Separation and Release Agreement.
31.1*	Certification of Chief Executive Officer of Talos Energy Inc. pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer of Talos Energy Inc. pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer and Chief Financial Officer of Talos Energy Inc. pursuant to 18 U.S.C. § 1350, as adopted pursuant to the Sarbanes-Oxley Act of 2002.
101.INS*	Inline XBRL Instance.
101.SCH*	Inline XBRL Taxonomy Extension Schema.
101.CAL*	Inline XBRL Taxonomy Extension Calculation.
101.DEF*	Inline XBRL Taxonomy Extension Definition.
101.LAB*	Inline XBRL Taxonomy Extension Label.
101.PRE*	Inline XBRL Taxonomy Extension Presentation.
104*	Cover Page Interactive Date File (Embedded within the Inline XBRL document and included in Exhibit 101).

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*	Filed herewith.
**	Furnished herewith.
†	Identifies management contracts and compensatory plans or arrangements.
#	The exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the SEC upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Talos Energy Inc.
Date:	May 6, 2024	By:	/s/ Sergio L. Maiworm, Jr.
			Sergio L. Maiworm, Jr.
			Chief Financial Officer and Executive Vice President

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EX-10.4

Exhibit 10.4

Executive Form

SEPARATION AND

RELEASE AGREEMENT

ThisSEPARATION AND RELEASE AGREEMENT (this “Agreement”) is entered into by and between Talos Energy Operating Company LLC, a Delaware limited liability company (the “Company”), and [_________] (“Employee”). Talos Energy Inc., a Delaware corporation and parent of the Company (the “Parent”), enters into this Agreement for the limited purpose of acknowledging and agreeing to the provisions set forth in Section 3[ ] and Section 3[ ]. The Company, Employee and, when applicable, the Parent, are each referred to herein individually as a “Party” and collectively as the “Parties.”

WHEREAS, Employee is a participant in the Talos Energy Operating Company LLC Executive Severance Plan (the “Severance Plan”);

WHEREAS, Employee has outstanding equity awards under the Talos Energy Inc. 2021 Long Term Incentive Plan, as amended from time to time (the “LTIP”);

WHEREAS, Employee’s employment with the Company will terminate as of [_________] (the “Separation Date”);

WHEREAS, pursuant to the Severance Plan, Employee is eligible to receive certain severance payments and benefits upon a termination [_________], which severance payments and benefits are conditioned upon Employee’s execution, delivery, and non-revocation of this Agreement;

WHEREAS, pursuant to the applicable award agreements under the LTIP, Employee is entitled to accelerated vesting of certain equity awards upon a termination [_________]; and

WHEREAS, the Parties wish to resolve any and all claims that Employee has or may have against the Company and the other Company Parties (as defined below), including any claims that Employee has or may have arising from or relating to Employee’s employment, or the end of Employee’s employment, with any Company Party.

NOW, THEREFORE, in consideration of the promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged byEmployee and the Company, the Parties hereby agree as follows:

1.Separation from Employment; Resignation.The Parties acknowledge and agree that Employee’s employment with the Company ended as of the Separation Date and that, as of the Separation Date, Employee was no longer employed by any Company Party. The Parties further acknowledge and agree that, as of the Separation Date, Employee automatically resigned (i) as an officer of the Company, the Parent and each of their respective affiliates (as applicable) and (ii) from the board of managers, board of directors, or similar governing body of each of the Company, the Parent and their respective affiliates (as applicable) and any other corporation, limited liability company, or other entity in which the Company or any of its affiliates holds an equity interest or with respect to which board or similar governing body Employee serves as the designee or other representative of the Company or any of its affiliates. Employee agrees to (A) reasonably cooperate with the Company and its affiliates to effectuate the resignations described in the preceding sentence and (B) complete any other actions the Company or its affiliates may reasonably require to effect such resignation.

2.Restrictive Covenants; Permitted Disclosures.

(a)Employee acknowledges and agrees that, in connection with Employee’s employment with the Company, Employee has obtained Confidential Information (as defined in the Severance Plan), and that Employee has continuing (i) obligations to the Company and the other Company Parties (including with respect to confidentiality), Section 7 of the Severance Plan and the Company’s employee handbook, (ii) non-disparagement obligations to the Company and the other Company Parties pursuant to Section 10 of the Severance Plan, and (iii) non-solicitation obligations pursuant to Section 8 of the Severance Plan (the obligations referenced in the preceding clauses (i), (ii) and (iii) are herein referred to as the “Restrictive Covenants”). In entering into this Agreement, Employee acknowledges the continued effectiveness and enforceability of the Restrictive Covenants, and expressly reaffirms Employee’s commitment to abide by (and agrees that he will abide by) the terms of the Restrictive Covenants.

(b)Nothing in this Agreement or the Restrictive Covenants shall prohibit or restrict Employee from lawfully (i) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by any governmental or regulatory agency, entity, or official(s) (collectively, “Governmental Authorities”) regarding a possible violation of any law, (ii) responding to any inquiry or legal process directed to Employee individually from any such Governmental Authorities, (iii) testifying, participating, or otherwise assisting in an action or proceeding by any such Governmental Authorities relating to a possible violation of law, or (iv) making any other disclosures that are protected under the whistleblower provisions of any applicable law. Additionally, pursuant to the federal Defend Trade Secrets Act of 2016, Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (x) is made (A) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law, (y) is made to Employee’s attorney in relation to a lawsuit for retaliation against Employee for reporting a suspected violation of law, or (z) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Nothing in this Agreement requires Employee to obtain prior authorization from the Company or its affiliates before engaging in any conduct described in this Section 2(b), or to notify the Company or its affiliates that Employee has engaged in any such conduct.

3.Severance Payments and Benefits.Provided that Employee (i) returns an executed copy of this Agreement to the Company, care of [____________], 333 Clay Street, Suite 3300, Houston, TX 77002 or via email to [____________], no earlier than the Separation Date and no later than the close of business on [_________] and does not revoke the acceptance of this Agreement in the time provided to do so and (ii) abides by the terms hereof (including those terms set forth in Section 2 above), then [_________].

Employee acknowledges and agrees that the consideration referenced in this Section 3 represents the entirety of the amounts Employee is eligible to receive as severance pay and benefits from the Company or any other Company Party, including under the LTIP, the Severance Plan or any other severance plan or policy of the Company or any other Company Party. Employee further acknowledges that as of the Separation Date, Employee will automatically forfeit all unvested restricted stock units and performance share units for which the service requirement has not been satisfied as of the Separation Date, in each case, determined after giving effect to Section 3[ ] and Section 3[ ] above and such awards shall terminate automatically and without any further action by the Company and at no cost to the Company.

2

4.Satisfaction of Severance Obligations; Receipt of Leaves and Other Compensation. Employee expressly acknowledges and agrees that Employee would not be entitled to the consideration set forth in Section 3 (or any portion thereof) but for Employee’s entry into this Agreement. Employee further acknowledges and agrees that Employee has been paid in full all bonuses, been provided all benefits, been afforded all rights and otherwise received all wages, compensation, and other sums that Employee has been owed or ever could be owed by each Company Party (with the exception of any sums to which Employee may be entitled pursuant to this Agreement) through the date Employee signs this Agreement (the “Signing Date”). Employee further acknowledges and agrees that Employee has received or has waived all leaves (paid and unpaid) that Employee has been entitled to receive from each Company Party through the Signing Date. Except as otherwise provided in Section 3, this Agreement extinguishes all rights, if any, that Employee may have and ever could have, contractual or otherwise, relating to or arising out of Employee’s employment or the termination of Employee’s employment through the Signing Date.

5.Complete Release of Claims.

(a)For good and valuable consideration, including the consideration set forth in Section 3 (and any portion thereof), Employee hereby forever releases and discharges the Company, Parent, each of their respective affiliates, and each of their respective past, present, and future parents, subsidiaries, predecessors, successors, and assigns, along with each of the foregoing entities’ respective affiliates, owners, shareholders, partners, officers, directors, members, managers, employees, trustees, representatives, agents, attorneys, successors, administrators, fiduciaries, insurers, and benefit plans and the trustees and fiduciaries of such plans, in their personal and representative capacities (collectively, the “Company Parties”) from, and Employee hereby waives, any and all claims, demands, liabilities, and causes of action, whether statutory or at common law, including any claim for salary, benefits, payments, expenses, costs, damages, penalties, compensation, remuneration, contractual entitlements, and all claims or causes of action relating to any matter that actually or allegedly occurred, whether known or unknown, on or prior to the Signing Date, including, (i) any alleged violation of: (A) the Age Discrimination in Employment Act of 1967 (including as amended by the Older Workers Benefit Protection Act); (B) Title VII of the Civil Rights Act of 1964; (C) the Civil Rights Act of 1991; (D) Sections 1981 through 1988 of Title 42 of the United States Code; (E) ERISA; (F) the Immigration Reform Control Act; (G) the Americans with Disabilities Act of 1990; (H) the National Labor Relations Act; (I) the Occupational Safety and Health Act; (J) the Family and Medical Leave Act of 1993; (K) the Texas Labor Code (specifically including the Texas Payday Law, the Texas Anti-Retaliation Act, Chapter 21 of the Texas Labor Code, and the Texas Whistleblower Act); (L) any local, state, or federal anti-discrimination or anti-retaliation law; and (M) any other local, state, or federal law, regulation, or ordinance; (ii) any public policy, contract, tort, or common law claim; (iii) any allegation for costs, fees, or other expenses, including attorneys’ fees, related to any Released Claim; (iv) any and all claims Employee may have arising under or as the result of any alleged breach of any contract (including any offer letter, other employment contract, or incentive or equity-based compensation plan or agreement) with any Company Parties; (v) any claim arising from, or relating to, Employee’s status as a holder of any interests in the Company or any other Company Party; and (vi) any claim for compensation or benefits of any kind not expressly set forth in the Separation Agreement (collectively, the “Released Claims”). This Agreement is not intended to indicate that any such claims exist or that, if they do exist, they are meritorious. Rather, Employee is simply agreeing that, in exchange for any consideration received by Employee pursuant to Section 3, any and all potential claims of this nature that Employee may have against the Company Parties, regardless of whether they actually exist, are expressly settled, compromised, and waived. THIS RELEASE INCLUDES MATTERS ATTRIBUTABLE TO THE SOLE OR PARTIAL NEGLIGENCE (WHETHER GROSS OR SIMPLE) OR OTHER FAULT, INCLUDING STRICT LIABILITY, OF ANY OF THE COMPANY PARTIES.

3

(b)Notwithstanding this release of liability, nothing in this Agreement prevents Employee from filing any non-legally waivable claim, including a challenge to the validity of this Agreement, with the Equal Employment Opportunity Commission (“EEOC”), Securities and Exchange Commission (“SEC”) or other Governmental Authority, or participating in (or cooperating with) any investigation or proceeding conducted by the EEOC, SEC or other Governmental Authority; however, Employee understands and agrees that Employee is waiving any and all rights to recover any monetary or personal relief or recovery from a Company Party as a result of any Governmental Authority proceeding or subsequent legal actions. Further, in no event shall the Released Claims include (i) any claim that first arises after the Signing Date, including any claim to enforce Employee’s rights under this Agreement, (ii) any claim to any vested benefits under ERISA, or (iii) any right to receive an award for information provided to any Governmental Authorities (including the SEC).

6.Representations and Warranties Regarding Claims. Employee hereby represents and warrants that Employee has not made any assignment, sale, delivery, transfer, or conveyance of any rights Employee has asserted or may have against any of the Company Parties with respect to any Released Claim.

7.Employee’s Acknowledgements. Employee acknowledges that:

(a)Employee has been advised, and hereby is advised in writing, to consult an attorney of Employee’s choosing before signing this Agreement;

(b)No material changes have been made to this Agreement since it was first provided to Employee and Employee has been given sufficient time (at least 21 days) to review this Agreement and consider whether to accept this Agreement before signing it;

(c)Employee is not otherwise entitled to the consideration set forth in this Agreement, but for his entry into (and non-revocation of) this Agreement;

(d)Employee fully understands the final and binding effect of this Agreement, Employee is signing this Agreement knowingly, voluntarily, and of Employee’s own free will, and Employee understands and agrees to each of the terms of this Agreement;

(e)The only matters relied upon by Employee and causing Employee to sign this Agreement are the provisions set forth in writing within the four corners of this Agreement; and

(f)No Company Party has provided any tax or legal advice to Employee regarding this Agreement and Employee has had an adequate opportunity to receive sufficient tax and legal advice from advisors of Employee’s own choosing such that Employee enters into this Agreement with full understanding of the tax and legal implications thereof.

8.No Waiver. No failure by any Party at any time to give notice of any breach by the other Party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

9.Applicable Law.This Agreement shall be construed according to the laws of the State of Texas without regard to its conflict of laws principles that would result in the application of the laws of another jurisdiction; provided, however, that Section 3[ ] and Section 3[ ] shall be governed by the laws of the State of Delaware, excluding any conflicts of law principles that might refer such construction to the laws of another jurisdiction.

4

10.Severability.The Parties hereby agree that any term or provision of this Agreement (or portion thereof) that renders such term or provision (or portion thereof) or any other term or provision (or portion thereof) of this Agreement invalid or unenforceable in any respect shall be severable and shall be modified or severed to the extent necessary to avoid rendering such term or provision invalid or unenforceable, and such modification or severance shall be accomplished in the manner that most nearly preserves the benefit of the Parties’ bargain hereunder.

11.Withholding of Taxes and Other Employee Deductions.The Company may withhold from all payments made pursuant to this Agreement all federal, state, local, and other taxes and withholdings as may be required pursuant to any law or governmental regulation or ruling.

12.Affiliate Definition. As used in this Agreement, the term “affiliate,” as used with respect to a particular person or entity, shall mean any other person or entity that owns or controls, is owned or controlled by, or is under common ownership or control with, such particular person or entity.

13.Counterparts.This Agreement may be executed in one or more counterparts (including portable document format (.pdf) and facsimile counterparts), each of which shall be deemed to be an original, but all of which together will constitute one and the same agreement.

14.Third-Party Beneficiaries.Each Company Party that is not a signatory hereto shall be a third-party beneficiary of Employee’s covenants and release of claims set forth in this Agreement is entitled to enforce such provisions as if it was a party hereto.

15.Amendment; Entire Agreement. This Agreement may not be changed orally but only by an agreement in writing agreed to and signed by the Parties. This Agreement and the Severance Plan, constitute the entire agreement of the Parties with regard to the subject matter hereof and supersede all prior and contemporaneous agreements and understandings, oral or written, between Employee and any Company Party with regard to the subject matter hereof.

16.Interpretation.Titles and headings to Sections hereof are for the purpose of reference only and shall in no way limit, define, or otherwise affect the provisions hereof. Unless the context requires otherwise, all references herein to a law, regulation, agreement, instrument or other document shall be deemed to refer to such law, regulation, agreement, instrument or other document as amended, supplemented, modified and restated from time to time to the extent permitted by the provisions thereof, and references to particular provisions of laws or regulations include a reference to the corresponding provisions of any succeeding law or regulation. The word “or” as used herein is not exclusive and is deemed to have the meaning “and/or.” The words “herein”, “hereof”, “hereunder”, and other compounds of the word “here” shall refer to the entire Agreement and not to any particular provision hereof. The use herein of the word “including” following any general statement, term, or matter shall not be construed to limit such statement, term, or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as “without limitation”, “but not limited to”, or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term, or matter. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against any Party hereto, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by each of the Parties hereto and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the Parties.

5

17.Continued Cooperation. Following the Separation Date, Employee will provide the Company and, as applicable, the other Company Parties, with assistance, when reasonably requested by the Company, with respect to transitioning matters related to Employee’s job responsibilities and otherwise providing information relating to the duties Employee’s performed for the Company and the other Company Parties. In requesting and scheduling Employee’s assistance pursuant to this Section 17, the Company shall take into consideration Employee’s personal and professional obligations.

18.Further Assurances. Employee shall, and shall cause Employee’s affiliates, representatives, and agents to, from time to time at the request of the Company and without any additional consideration, furnish the Company with such further information or assurances, execute and deliver such additional documents, instruments, and conveyances, and take such other actions and do such other things, as may be reasonably necessary or desirable, as determined in the sole discretion of the Company, to carry out the provisions of this Agreement.

19.Section 409A. This Agreement and the payments provided hereunder are intended be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986 and the Treasury regulations and interpretive guidance issued thereunder (collectively, “Section 409A”) and shall be construed and administered in accordance with such intent. Each installment payment of the Separation Payment shall be deemed and treated as a separate payment for purposes of Section 409A. Notwithstanding the foregoing, the Company makes no representations that the benefits provided under this Agreement are exempt from the requirements of Section 409A and in no event shall the Company or any other Company Party be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by Employee on account of non-compliance with Section 409A.

20.Revocation Right.Employee has seven days after signing this Agreement to revoke it. This Agreement will not become effective or enforceable until the revocation period has expired. Any notice of revocation of this Agreement Release is effective only if received by [____________], 333 Clay Street, Suite 3300, Houston, TX 77002 or via email to [____________] in writing by 11:59 p.m., Central Standard Time, on or before the seventh day after Employee signs this Agreement. Employee understands that if an effective revocation is delivered in the foregoing manner and timeframe, then no consideration shall be provided to Employee pursuant to Section 3 of this Agreement or the Severance Plan, and the release of claims set forth in Section 5 of this shall be of no force or effect, and all remaining provisions of this Agreement shall remain in full force and effect;

21.Return of Property. Employee represents and warrants that Employee has returned to the Company all property belonging to the Company and any other Company Party, including all computer files and other electronically stored information, client materials, electronically stored information, and other materials provided to Employee by the Company or any other Company Party in the course of Employee’s employment and Employee further represents and warrants that Employee has not maintained a copy of any such materials in any form.

[The remainder of this page was left blank intentionally; the signature page follows.]

6

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized officer thereof and Employee has executed this Agreement, in each case, as of the dates set forth beneath their signature blocks below, effective for all purposes as provided above.

EMPLOYEE

[____________]

Date:

TALOS ENERGY OPERATING COMPANY LLC

By:

Name: [____________]

Title: [____________]

Date:

With respect to Section 3[ ] and Section 3[ ] only:

TALOS ENERGY INC.

By:

Name: [____________]

Title: [____________]

Date:

A-1

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Timothy S. Duncan, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Talos Energy Inc. (“registrant”)

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ Timothy S. Duncan
May 6, 2024	Timothy S. Duncan
	Chief Executive Officer and President (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Sergio L. Maiworm, Jr., certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Talos Energy Inc. (“registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ Sergio L. Maiworm, Jr.
May 6, 2024	Sergio L. Maiworm, Jr.
	Chief Financial Officer and Executive Vice President (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER

UNDER SECTION 906 OF THE

SARBANES OXLEY ACT OF 2002, 18 U.S.C. § 1350

Pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and in connection with the accompanying Quarterly Report on Form 10-Q of Talos Energy Inc. (the “Company”) for the quarterly period ended March 31, 2024 that is being filed concurrently with the Securities and Exchange Commission on the date hereof (the “Report”), Timothy S. Duncan, Chief Executive Officer of the Company, and Sergio L. Maiworm, Jr., Chief Financial Officer of the Company, each certify, to the best of his knowledge, that:

i.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

ii.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 6, 2024	/s/ Timothy S. Duncan
	Timothy S. Duncan
	Chief Executive Officer and President (Principal Executive Officer)
	/s/ Sergio L. Maiworm, Jr.
	Sergio L. Maiworm, Jr.
	Chief Financial Officer and Executive Vice President (Principal Financial Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2024	Apr. 29, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2024
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Trading Symbol	TALO
Title of 12(b) Security	Common Stock
Security Exchange Name	NYSE
Entity Registrant Name	Talos Energy Inc.
Document Quarterly Report	true
Document Transition Report	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Incorporation, State or Country Code	DE
Entity File Number	001-38497
Entity Tax Identification Number	82-3532642
Entity Address, Address Line One	333 Clay Street
Entity Address, Address Line Two	Suite 3300
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77002
City Area Code	713
Local Phone Number	328-3000
Entity Central Index Key	0001724965
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		183,919,349

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 21,001	$ 33,637
Accounts receivable
Trade, net	248,892	178,977
Joint interest, net	143,801	79,337
Other, net	16,652	19,296
Assets from price risk management activities	18,753	36,152
Prepaid assets	75,776	64,387
Other current assets	16,036	10,389
Total current assets	540,911	422,175
Property and equipment:
Proved properties	9,268,050	7,906,295
Unproved properties, not subject to amortization	654,906	268,315
Other property and equipment	34,440	34,027
Total property and equipment	9,957,396	8,208,637
Accumulated depreciation, depletion and amortization	(4,383,970)	(4,168,328)
Total property and equipment, net	5,573,426	4,040,309
Other long-term assets:
Restricted cash	103,360	102,362
Assets from price risk management activities	5,355	17,551
Equity method investments	108,036	146,049
Other well equipment	63,507	54,277
Notes receivable, net	16,619	16,207
Operating lease assets	12,676	11,418
Other assets	10,494	5,961
Total assets	6,434,384	4,816,309
Current liabilities:
Accounts payable	136,833	84,193
Accrued liabilities	272,231	227,690
Accrued royalties	71,007	55,051
Current portion of long-term debt	0	33,060
Current portion of asset retirement obligations	71,799	77,581
Liabilities from price risk management activities	74,033	7,305
Accrued interest payable	21,106	42,300
Current portion of operating lease liabilities	3,543	2,666
Other current liabilities	46,310	48,769
Total current liabilities	696,862	578,615
Long-term liabilities:
Long-term debt	1,533,952	992,614
Asset retirement obligations	1,037,533	819,645
Liabilities from price risk management activities	3,747	795
Operating lease liabilities	18,271	18,211
Other long-term liabilities	391,834	251,278
Total liabilities	3,682,199	2,661,158
Commitments and Contingencies (Note 11)
Stockholders' equity:
Preferred stock; $0.01 par value; 30,000,000 shares authorized and zero shares issued or outstanding as of March 31, 2024 and December 31, 2023, respectively	0	0
Common stock; $0.01 par value; 270,000,000 shares authorized; 187,307,298 and 127,480,361 shares issued as of March 31, 2024 and December 31, 2023, respectively	1,873	1,275
Additional paid-in capital	3,257,972	2,549,097
Accumulated deficit	(460,156)	(347,717)
Treasury stock, at cost; 3,400,000 and 3,400,000 shares as of March 31, 2024 and December 31, 2023, respectively	(47,504)	(47,504)
Total stockholdersʼ equity	2,752,185	2,155,151
Total liabilities and stockholdersʼ equity	$ 6,434,384	$ 4,816,309

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	30,000,000	30,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	270,000,000	270,000,000
Common stock, shares issued	187,307,298	127,480,361
Treasury stock, common, shares	3,400,000	3,400,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenues:
Total revenues	$ 429,932	$ 322,582
Operating expenses:
Lease operating expense	135,178	81,362
Production taxes	544	606
Depreciation, depletion and amortization	215,664	147,323
Accretion expense	26,903	19,414
General and administrative expense	69,841	63,187
Other operating (income) expense	(86,043)	2,838
Total operating expenses	362,087	314,730
Operating income (expense)	67,845	7,852
Interest expense	(50,845)	(37,581)
Price risk management activities income (expense)	(87,062)	58,937
Equity method investment income (expense)	(8,054)	7,443
Other income (expense)	(55,896)	6,666
Net income (loss) before income taxes	(134,012)	43,317
Income tax benefit (expense)	21,573	46,543
Net income (loss)	$ (112,439)	$ 89,860
Net income (loss) per common share:
Basic	$ (0.71)	$ 0.85
Diluted	$ (0.71)	$ 0.84
Weighted average common shares outstanding:
Basic	158,490	105,634
Diluted	158,490	106,950
Oil
Revenues:
Revenues	$ 393,221	$ 292,694
Natural Gas
Revenues:
Revenues	23,698	20,183
NGL
Revenues:
Revenues	$ 13,013	$ 9,705

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Treasury Stock
Balance at Dec. 31, 2022	$ 1,165,576	$ 826	$ 1,699,799	$ (535,049)
Balance, Shares at Dec. 31, 2022		82,570,328
Equity based compensation	7,232		7,232
Equity-based compensation tax withholdings	(7,378)		(7,378)
Equity-based compensation stock issuances		$ 11	(11)
Equity-based compensation stock issuances, Shares		1,085,747
Issuance of common stock for acquisitions	832,198	$ 438	831,760
Issuance of common stock for acquisitions, Shares		43,799,890
Purchase of treasury stock, Shares					1,900,000
Purchase of treasury stock	(26,647)				$ (26,647)
Net Income (Loss)	89,860			89,860
Balance at Mar. 31, 2023	2,060,841	$ 1,275	2,531,402	(445,189)	$ (26,647)
Balance, Shares at Mar. 31, 2023		127,455,965
Balance, Shares at Mar. 31, 2023					1,900,000
Balance at Dec. 31, 2023	$ 2,155,151	$ 1,275	2,549,097	(347,717)	$ (47,504)
Balance, Shares at Dec. 31, 2023	127,480,361	127,480,361
Balance, Shares at Dec. 31, 2023	3,400,000				3,400,000
Equity based compensation	$ 4,646		4,646
Equity-based compensation tax withholdings	(5,520)		(5,520)
Equity-based compensation stock issuances		$ 10	(10)
Equity-based compensation stock issuances, Shares		977,485
Issuance of common stock for acquisitions	$ 322,630	$ 243	322,387
Issuance of common stock for acquisitions, Shares		24,349,452
Issuance of common stock, Shares	34,500,000	34,500,000
Issuance of common stock	$ 387,717	$ 345	387,372
Net Income (Loss)	(112,439)			(112,439)
Balance at Mar. 31, 2024	$ 2,752,185	$ 1,873	$ 3,257,972	$ (460,156)	$ (47,504)
Balance, Shares at Mar. 31, 2024	187,307,298	187,307,298
Balance, Shares at Mar. 31, 2024	3,400,000				3,400,000

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities:
Net income (loss)	$ (112,439)	$ 89,860
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation, depletion, amortization and accretion expense	242,567	166,737
Amortization of deferred financing costs and original issue discount	2,598	4,148
Equity-based compensation expense	2,754	3,938
Price risk management activities (income) expense	87,062	(58,937)
Net cash received (paid) on settled derivative instruments	(3,494)	(12,323)
Equity method investment (income) expense	8,054	(7,443)
Loss (gain) on extinguishment of debt	60,256	0
Settlement of asset retirement obligations	(27,907)	(10,113)
Loss (gain) on sale of business	(86,940)	0
Changes in operating assets and liabilities:
Accounts receivable	8,020	36,821
Other current assets	(5,818)	7,735
Accounts payable	10,707	(4,894)
Other current liabilities	(65,249)	(116,637)
Other non-current assets and liabilities, net	(23,745)	(36,035)
Net cash provided by (used in) operating activities	96,426	62,857
Cash flows from investing activities:
Exploration, development and other capital expenditures	(146,077)	(103,962)
Proceeds from (cash paid for) acquisitions, net of cash acquired	(916,045)
Proceeds from (cash paid for) acquisitions, net of cash acquired		17,617
Contributions to equity method investees	(17,519)	(12,835)
Investment in intangible assets	0	(7,796)
Proceeds from sales of businesses	141,997	0
Net cash provided by (used in) investing activities	(937,644)	(106,976)
Cash flows from financing activities:
Issuance of common stock	387,717	0
Issuance of senior notes	1,250,000	0
Redemption of senior notes	(897,116)	0
Proceeds from Bank Credit Facility	670,000	275,000
Repayment of Bank Credit Facility	(545,000)	(110,000)
Deferred financing costs	(25,505)	(11,346)
Other deferred payments	(672)	0
Payments of finance lease	(4,324)	(3,987)
Purchase of treasury stock	0	(25,173)
Employee stock awards tax withholdings	(5,520)	(7,378)
Net cash provided by (used in) financing activities	829,580	117,116
Net increase (decrease) in cash, cash equivalents and restricted cash	(11,638)	72,997
Cash, cash equivalents and restricted cash:
Balance, beginning of period	135,999	44,145
Balance, end of period	124,361	117,142
Supplemental non-cash transactions:
Capital expenditures included in accounts payable and accrued liabilities	101,794	174,597
Supplemental cash flow information:
Interest paid, net of amounts capitalized	$ 55,224	$ 40,988

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (112,439)	$ 89,860

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Insider Trading Arrangements	3 Months Ended
	Mar. 31, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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Organization, Nature of Business and Basis of Presentation

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Nature of Business and Basis of Presentation

Note 1 — Organization, Nature of Business and Basis of Presentation

Organization and Nature of Business

Talos Energy Inc. (the “Parent Company”) is a Delaware corporation originally incorporated on November 14, 2017. The Parent Company conducts all business operations through its operating subsidiaries, owns no operating assets and has no material operations, cash flows or liabilities independent of its subsidiaries. The Parent Company’s common stock is traded on The New York Stock Exchange under the ticker symbol “TALO.”

The Parent Company (including its subsidiaries, collectively “Talos” or the “Company”) is a technically driven independent exploration and production company focused on safely and efficiently maximizing long-term value through its operations, currently in the United States (“U.S.”) and offshore Mexico. The Company leverages decades of technical and offshore operational expertise towards the acquisition, exploration and development of assets in key geological trends that are present in many offshore basins around the world.

Basis of Presentation and Consolidation

The Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, certain information and disclosures normally included in complete financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, these financial statements include all adjustments, which unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, cash flows and changes in equity for the periods presented. The results for interim periods are not necessarily indicative of results for the entire year. The unaudited financial statements and related notes included in this Quarterly Report should be read in conjunction with the Company’s audited Consolidated Financial Statements and accompanying notes included in the 2023 Annual Report.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Segments

From January 1, 2024 through March 18, 2024, the Company had two operating segments: (i) exploration and production of oil, natural gas and NGLs (“Upstream Segment”) and (ii) CCS (“CCS Segment”), of which the Company’s only reportable segment was the Upstream Segment. Subsequent to the TLCS Divestiture (as defined herein) and sale of the Company’s entire CCS business, the Company had one operating segment. See additional information in Note 14 — Segment Information.

Summary of Significant Accounting Policies

The Company has provided a discussion of its significant accounting policies, estimates and judgments in Note 2 – Summary of Significant Accounting Policies included in the accompanying Notes to Consolidated Financial Statements in the 2023 Annual Report. The Company has not changed any of its significant accounting policies from those described in our 2023 Annual Report.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of the amount of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows (in thousands):

	March 31, 2024		December 31, 2023
Cash and cash equivalents	$	21,001	$	33,637
Restricted cash included in Other long-term assets		103,360		102,362
Total cash, cash equivalent and restricted cash	$	124,361	$	135,999

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Acquisitions and Divestitures

3 Months Ended

Mar. 31, 2024

Business Combinations [Abstract]

Acquisitions and Divestitures

Note 2 — Acquisitions and Divestitures

Acquisitions — Business Combinations

Acquisitions qualifying as business combinations are accounted for under the acquisition method of accounting, which requires, among other items, that assets acquired and liabilities assumed be recognized on the Consolidated Balance Sheets at their fair values as of the acquisition date.

QuarterNorth Acquisition — The Company executed an agreement and plan of merger, dated as of January 13, 2024, by and among Talos, QuarterNorth Energy Inc. (“QuarterNorth”), Compass Star Merger Sub Inc. and the Equityholder Representatives named therein (the “QuarterNorth Merger Agreement”) to acquire QuarterNorth, a privately-held U.S. Gulf of Mexico exploration and production company (such acquisition, the “QuarterNorth Acquisition”). On March 4, 2024, the Company completed the QuarterNorth Acquisition for consideration consisting of (i) $1,247.4 million in cash and (ii) 24.3 million shares of the Company’s common stock valued at $322.6 million. The cash payment was partially funded with an upsized underwritten public offering of 34.5 million shares of the Company’s common stock, borrowings under the Bank Credit Facility and the New Senior Notes (as defined in Note 7 — Debt).

The following table summarizes the purchase price (in thousands except share and per share data):

Shares of Talos common stock		24,349,452
Talos common stock price(1)	$	13.25
Common stock value	$	322,630
Cash consideration	$	1,247,419
Total purchase price(2)	$	1,570,049

(1)Represents the closing price of the Company’s common stock on March 4, 2024, the date of the closing of the QuarterNorth Acquisition.

(2)Total purchase price net of $331.4 million cash and cash equivalents acquired at closing is $1,238.7 million.

The following table presents the preliminary allocation of the purchase price to the assets acquired and liabilities assumed, based on their fair values on March 4, 2024 (in thousands):

Cash and cash equivalents	$	331,374
Other current assets		160,978
Property and equipment		1,621,507
Other long-term assets		20,780
Current liabilities:
Current portion of asset retirement obligations		(6,748	)
Other current liabilities		(194,278	)
Long-term liabilities:
Asset retirement obligations		(192,771	)
Deferred tax liabilities		(168,481	)
Other long-term liabilities		(2,312	)
Allocated purchase price	$	1,570,049

The fair values determined for accounts receivable, accounts payable and other current assets and most current liabilities were generally equivalent to the carrying value due to their short-term nature.

The fair value of proved oil and natural gas properties as of the acquisition date is based on estimated proved oil, natural gas and NGL reserves and related discounted future net cash flows incorporating market participant assumptions. Significant inputs to the valuation include estimates of future production volumes, future operating, development and plugging and abandonment costs, future commodity prices, and a weighted average cost of capital discount rate. When estimating the fair value of proved and unproved properties, additional risk adjustments were applied to proved developed non-producing, proved undeveloped and probable reserves to reflect the relative uncertainty of each reserve class. These inputs are classified as Level 3 unobservable inputs, including the underlying commodity price assumptions which are based on the three-year NYMEX forward strip prices, escalated for inflation thereafter, and adjusted for price differentials.

The fair value of asset retirement obligations is determined by calculating the present value of estimated future cash flows related to the liabilities. The Company utilizes several assumptions, including a credit-adjusted risk-free interest rate, estimated costs of decommissioning services, estimated timing of when the work will be performed and a projected inflation rate.

The fair values of derivative instruments were estimated using a third-party industry standard pricing model which considers various inputs such as quoted forward commodity prices, discount rates, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant data.

The Company is still finalizing the fair value analysis related to the oil and natural gas properties, other well equipment, asset retirement obligations assumed, certain contingent liabilities and deferred tax liabilities arising from the assets acquired and liabilities assumed. The preliminary purchase price allocation will be subject to further refinement as the Company continues to refine its estimates and assumptions based on further information available at the acquisition date. These refinements may result in material changes to the estimated fair value of assets acquired and liabilities assumed. The Company anticipates finalizing the determination of fair values by December 31, 2024.

The Company incurred approximately $21.8 million of acquisition-related costs in connection with the QuarterNorth Acquisition exclusive of severance expense, of which $18.8 million was recognized during the three months ended March 31, 2024 and $3.0 million was recognized for the year ended December 31, 2023. These costs were reflected in “General and administrative expense” on the Condensed Consolidated Statements of Operations except for $4.9 million of fees associated with an unutilized bridge loan that was included in “Interest expense” on the Condensed Consolidated Statements of Operations during the three months ended March 31, 2024. Additionally, the Company incurred $14.2 million in severance expense in connection with the QuarterNorth Acquisition for the three months ended March 31, 2024. See Note 9 — Employee Benefits Plans and Share-Based Compensation for additional discussion.

The following table presents revenue and net income attributable to the QuarterNorth Acquisition for the period from March 4, 2024 to March 31, 2024:

	Three Months Ended March 31, 2024
Revenue	$	43,949
Net income (loss)	$	6,749

Pro Forma Financial Information (Unaudited) — The following supplemental pro forma financial information (in thousands, except per common share amounts), presents the condensed consolidated results of operations for the three months ended March 31, 2024 and 2023 as if the QuarterNorth Acquisition had occurred on January 1, 2023. The unaudited pro forma information was derived from historical statements of operations of the Company and QuarterNorth adjusted to include (i) depletion expense applied to the adjusted basis of the oil and natural gas properties acquired, (ii) interest expense to reflect borrowings under the Bank Credit Facility and New Senior Notes, (iii) general and administrative expense adjusted for transaction related costs incurred (including severance), (iv) weighted average basic and diluted shares of common stock outstanding from the issuance of 24.3 million shares of common stock to QuarterNorth and (v) weighted average basic and diluted shares of common stock outstanding from the issuance of 34.5 million shares of common stock from the upsized underwritten public offering in January 2024 that partially funded the cash portion of the QuarterNorth Acquisition. Supplemental pro forma earnings for the three months ended March 31, 2023 were adjusted to include $31.7 million of general and administrative expenses. Supplemental pro forma earnings for the three months ended March 31, 2024 were adjusted to exclude $25.0 million of general and administrative expenses. This information does not purport to be indicative of results of operations that would have occurred had the QuarterNorth Acquisition occurred on January 1, 2023, nor is such information indicative of any expected future results of operations.

	Three Months Ended March 31,
	2024			2023
Revenue	$	557,201		$	482,951
Net income (loss)	$	(110,459	)	$	74,320
Basic net income (loss) per common share	$	(0.60	)	$	0.45
Diluted net income (loss) per common share	$	(0.60	)	$	0.45

EnVen Acquisition — On February 13, 2023, the Company completed the acquisition of EnVen Energy Corporation (“EnVen”), a private operator in the Deepwater U.S. Gulf of Mexico (the “EnVen Acquisition,” and the merger agreement related thereto, the “EnVen Merger Agreement”) for consideration consisting of (i) $207.3 million in cash, (ii) 43.8 million shares of the Company’s common stock valued at $832.2 million and (iii) the effective settlement of an accounts receivable balance of $8.4 million. No gain or loss was recognized on settlement as the payable was effectively settled at the recorded amount. The cash payment was partially funded with borrowings under the Bank Credit Facility.

The Company incurred approximately $21.8 million of acquisition-related costs in connection with the EnVen Acquisition exclusive of severance expense, of which $12.6 million was recognized during the three months ended March 31, 2023 and reflected in “General and administrative expense” on the Condensed Consolidated Statements of Operations. Additionally, the Company incurred $22.6 million in severance expense in connection with the EnVen Acquisition for the three months ended March 31, 2023.

The following table presents revenue and net income (loss) attributable to the EnVen Acquisition for the period from February 13, 2023 to March 31, 2023 (in thousands):

	Three Months Ended March 31, 2023
Revenue	$	62,059
Net income (loss)	$	(6,090	)

Pro Forma Financial Information (Unaudited) — The following supplemental pro forma financial information (in thousands, except per common share amounts), presents the condensed consolidated results of operations for the three months ended March 31, 2023 as if the EnVen Acquisition had occurred on January 1, 2022. The unaudited pro forma information was derived from historical statements of operations of the Company and EnVen adjusted to include (i) depletion expense applied to the adjusted basis of the oil and natural gas properties acquired, (ii) interest expense to reflect borrowings under the Bank Credit Facility and to adjust the amortization of the premium of the 11.75% Notes (as defined in Note 7 — Debt), (iii) general and administrative expense adjusted for transaction related costs incurred (including severance), (iv) other income (expense) to adjust the accretion of the discount on the two notes receivable to settle future asset retirement obligations and (v) weighted average basic and diluted shares of common stock outstanding from the issuance of 43.8 million shares of common stock to EnVen. Supplemental pro forma earnings for the three months ended March 31, 2023 were adjusted to exclude $62.6 million of general and administrative expenses. This information does not purport to be indicative of results of operations that would have occurred had the EnVen Acquisition occurred on January 1, 2022, nor is such information indicative of any expected future results of operations (in thousands, except for the per share data).

	Three Months Ended March 31, 2023
Revenue	$	374,625
Net income (loss)	$	118,090
Basic net income (loss) per common share	$	0.93
Diluted net income (loss) per common share	$	0.92

Divestiture

Talos Low Carbon Solutions Divestiture — On March 18, 2024, the Company entered into a definitive agreement relating to and subsequently completed the sale of its wholly owned subsidiary, Talos Low Carbon Solutions LLC to TotalEnergies E&P USA, Inc. for a purchase price of $125.0 million plus customary reimbursements and adjustments, combined totaling approximately $142.0 million (the “TLCS Divestiture”). The TLCS Divestiture includes the Company’s entire CCS business including its equity investments in three projects along the U.S. Gulf Coast: Bayou Bend CCS LLC, Harvest Bend CCS LLC, and Coastal Bend CCS LLC. A gain of $86.9 million was recognized on the TLCS Divestiture during the three months ended March 31, 2024, which is presented as “Other operating income (expense)” on the Condensed Consolidated Statements of Operations.

The Company incurred approximately $6.7 million of costs in connection with the TLCS Divestiture exclusive of severance expense, of which $6.1 million was recognized during the during the three months ended March 31, 2024 and reflected in “General and administrative expense” on the Condensed Consolidated Statements of Operations. Additionally, the Company incurred $3.7 million in severance expense in connection with the TLCS Divestiture for the three months ended March 31, 2024. See Note 9 — Employee Benefits Plans and Share-Based Compensation for additional discussion.

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Property, Plant and Equipment

3 Months Ended

Mar. 31, 2024

Oil and Gas Property [Abstract]

Property, Plant and Equipment

Note 3 — Property, Plant and Equipment

Proved Properties

During the three months ended March 31, 2024 and 2023, the Company’s ceiling test computations did not result in a write-down of its U.S. oil and natural gas properties. At March 31, 2024, the Company’s ceiling test computation was based on SEC pricing of $78.19 per Bbl of oil, $2.50 per Mcf of natural gas and $17.08 per Bbl of NGLs.

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Leases

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Leases

Note 4 — Leases

The Company has operating leases principally for office space, drilling rigs, compressors and other equipment necessary to support the Company’s operations. Additionally, the Company has a finance lease related to the use of the Helix Producer I (the “HP-I”), a dynamically positioned floating production facility that interconnects with the Phoenix Field through a production buoy. The HP-I is utilized in the Company’s oil and natural gas development activities and the right-of-use asset was capitalized and included in proved property and depleted as part of the full cost pool. Once items are included in the full cost pool, they are indistinguishable from other proved properties. The capitalized costs within the full cost pool are amortized over the life of the total proved reserves using the unit-of-production method, computed quarterly. Costs associated with the Company’s leases are either expensed or capitalized depending on how the underlying asset is utilized.

The lease costs described below are presented on a gross basis and do not represent the Company’s net proportionate share of such amounts. A portion of these costs have been or may be billed to other working interest owners. The Company’s share of these costs is included in property and equipment, lease operating expense or general and administrative expense, as applicable. The components of lease costs were as follows (in thousands):

	Three Months Ended March 31,
	2024			2023
Finance lease cost - interest on lease liabilities	$	3,372		$	3,708
Operating lease cost, excluding short-term leases(1)		897			908
Short-term lease cost(2)		12,652			32,985
Variable lease cost(3)		616			363
Variable and fixed sublease income		(359	)		—
Total lease cost	$	17,178		$	37,964

(1)Operating lease cost reflect a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a straight-line basis.

(2)Short-term lease costs are reported at gross amounts and primarily represent costs incurred for drilling rigs, most of which are short-term contracts not recognized as a right-of-use asset and lease liability on the Condensed Consolidated Balance Sheets.

(3)Variable lease costs primarily represent differences between minimum payment obligations and actual operating charges incurred by the Company related to its long-term leases.

The present value of the fixed lease payments recorded as the Company’s right-of-use (“ROU”) assets and lease liabilities, adjusted for initial direct costs and incentives were as follows (in thousands):

	March 31, 2024		December 31, 2023
Operating leases:
Operating lease assets	$	12,676	$	11,418
Current portion of operating lease liabilities	$	3,543	$	2,666
Operating lease liabilities		18,271		18,211
Total operating lease liabilities	$	21,814	$	20,877
Finance leases:
Proved properties	$	166,261	$	166,261
Other current liabilities	$	18,279	$	17,834
Other long-term liabilities		126,461		131,230
Total finance lease liabilities	$	144,740	$	149,064

The table below presents the supplemental cash flow information related to leases (in thousands):

	Three Months Ended March 31,
	2024		2023
Operating cash outflow from finance leases	$	3,372	$	3,708
Operating cash outflow from operating leases	$	1,217	$	1,265
ROU assets obtained in exchange for new operating lease liabilities(1)	$	1,601	$	12,971

(1)See QuarterNorth Acquisition and EnVen Acquisition each in Note 2 — Acquisitions and Divestitures.

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Financial Instruments

3 Months Ended

Mar. 31, 2024

Financial Instruments [Abstract]

Financial Instruments

Note 5 — Financial Instruments

As of March 31, 2024 and December 31, 2023, the carrying amounts of cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate their fair values because they are highly liquid or due to the short-term nature of these instruments.

Debt Instruments

The following table presents the carrying amounts, net of discount, premium and deferred financing costs, and estimated fair values of the Company’s debt instruments (in thousands):

	March 31, 2024				December 31, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
9.000% Second-Priority Senior Secured Notes – due February 2029	$	609,107	$	663,894	$	—	$	—
9.375% Second-Priority Senior Secured Notes – due February 2031	$	608,985	$	666,175	$	—	$	—
12.00% Second-Priority Senior Secured Notes – due January 2026	$	—	$	—	$	601,353	$	655,130
11.75% Senior Secured Second Lien Notes – due April 2026	$	—	$	—	$	234,221	$	233,410
Bank Credit Facility – matures March 2027	$	315,860	$	325,000	$	190,100	$	200,000

The carrying value of the senior notes are adjusted for discount, premium and deferred financing costs. Fair value is estimated (representing a Level 1 fair value measurement) using quoted secondary market trading prices and, where such prices are not available, other observable (Level 2) inputs are used such as quoted prices for similar liabilities in the active market.

The carrying amount of the Company’s bank credit facility, as amended and restated (the “Bank Credit Facility”), is presented net of deferred financing costs. The fair value of the Bank Credit Facility is estimated based on the outstanding borrowings since it is secured by the Company’s reserves and the interest rates are variable and reflective of market rates (representing a Level 2 fair value measurement).

Oil and Natural Gas Derivatives

The Company attempts to mitigate a portion of its commodity price risk and stabilize cash flows associated with sales of oil and natural gas production. The Company is currently utilizing oil and natural gas swaps, costless collars and put options. Swaps are contracts where the Company either receives or pays depending on whether the oil or natural gas floating market price is above or below the contracted fixed price. Costless collars consist of a purchased put option and a sold call option with no net premiums paid to or received from counterparties. Typical collar contracts require payments by the Company if the NYMEX average closing price is above the ceiling price or payments to the Company if the NYMEX average closing price is below the floor price (“two-way collar”). Put options give the owner the right but not the obligation, to sell the underlying commodity at a specified price (i.e. strike price) within a specific period. Certain of the Company’s put options have a deferred premium, which is presented net of the derivative asset. For the deferred premium puts, the Company agrees to pay a premium to the counterparty at the time of settlement. At settlement, if the applicable index price is below the strike price of the put, the Company receives the difference between the strike price and the applicable index price multiplied by the contract volumes less the premium. If the applicable index price settles at or above the strike price of the put, the Company pays only the premium at settlement.

The following table presents the impact that derivatives, not designated as hedging instruments, had on its Condensed Consolidated Statements of Operations (in thousands):

	Three Months Ended March 31,
	2024			2023
Net cash received (paid) on settled derivative instruments	$	(3,494	)	$	(12,323	)
Unrealized gain (loss)		(83,568	)		71,260
Price risk management activities income (expense)	$	(87,062	)	$	58,937

The following tables reflect the contracted average daily volumes and weighted average prices under the terms of the Company's derivative contracts as of March 31, 2024:

Swap Contracts
Production Period	Settlement Index	Volumes		Swap Price
Crude oil:		(Bbls)		(per Bbl)
April 2024 – December 2024	NYMEX WTI CMA		28,147	$	73.47
January 2025 – December 2025	NYMEX WTI CMA		19,679	$	73.19
Natural gas:		(MMBtu)		(per MMBtu)
April 2024 – December 2024	NYMEX Henry Hub		34,455	$	2.91
January 2025 – December 2025	NYMEX Henry Hub		38,644	$	3.60

Two-Way Collar Contracts
Production Period	Settlement Index	Volumes		Floor Price		Ceiling Price
Crude oil:		(Bbls)		(per Bbl)		(per Bbl)
April 2024 – December 2024	NYMEX WTI CMA		1,000	$	70.00	$	75.00
January 2025 – March 2025	NYMEX WTI CMA		3,000	$	65.00	$	84.35
Natural gas:		(MMBtu)		(per MMBtu)		(per MMBtu)
April 2024 – December 2024	NYMEX Henry Hub		10,000	$	4.00	$	6.90

Long Puts
Production Period	Settlement Index	Volumes		Strike Price		Deferred Premium Price
Crude oil:		(Bbls)		(per Bbl)		(per Bbl)
April 2024 – December 2024	NYMEX WTI CMA		4,000	$	70.00	$	(6.28	)
Natural gas:		(MMBtu)		(per MMBtu)		(per MMBtu)
May 2024 – December 2024	NYMEX Henry Hub		13,660	$	2.90	$	(0.40	)

Swaps with Sold Puts
Production Period	Settlement Index	Volumes		Swap Price		Strike Price
Crude oil:		(Bbls)		(per Bbl)		(per Bbl)
April 2024 – December 2024	NYMEX WTI CMA		1,000	$	72.20	$	60.00

The following tables provide additional information related to financial instruments measured at fair value on a recurring basis (in thousands):

	March 31, 2024
	Level 1		Level 2			Level 3		Total
Assets:
Oil and natural gas derivatives	$	—	$	24,108		$	—	$	24,108
Liabilities:
Oil and natural gas derivatives		—		(77,780	)		—		(77,780	)
Total net asset (liability)	$	—	$	(53,672	)	$	—	$	(53,672	)

	December 31, 2023
	Level 1		Level 2			Level 3		Total
Assets:
Oil and natural gas derivatives	$	—	$	53,703		$	—	$	53,703
Liabilities:
Oil and natural gas derivatives		—		(8,100	)		—		(8,100	)
Total net asset (liability)	$	—	$	45,603		$	—	$	45,603

Financial Statement Presentation

Derivatives are classified as either current or non-current assets or liabilities based on their anticipated settlement dates. Although the Company has master netting arrangements with its counterparties, the Company presents its derivative financial instruments on a gross basis in its Condensed Consolidated Balance Sheets. The following table presents the fair value of derivative financial instruments as well as the potential effect of netting arrangements on the Company's recognized derivative asset and liability amounts (in thousands):

	March 31, 2024				December 31, 2023
	Assets		Liabilities		Assets		Liabilities
Oil and natural gas derivatives:
Current	$	18,753	$	74,033	$	36,152	$	7,305
Non-current		5,355		3,747		17,551		795
Total gross amounts presented on balance sheet		24,108		77,780		53,703		8,100
Less: Gross amounts not offset on the balance sheet		18,601		18,601		8,100		8,100
Net amounts	$	5,507	$	59,179	$	45,603	$	—

Credit Risk

The Company is subject to the risk of loss on its financial instruments as a result of nonperformance by counterparties pursuant to the terms of their contractual obligations. The Company has entered into International Swaps and Derivative Association agreements with counterparties to mitigate this risk. The Company also maintains credit policies with regard to its counterparties to minimize overall credit risk. These policies require (i) the evaluation of potential counterparties’ financial condition to determine their credit worthiness; (ii) the regular monitoring of counterparties’ credit exposures; (iii) the use of contract language that affords the Company netting or set off opportunities to mitigate exposure risk; and (iv) potentially requiring counterparties to post cash collateral, parent guarantees, or letters of credit to minimize credit risk. The Company’s assets and liabilities from commodity price risk management activities at March 31, 2024 represent derivative instruments from nine counterparties; all of which are registered swap dealers that have an “investment grade” (minimum Standard & Poor’s rating of BBB- or better) credit rating, and eight of which are parties under the Company’s Bank Credit Facility. The Company enters into derivatives directly with these counterparties and, subject to the terms of the Company’s Bank Credit Facility, is not required to post collateral or other securities for credit risk in relation to the derivative activities. Had the Company’s counterparties failed to perform under existing commodity derivative contracts the maximum loss at March 31, 2024 would have been $5.5 million.

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Equity Method Investments

3 Months Ended

Mar. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

Note 6 — Equity Method Investments

The following table presents the Company’s investments in unconsolidated affiliates by segment as of the dates indicated below. The Company accounts for these investments using the equity method of accounting.

	Ownership Interest at
	March 31, 2024			March 31, 2024		December 31, 2023
Upstream:
Talos Energy Mexico 7, S. de R.L. de C.V. (“Talos Mexico”)		50.1	%	$	106,922	$	107,259
SP 49 Pipeline LLC		33.3	%		1,114		861
CCS(1):
Bayou Bend CCS LLC		—	%		—		28,183
Harvest Bend CCS LLC		—	%		—		9,746
Coastal Bend CCS LLC		—	%		—		—
Total Equity Method Investments				$	108,036	$	146,049

(1)See TLCS Divestiture discussion in Note 2 — Acquisitions and Divestitures.

Talos Mexico is a variable interest entity. The Company’s maximum exposure to loss as a result of its involvement with Talos Mexico is the carrying amount of its investment.

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Debt

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Debt

Note 7 — Debt

A summary of the detail comprising the Company’s debt and the related book values for the respective periods presented is as follows (in thousands):

	March 31, 2024			December 31, 2023
9.000% Second-Priority Senior Secured Notes – due February 2029	$	625,000		$	—
9.375% Second-Priority Senior Secured Notes – due February 2031		625,000			—
12.00% Second-Priority Senior Secured Notes – due January 2026		—			638,541
11.75% Senior Secured Second Lien Notes – due April 2026		—			227,500
Bank Credit Facility – matures March 2027(1)		325,000			200,000
Total debt, before discount, premium and deferred financing cost		1,575,000			1,066,041
Unamortized discount, premium and deferred financing cost, net		(41,048	)		(40,367	)
Total debt(2)		1,533,952			1,025,674
Less: Current portion of long-term debt		—			33,060
Long-term debt	$	1,533,952		$	992,614

(1)As of March 31, 2024, the Company had outstanding borrowings at a weighted average interest rate of 8.42%.

(2)As of March 31, 2024, the Company was in compliance with all debt covenants.

9.000% Second-Priority Senior Secured Notes—due February 2029

The 9.000% Second-Priority Senior Secured Notes due 2029 (the “9.000% Notes”) were issued pursuant to an indenture dated February 7, 2024, by and among the Company, Talos Production Inc. (the “Issuer”), the subsidiary guarantors party thereto (together with the Company, the “Guarantors”) and Wilmington Trust, National Association, as trustee and collateral agent. The 9.000% Notes are secured on a second-priority senior secured basis by liens on substantially the same collateral as the collateral securing the Issuer’s existing first-priority obligations under its Bank Credit Facility. The 9.000% Notes rank equally in right of payment with all of the Issuer’s and the Guarantors’ existing and future senior obligations, are senior in right of payment to any obligations of the Issuer and the Guarantors future debt that is, by its term, expressly subordinated in right of payment to the 9.000% Notes and, to the extent of the value of the collateral, are effectively senior to all existing and future unsecured obligations of the Issuer and the Guarantors (other than the Company) and any future obligations of the Issuer and the Guarantors that are secured by the collateral on a junior-priority basis. The 9.000% Notes are effectively pari passu with all of the Issuer’s and the Guarantors’ existing and future obligations that are secured by the collateral on a second-priority basis including the 9.375% Notes (as defined below) and are effectively junior to any existing and future obligations of the Issuer and the Guarantors that are secured by the collateral on a senior-priority basis to the 9.000% Notes including indebtedness under the Bank Credit Facility. The 9.000% Notes mature on February 1, 2029 and have interest payable semi-annually each February 1 and August 1, commencing August 1, 2024.

At any time prior to February 1, 2026, the Company may redeem up to 40% of the principal amount of the 9.000% Notes at a redemption rate of 109.00% of the principal amount plus accrued and unpaid interest. At any time prior to February 1, 2026, the Company may also redeem some or all of the 9.000% Notes, plus a “make-whole premium,” together with accrued and unpaid interest, if any, to, but excluding, the date of redemption. Thereafter, the Company may redeem all or a portion of the 9.000% Notes in whole at any time or in part from time to time at the following redemption prices (expressed as percentages of the principal amount) plus accrued and unpaid interest if redeemed during the period commencing on February 1 of the years set forth below:

Period	Redemption Price
2026		104.500	%
2027		102.250	%
2028 and thereafter		100.000	%

As of March 31, 2024, the Company has incurred debt issuance costs of $16.2 million related to the 9.000% Notes issued as part of the debt offering that partially funded the cash portion of the QuarterNorth Acquisition. The debt issue costs reduced the proceeds from the debt issued. See Note 2 — Acquisitions and Divestitures for further discussion on the QuarterNorth Acquisition.

9.375% Second-Priority Senior Secured Notes—due February 2031

The 9.375% Second-Priority Senior Secured Notes due 2031 (the “9.375% Notes” and, together with the 9.000% Notes, the “New Senior Notes”) were issued pursuant to an indenture dated February 7, 2024, by and among the Company, the Issuer, the Guarantors party thereto and Wilmington Trust, National Association, as trustee and collateral agent. The 9.375% Notes are secured on a second-priority senior secured basis by liens on substantially the same collateral as the collateral securing the Issuer’s existing first-priority obligations under its Bank Credit Facility. The 9.375% Notes rank equally in right of payment with all of the Issuer’s and the Guarantors’ existing and future senior obligations, are senior in right of payment to any obligations of the Issuer and the Guarantors future debt that is, by its term, expressly subordinated in right of payment to the 9.375% Notes and, to the extent of the value of the collateral, are effectively senior to all existing and future unsecured obligations of the Issuer and the Guarantors (other than the Company) and any future obligations of the Issuer and the Guarantors that are secured by the collateral on a junior-priority basis. The 9.375% Notes are effectively pari passu with all of the Issuer’s and the Guarantors’ existing and future obligations that are secured by the collateral on a second-priority basis including the 9.000% Notes and are effectively junior to any existing and future obligations of the Issuer and the Guarantors that are secured by the collateral on a senior-priority basis to the 9.375% Notes including indebtedness under the Bank Credit Facility. The 9.375% Notes mature on February 1, 2031 and have interest payable semi-annually each February 1 and August 1, commencing August 1, 2024.

At any time prior to February 1, 2027, the Company may redeem up to 40% of the principal amount of the 9.375% Notes at a redemption rate of 109.375% of the principal amount plus accrued and unpaid interest. At any time prior to February 1, 2027, the Company may also redeem some or all of the 9.375% Notes, plus a “make-whole premium,” together with accrued and unpaid interest, if any, to, but excluding, the date of redemption. Thereafter, the Company may redeem all or a portion of the 9.375% Notes in whole at any time or in part from time to time at the following redemption prices (expressed as percentages of the principal amount) plus accrued and unpaid interest if redeemed during the period commencing on February 1 of the years set forth below:

Period	Redemption Price
2027		104.688	%
2028		102.344	%
2029 and thereafter		100.000	%

As of March 31, 2024, the Company has incurred debt issuance costs of $16.2 million related to the 9.375% Notes issued as part of the debt offering that partially funded the cash portion of the QuarterNorth Acquisition. The debt issue costs reduced the proceeds from the debt issued. See Note 2 — Acquisitions and Divestitures for further discussion on the QuarterNorth Acquisition.

12.00% Second-Priority Senior Secured Notes

On February 7, 2024, the Company redeemed $638.5 million aggregate principal amount of the 12.00% Second-Priority Senior Secured Notes due 2026 (the “12.00% Notes”) at 103.000% plus accrued and unpaid interest using the proceeds from the issuance of the New Senior Notes. The debt redemption resulted in a loss on extinguishment of debt of $54.9 million, which is presented as “Other income (expense)” on the Condensed Consolidated Statements of Operations.

11.75% Senior Secured Second Lien Notes

The Company redeemed $227.5 million aggregate principal amount of the 11.75% Senior Secured Second Lien Notes due 2026 (the “11.75% Notes”) at 102.938% plus accrued and unpaid interest using the proceeds from the issuance of the New Senior Notes. On February 7, 2024, the Company irrevocably deposited funds with the trustee sufficient to satisfy and discharge the 11.75% Notes until redeemed on April 15, 2024 with the funds deposited with the trustee. As a result, the transferred assets and long-term debt were derecognized from the balance sheet as of February 7, 2024. On April 15, 2024, the 11.75% Notes were redeemed using the funds irrevocably deposited in the trust with the trustee on February 7, 2024. The debt redemption resulted in a loss on extinguishment of debt of $5.4 million, which is presented as “Other income (expense)” on the Condensed Consolidated Statements of Operations.

Bank Credit Facility

The Company maintains the Bank Credit Facility with a syndicate of financial institutions. The Bank Credit Facility provides for the determination of the borrowing base based on the Company’s proved producing reserves and a portion of the Company's proved undeveloped reserves. The borrowing base is redetermined by the lenders at least semi-annually during the second quarter and fourth quarter of each year. On January 13, 2024, the Company entered into the Tenth Amendment to Credit Agreement (the “Tenth Amendment”). The Tenth Amendment, among other things, (i) permitted the incurrence of additional indebtedness in order to fund the QuarterNorth Acquisition, with such indebtedness excluded from any reduction of the borrowing base that would otherwise result from such incurrence, (ii) reaffirmed the borrowing base at approximately $1.1 billion and (iii) reaffirmed commitments at $965.0 million effective upon the amendment effective date.

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Asset Retirement Obligations

3 Months Ended

Mar. 31, 2024

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

Note 8 — Asset Retirement Obligations

The asset retirement obligations included in the Condensed Consolidated Balance Sheets in current and non-current liabilities, and the changes in that liability were as follows (in thousands):

Asset retirement obligations at December 31, 2023	$	897,226
Obligations assumed(1)		199,519
Obligations incurred		36
Obligations settled		(27,907	)
Accretion expense		26,903
Changes in estimate		13,555
Asset retirement obligations at March 31, 2024	$	1,109,332
Less: Current portion at March 31, 2024		71,799
Long-term portion at March 31, 2024	$	1,037,533

(1)Assumed in connection with the QuarterNorth Acquisition. See further discussion in Note 2 — Acquisitions and Divestitures.

At March 31, 2024, the Company has (1) restricted cash of $103.4 million held in escrow and (2) two notes receivable with an aggregated face value of $66.2 million to settle future asset retirement obligations. A discussion of these assets is included in the accompanying Notes to the Consolidated Financial Statements in the 2023 Annual Report.

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Employee Benefits Plans and Share-Based Compensation

3 Months Ended

Mar. 31, 2024

Compensation And Employee Benefit Plans [Abstract]

Employee Benefits Plans and Share-Based Compensation

Note 9 — Employee Benefits Plans and Share-Based Compensation

Severance

The following table summarizes severance accrual activity in connection the EnVen Acquisition, QuarterNorth Acquisition and TLCS Divestiture included in “Other current liabilities” and “Other long-term liabilities” on the Condensed Consolidated Balance Sheets as of March 31, 2024 (in thousands):

Severance accrual at December 31, 2023	$	6,295
Accrual additions		17,914
Benefit payments		(10,258	)
Severance accrual at March 31, 2024		13,951
Less: Current portion at March 31, 2024		13,876
Long-term portion at March 31, 2024	$	75

The above table includes involuntary termination benefits that are being provided pursuant to a one-time benefit arrangement that is being spread over the future service period through the termination date. The Company expects to incur an additional $7.4 million in severance expense related to the QuarterNorth Acquisition. Involuntary termination benefits are also being provided pursuant to contractual termination benefits required by the terms of existing employment agreements. Severance costs are reflected in “General and administrative expense” on the Condensed Consolidated Statements of Operations.

Long Term Incentive Plans

Restricted Stock Units (“RSUs”) — The following table summarizes RSU activity under the Talos Energy Inc. 2021 Long Term Incentive Plan (the “2021 LTIP”) for the three months ended March 31, 2024:

	Restricted Stock Units			Weighted Average Grant Date Fair Value
Unvested RSUs at December 31, 2023		2,306,361		$	14.89
Granted		1,435,516		$	13.27
Vested		(1,357,605	)	$	13.56
Forfeited		(41,691	)	$	15.14
Unvested RSUs at March 31, 2024(1)		2,342,581		$	14.66

(1)As of March 31, 2024, 32,213 of the unvested RSUs were accounted for as liability awards in “Accrued liabilities” on the Condensed Consolidated Balance Sheets.

Performance Share Units (“PSUs”) — The following table summarizes PSU activity under the 2021 LTIP for the three months ended March 31, 2024:

	Performance Share Units			Weighted Average Grant Date Fair Value
Unvested PSUs at December 31, 2023		1,016,649		$	21.30
Forfeited		(48,995	)	$	20.16
Unvested PSUs at March 31, 2024		967,654		$	21.36

Share-based Compensation Costs

Share-based compensation costs associated with RSUs, PSUs and other awards are reflected as “General and administrative expense,” on the Condensed Consolidated Statements of Operations, net amounts capitalized to “Proved Properties,” on the Condensed Consolidated Balance Sheets. Because of the non-cash nature of share-based compensation, the expensed portion of share-based compensation is added back to net income in arriving at “Net cash provided by (used in) operating activities” on the Condensed Consolidated Statements of Cash Flows.

The following table presents the amount of costs expensed and capitalized (in thousands):

	Three Months Ended March 31,
	2024		2023
Share-based compensation costs	$	4,615	$	7,191
Less: Amounts capitalized to oil and gas properties		1,861		3,253
Total share-based compensation expense	$	2,754	$	3,938

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Income Taxes

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 10 — Income Taxes

The Company is a corporation that is subject to U.S. federal, state and foreign income taxes.

For the three months ended March 31, 2024, the Company recognized an income tax benefit of $21.6 million for an effective tax rate of 16.1%. The Company’s effective tax rate of 16.1% is different than the U.S. federal statutory income tax rate of 21% primarily due to permanent differences. For the three months ended March 31, 2023, the Company recognized an income tax benefit of $46.5 million for an effective tax rate of -107.4%. The Company’s effective tax rate of -107.4% is different than the U.S. federal statutory income tax rate of 21% primarily due to a non-cash benefit discrete item of $54.9 million related to the partial release of its valuation allowance on its federal deferred tax assets not subject to separate return limitations. The release of the valuation allowance was a result of the deferred tax liabilities acquired with the EnVen Acquisition.

The Company evaluates and updates the estimated annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. Consequently, based upon the mix and timing of the Company’s actual earnings compared to annual projections, the effective tax rate may vary quarterly and may make quarterly comparisons not meaningful. The quarterly income tax provision is generally comprised of tax expense on income or benefit on loss at the most recent estimated annual effective tax rate. The tax effect of discrete items is recognized in the period in which they occur at the applicable statutory rate.

Deferred income tax assets and liabilities are recorded related to net operating losses and temporary differences between the book and tax basis of assets and liabilities expected to produce deductions and income in the future. The deferred tax asset estimates are subject to revision, either up or down, in future periods based on new facts or circumstances. The Company reduces deferred tax assets by a valuation allowance when, based on estimates, it is more likely than not that a portion of those assets will not be realized in a future period. In evaluating the Company’s valuation allowance, the Company considers cumulative losses, the reversal of existing temporary differences, the existence of taxable income in carryback years, tax optimization planning and future taxable income for each of its taxable jurisdictions. The Company assesses the realizability of its deferred tax assets quarterly; changes to the Company’s assessment of its valuation allowance in future periods could materially impact its results of operations. The Company’s valuation allowance primarily relates to various state operating loss carryforwards. A deferred tax liability of $240.6 million and $92.2 million is included in “Other long-term liabilities” on the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023, respectively.

QuarterNorth Acquisition

On March 4, 2024, the Company completed the QuarterNorth Acquisition, which is further discussed in Note 2 — Acquisitions and Divestitures. The Company recognized a net deferred tax liability of $168.5 million in its purchase price allocation as of the acquisition date to reflect differences between tax basis and the fair value of QuarterNorth’s assets acquired and liabilities assumed. The deferred tax balance is based on preliminary calculations and on information available to management at the time such estimates were made. The Company recorded a current tax payable of $11.9 million related to QuarterNorth’s 2023 U.S. federal income tax liability, which is included in “Accounts payable” on the Condensed Consolidated Balance Sheets.

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Income (Loss) Per Share

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Income (Loss) Per Share

Note 11 — Income (Loss) Per Share

Basic earnings per common share is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Except when the effect would be antidilutive, diluted earnings per common share includes the impact of RSUs and PSUs.

The following table presents the computation of the Company’s basic and diluted income (loss) per share were as follows (in thousands, except for the per share amounts):

	Three Months Ended March 31,
	2024			2023
Net income (loss)	$	(112,439	)	$	89,860
Weighted average common shares outstanding — basic		158,490			105,634
Dilutive effect of securities		—			1,316
Weighted average common shares outstanding — diluted		158,490			106,950
Net income (loss) per common share:
Basic	$	(0.71	)	$	0.85
Diluted	$	(0.71	)	$	0.84
Anti-dilutive potentially issuable securities excluded from diluted common shares		2,789			983

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Related Party Transactions

3 Months Ended

Mar. 31, 2024

Related Party Transactions [Abstract]

Related Party Transactions

Note 12 — Related Party Transactions

Registration Rights Agreements

Adage Capital Partners, L.P. (“Adage”) and affiliated entities of Bain Capital, LP (“Bain”) are parties to a registration rights agreement entered into in connection with the EnVen Acquisition relating to the registered resale of the Company’s common stock owned by such parties, a discussion of which is included in the accompanying Notes to the Consolidated Financial Statements in the 2023 Annual Report. Bain held approximately 8.2% of the Company’s outstanding shares of common stock as of March 31, 2024 based on SEC beneficial ownership reports filed by Bain. Adage ceased being a beneficial owner of more than five percent of the Company’s common stock as of December 31, 2023 based on a SEC beneficial ownership report filed by Adage in February 2024.

In connection with the Company’s entry into the QuarterNorth Merger Agreement, on March 4, 2024, the Company entered into a registration rights agreement (the “QNE Registration Rights Agreement”) with certain stockholders of QuarterNorth listed on Schedule A attached thereto (collectively, the “RRA Holders”). Pursuant to the QNE Registration Rights Agreement, the Company granted the RRA Holders certain demand, “piggy-back” and shelf registration rights with respect to the shares of the Company’s common stock received in connection with the QuarterNorth Acquisition, subject to certain customary thresholds and conditions. The shelf registration statement on Form S-3 (File No 333-277867), including the prospectus forming part thereof, was filed with the SEC shortly after the closing of the QuarterNorth Acquisition. The selling stockholders named in the prospectus collectively beneficially owned approximately 13.5% of the Company’s common stock outstanding as of March 8, 2024, a majority of which was held by the RRA Holders. No individual selling stockholder named in the prospectus owned more than five percent of the Company’s common stock.

The Company will bear all of the expenses incurred in connection with any offer and sale, while the selling stockholders will be responsible for paying underwriting fees, discounts and selling commissions. For the three months ended March 31, 2024 and 2023, the Company did not incur any such fees.

Slim Family

Carlos Slim Helú, Carlos Slim Domit, Marco Antonio Slim Domit, Patrick Slim Domit, María Soumaya Slim Domit, Vanessa Paola Slim Domit and Johanna Monique Slim Domit (collectively, the “Slim Family”) are beneficiaries of a Mexican trust which in turn owns all of the outstanding voting securities of Control Empresarial de Capitales S.A. de C.V. (“Control Empresarial” together with the Slim Family, the “Slim Family Office”). Control Empresarial, a sociedad anónima de capital variable organized under the laws of the United Mexican States, is a holding company with portfolio investments in various companies. Control Empresarial and the Slim Family became related parties on November 7, 2023 when they accumulated greater than ten percent of the Company’s outstanding shares of common stock. In connection with the Company’s upsized underwritten public offering during January 2024 of 34.5 million shares of the Company’s common stock, Control Empresarial increased their holding of the Company’s outstanding stock. Control Empresarial held approximately 19.5% of the Company’s outstanding shares of common stock as of March 31, 2024 based on SEC beneficial ownership reports filed by Control Empresarial.

In connection with the Debt Offering in February 2024, the Company consummated a firm commitment debt offering consisting of $1,250.0 million in aggregate principal amount of second-priority senior secured notes in a private offering to eligible purchasers that was exempt from registration under the Securities Act. In connection with the Debt Offering, and after expressing a non-binding indication of interest after commencement of the offering, entities and/or persons related to the Slim Family Office purchased an aggregate principal amount of $312.5 million of such notes from the initial purchasers of such offering. In connection with such transaction, the Company expects to pay Inbursa, a banking institution controlled by the Slim Family Office, an advisory fee of approximately $2.7 million. See Note 7 – Debt for additional information regarding the Debt Offering.

The Slim Family own a majority stake in Grupo Carso, which indirectly has an ownership interest in Talos Mexico. The Company had no related party receivable from affiliates of the Slim Family as of March 31, 2024.

Equity Method Investments

The Company had a $2.3 million and $5.5 million related party receivable from various equity method investments as of March 31, 2024 and December 31, 2023, respectively. This is reflected as “Other, net” within “Accounts Receivable” on the Consolidated Balance Sheets. See Note 6 – Equity Method Investments for additional information on the Company’s equity method investments.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 13 — Commitments and Contingencies

Performance Obligations

Regulations with respect to the Company's operations govern, among other things, engineering and construction specifications for production facilities, safety procedures, plugging and abandonment of wells and removal of facilities in the U.S. Gulf of Mexico.

As of March 31, 2024, the Company had secured performance bonds from third party sureties totaling $1.5 billion. The cost of securing these bonds is reflected as “Interest expense” on the Condensed Consolidated Statements of Operations. Additionally, as of March 31, 2024, the Company had secured letters of credit issued under its Bank Credit Facility totaling $10.8 million. Letters of credit that are outstanding reduce the available revolving credit commitments. See Note 7 — Debt for further information on the Bank Credit Facility.

Firm Transportation Commitments

In connection with the QuarterNorth Acquisition, the Company assumed a firm transportation agreement with a pipeline carrier for future transportation of oil production from the Katmai Field. Under the firm agreement, we are obligated to transport a minimum monthly oil volume or pay for any deficiencies. The future minimum transportation under the Company’s commitment totals approximately $22.0 million for years 2025 through 2028. Our production is currently expected to exceed the minimum monthly volume in the periods provided in the agreement.

Legal Proceedings and Other Contingencies

From time to time, the Company is involved in litigation, regulatory examinations and administrative proceedings primarily arising in the ordinary course of business in jurisdictions in which the Company does business. Although the outcome of these matters cannot be predicted with certainty, the Company’s management believes none of these matters, either individually or in the aggregate, would have a material effect upon the Company’s financial position; however, an unfavorable outcome could have a material adverse effect on the Company’s results from operations for a specific interim period or year.

U.S. Specialty Insurance Company (“USSI”) has issued approximately $80.0 million in surety bonds on behalf of QuarterNorth, as Principal. USSI claims that collateral equivalent to the amount of the bonds is now required due to the merger of QuarterNorth into the Company. On March 20, 2024, USSI filed suit to require QuarterNorth to provide collateral in the amount of the bonds to secure QuarterNorth’s alleged obligations owed to USSI. Furthermore, USSI has notified certain purchasers of QuarterNorth’s production that USSI believes QuarterNorth is in default of its obligations and has requested that payment for production that is owed to QuarterNorth be made to USSI. Certain buyers of QuarterNorth’s production have withheld payment to QuarterNorth until this matter is resolved. The Company expects to replace most or all of the bonds issued by USSI during the second quarter of 2024, which will substantially or fully resolve this matter.

In June 2019, David M. Dunwoody, Jr., former President of EnVen, filed a lawsuit against EnVen in Texas District Court alleging that the circumstances of his resignation entitled him to the severance payments and benefits under his employment agreement dated as of November 6, 2015 as a resignation for “Good Reason.” The litigation was assumed as part of the EnVen Acquisition. The Company paid the judgment of $14.4 million, inclusive of Mr. Dunwoody’s legal fees and interest, during the three months ended March 31, 2024.

Decommissioning Obligations

The Company, as a co-lessee or predecessor-in-interest in oil and natural gas leases located in the U.S. Gulf of Mexico, is in the chain of title with unrelated third parties either directly or by virtue of divestiture of certain oil and natural gas assets previously owned and assigned by our subsidiaries. Certain counterparties in these divestiture transactions or third parties in existing leases have filed for bankruptcy protection or undergone associated reorganizations and may not be able to perform required abandonment obligations. Regulations or federal laws could require the Company to assume such obligations. The Company reflects such costs as “Other operating (income) expense” on the Condensed Consolidated Statements of Operations.

The decommissioning obligations are included in the Condensed Consolidated Balance Sheets as “Other current liabilities” and “Other long-term liabilities” and the changes in that liability were as follows (in thousands):

	March 31, 2024			December 31, 2023
Balance, beginning of period	$	15,564		$	54,269
Additions		—			266
Obligations assumed		1,326			—
Changes in estimate		855			11,613
Settlements		(3,506	)		(50,584	)
Balance, end of period	$	14,239		$	15,564
Less: Current portion		4,000			3,280
Long-term portion	$	10,239		$	12,284

Although it is reasonably possible that the Company could receive state or federal decommissioning orders in the future or be notified of defaulting third parties in existing leases, the Company cannot predict with certainty, if, how or when such orders or notices will be resolved or estimate a possible loss or range of loss that may result from such orders. However, the Company could incur judgments, enter into settlements or revise its opinion regarding the outcome of certain notices or matters, and such developments could have a material adverse effect on its results of operations in the period in which the amounts are accrued and its cash flows in the period in which the amounts are paid.

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Segment Information

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Segment Information

Note 14 — Segment Information

From January 1, 2024 through March 18, 2024, the Company’s operations were managed through two operating segments: (i) Upstream Segment and (ii) CCS Segment. The CCS Segment was divested in March 2024. The Upstream Segment was the Company’s only reportable segment. The Company’s chief operating decision-maker (“CODM”) is the President and Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company. A reportable segment is an operating segment that meets materiality thresholds. The 10% tests, as prescribed by the segment reporting accounting guidance, are based on the reported measures of revenue, profit, and assets that are used by the CODM to assess performance and allocate resources. During the quarter ended March 31, 2024, the CCS Segment did not meet any of the reportable segment quantitative thresholds. The profit or loss metric used to evaluate segment performance was Adjusted EBITDA, which is defined by the Company as net income (loss) plus interest expense; income tax expense (benefit); depreciation, depletion, and amortization; accretion expense; non-cash write-down of oil and natural gas properties; transaction and other (income) expenses; decommissioning obligations; the net change in the fair value of derivatives (mark to market effect, net of cash settlements and premiums related to these derivatives); (gain) loss on debt extinguishment; non-cash write-down of other well equipment; and non-cash equity-based compensation expense.

Corporate general and administrative expense includes certain shared costs such as finance, accounting, tax, human resources, information technology and legal costs that are not directly attributable to each operating segment. A portion of these expenses were allocated based on the percentage of employees dedicated to each operating segment. The remaining expenses are included in the reconciliation of reportable segment Adjusted EBITDA to consolidated pre-tax net income (loss) as an unallocated corporate general and administrative expense. From January 1, 2024 through March 18, 2024, the accounting policies of the segments were the same as those described in Note 2 – Summary of Significant Accounting Policies included in the accompanying Notes to Consolidated Financial Statements in the 2023 Annual Report.

The Company’s CODM does not review assets by segment as part of the financial information provided and therefore, no asset information is provided in the table below.

The following table presents selected segment information for the periods indicated (in thousands):

	Upstream			All Other(1)			Total
Revenues from External Customers:
Three Months Ended March 31, 2024	$	429,932		$	—		$	429,932
Three Months Ended March 31, 2023		322,582			—			322,582
Equity in the Net Income (Loss) of Investees Accounted for by the Equity Method:
Three Months Ended March 31, 2024	$	(84	)	$	(7,970	)	$	(8,054	)
Three Months Ended March 31, 2023		132			(1,277	)		(1,145	)
Adjusted EBITDA:
Three Months Ended March 31, 2024	$	269,334		$	(9,872	)	$	259,462
Three Months Ended March 31, 2023		210,483			(6,157	)		204,326
Segment Expenditures:
Three Months Ended March 31, 2024	$	143,848		$	17,519		$	161,367
Three Months Ended March 31, 2023		190,024			21,189			211,213

(1)The CCS Segment is included in the “All Other” category. The CCS Segment was an emerging business in the start-up phase of operations and the business did not generate any revenues. The CCS Segment’s business activities were conducted through both wholly owned subsidiaries and equity method investments with industry partners. CCS equity method investments was a business strategy that enabled us to achieve favorable economies of scale relative to the level of investment and business risk assumed.

Reconciliations

The following table presents the reconciliation of Adjusted EBITDA to the Company’s consolidated totals (in thousands):

	Three Months Ended March 31,
	2024			2023
Adjusted EBITDA:
Total for reportable segments	$	269,334		$	210,483
All other		(9,872	)		(6,157	)
General and administrative expense		(1,786	)		(1,263	)
Interest expense		(50,845	)		(37,581	)
Depreciation, depletion and amortization		(215,664	)		(147,323	)
Accretion expense		(26,903	)		(19,414	)
Transaction and other income (expenses)(1)		49,157			(22,009	)
Decommissioning obligations(2)		(855	)		(741	)
Derivative fair value gain (loss)(3)		(87,062	)		58,937
Net cash (received) paid on settled derivative instruments (3)		3,494			12,323
Gain (loss) on debt extinguishment		(60,256	)		—
Non-cash equity-based compensation expense		(2,754	)		(3,938	)
Income (loss) before income taxes	$	(134,012	)	$	43,317

(1)For the three months ended March 31, 2024, transaction expenses include $28.1 million in costs related to the QuarterNorth Acquisition, inclusive of $14.2 million in severance expense and $9.8 million in costs related to the TLCS Divestiture, inclusive of $3.7 million in severance expense. For the three months ended March 31, 2023, transaction expenses included $35.2 million in costs related to the EnVen Acquisition, inclusive of $22.6 million in severance expense. See further discussion in Note 2 — Acquisitions and Divestitures and Note 9 — Employee Benefits Plans and Share-Based Compensation. Other income (expense) includes other miscellaneous income and expenses that we do not view as a meaningful indicator of our operating performance. For the three months ended March 31, 2024, it includes a gain of $86.9 million related to the TLCS Divestiture. See further discussion in Note 2 — Acquisitions and Divestitures. For the three months ended March 31, 2023, it includes a $8.6 million gain on the funding of the capital carry of its investment in Bayou Bend by Chevron.

(2)Estimated decommissioning obligations were a result of working interest partners or counterparties of divestiture transactions that were unable to perform the required abandonment obligations due to bankruptcy or insolvency. See Note 13 — Commitments and Contingencies for additional information on decommissioning obligations.

(3)The adjustments for the derivative fair value (gains) losses and net cash receipts (payments) on settled commodity derivative instruments have the effect of adjusting net loss for changes in the fair value of derivative instruments, which are recognized at the end of each accounting period because we do not designate commodity derivative instruments as accounting hedges. This results in reflecting commodity derivative gains and losses within Adjusted EBITDA on an unrealized basis during the period the derivatives settled.

The following table presents the reconciliation of Segment Expenditures to the Company’s consolidated totals (in thousands):

	Three Months Ended March 31,
	2024			2023
Segment Expenditures:
Total reportable segments	$	143,848		$	190,024
All other		17,519			21,189
Change in capital expenditures included in accounts payable and accrued liabilities		34,262			(55,969	)
Plugging & abandonment		(27,907	)		(10,113	)
Decommissioning obligations settled		(3,506	)		(708	)
Investment in CCS intangibles and equity method investees		(17,519	)		(21,189	)
Deferred Payments		(672	)		—
Non-cash well equipment transfers		—			(19,402	)
Other		52			130
Exploration, development and other capital expenditures	$	146,077		$	103,962

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Organization, Nature of Business and Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Nature of Business, Basis of Presentation and Consolidation

Organization and Nature of Business

Talos Energy Inc. (the “Parent Company”) is a Delaware corporation originally incorporated on November 14, 2017. The Parent Company conducts all business operations through its operating subsidiaries, owns no operating assets and has no material operations, cash flows or liabilities independent of its subsidiaries. The Parent Company’s common stock is traded on The New York Stock Exchange under the ticker symbol “TALO.”

The Parent Company (including its subsidiaries, collectively “Talos” or the “Company”) is a technically driven independent exploration and production company focused on safely and efficiently maximizing long-term value through its operations, currently in the United States (“U.S.”) and offshore Mexico. The Company leverages decades of technical and offshore operational expertise towards the acquisition, exploration and development of assets in key geological trends that are present in many offshore basins around the world.

Basis of Presentation and Consolidation

The Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC regarding interim financial reporting. Accordingly, certain information and disclosures normally included in complete financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, these financial statements include all adjustments, which unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, cash flows and changes in equity for the periods presented. The results for interim periods are not necessarily indicative of results for the entire year. The unaudited financial statements and related notes included in this Quarterly Report should be read in conjunction with the Company’s audited Consolidated Financial Statements and accompanying notes included in the 2023 Annual Report.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Segments

Segments

From January 1, 2024 through March 18, 2024, the Company had two operating segments: (i) exploration and production of oil, natural gas and NGLs (“Upstream Segment”) and (ii) CCS (“CCS Segment”), of which the Company’s only reportable segment was the Upstream Segment. Subsequent to the TLCS Divestiture (as defined herein) and sale of the Company’s entire CCS business, the Company had one operating segment. See additional information in Note 14 — Segment Information.

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Organization, Nature of Business and Basis of Presentation (Tables)

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Cash and Cash Equivalents

The following table provides a reconciliation of the amount of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows (in thousands):

	March 31, 2024		December 31, 2023
Cash and cash equivalents	$	21,001	$	33,637
Restricted cash included in Other long-term assets		103,360		102,362
Total cash, cash equivalent and restricted cash	$	124,361	$	135,999

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Acquisitions and Divestitures (Tables)

3 Months Ended

Mar. 31, 2024

QuarterNorth

Business Acquisition [Line Items]

Summary of Purchase Price

The following table summarizes the purchase price (in thousands except share and per share data):

Shares of Talos common stock		24,349,452
Talos common stock price(1)	$	13.25
Common stock value	$	322,630
Cash consideration	$	1,247,419
Total purchase price(2)	$	1,570,049

(1)Represents the closing price of the Company’s common stock on March 4, 2024, the date of the closing of the QuarterNorth Acquisition.

Total purchase price net of $331.4 million cash and cash equivalents acquired at closing is $1,238.7 million.

Summary of Allocation of Purchase Price to Assets Acquired and Liabilities Assumed

The following table presents the preliminary allocation of the purchase price to the assets acquired and liabilities assumed, based on their fair values on March 4, 2024 (in thousands):

Cash and cash equivalents	$	331,374
Other current assets		160,978
Property and equipment		1,621,507
Other long-term assets		20,780
Current liabilities:
Current portion of asset retirement obligations		(6,748	)
Other current liabilities		(194,278	)
Long-term liabilities:
Asset retirement obligations		(192,771	)
Deferred tax liabilities		(168,481	)
Other long-term liabilities		(2,312	)
Allocated purchase price	$	1,570,049

Summary Of Revenues And Net Income Attributable To Acquisition

The following table presents revenue and net income attributable to the QuarterNorth Acquisition for the period from March 4, 2024 to March 31, 2024:

	Three Months Ended March 31, 2024
Revenue	$	43,949
Net income (loss)	$	6,749

Supplemental Proforma Information

This information does not purport to be indicative of results of operations that would have occurred had the QuarterNorth Acquisition occurred on January 1, 2023, nor is such information indicative of any expected future results of operations.

	Three Months Ended March 31,
	2024			2023
Revenue	$	557,201		$	482,951
Net income (loss)	$	(110,459	)	$	74,320
Basic net income (loss) per common share	$	(0.60	)	$	0.45
Diluted net income (loss) per common share	$	(0.60	)	$	0.45

EnVen Energy Corporation

Business Acquisition [Line Items]

Summary Of Revenues And Net Income Attributable To Acquisition

The following table presents revenue and net income (loss) attributable to the EnVen Acquisition for the period from February 13, 2023 to March 31, 2023 (in thousands):

	Three Months Ended March 31, 2023
Revenue	$	62,059
Net income (loss)	$	(6,090	)

Supplemental Proforma Information

This information does not purport to be indicative of results of operations that would have occurred had the EnVen Acquisition occurred on January 1, 2022, nor is such information indicative of any expected future results of operations (in thousands, except for the per share data).

	Three Months Ended March 31, 2023
Revenue	$	374,625
Net income (loss)	$	118,090
Basic net income (loss) per common share	$	0.93
Diluted net income (loss) per common share	$	0.92

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Leases (Tables)

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Components of Lease Costs

The components of lease costs were as follows (in thousands):

	Three Months Ended March 31,
	2024			2023
Finance lease cost - interest on lease liabilities	$	3,372		$	3,708
Operating lease cost, excluding short-term leases(1)		897			908
Short-term lease cost(2)		12,652			32,985
Variable lease cost(3)		616			363
Variable and fixed sublease income		(359	)		—
Total lease cost	$	17,178		$	37,964

(1)Operating lease cost reflect a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a straight-line basis.

(2)Short-term lease costs are reported at gross amounts and primarily represent costs incurred for drilling rigs, most of which are short-term contracts not recognized as a right-of-use asset and lease liability on the Condensed Consolidated Balance Sheets.

(3)Variable lease costs primarily represent differences between minimum payment obligations and actual operating charges incurred by the Company related to its long-term leases.

Schedule of Right-of-Use ("ROU") Asset and Lease Liability, Adjusted for Initial Direct Costs and Incentives

The present value of the fixed lease payments recorded as the Company’s right-of-use (“ROU”) assets and lease liabilities, adjusted for initial direct costs and incentives were as follows (in thousands):

	March 31, 2024		December 31, 2023
Operating leases:
Operating lease assets	$	12,676	$	11,418
Current portion of operating lease liabilities	$	3,543	$	2,666
Operating lease liabilities		18,271		18,211
Total operating lease liabilities	$	21,814	$	20,877
Finance leases:
Proved properties	$	166,261	$	166,261
Other current liabilities	$	18,279	$	17,834
Other long-term liabilities		126,461		131,230
Total finance lease liabilities	$	144,740	$	149,064

Supplemental Cash Flow Information Related to Leases

The table below presents the supplemental cash flow information related to leases (in thousands):

	Three Months Ended March 31,
	2024		2023
Operating cash outflow from finance leases	$	3,372	$	3,708
Operating cash outflow from operating leases	$	1,217	$	1,265
ROU assets obtained in exchange for new operating lease liabilities(1)	$	1,601	$	12,971

(1)See QuarterNorth Acquisition and EnVen Acquisition each in Note 2 — Acquisitions and Divestitures.

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Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2024

Financial Instruments [Abstract]

Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments

The following table presents the carrying amounts, net of discount, premium and deferred financing costs, and estimated fair values of the Company’s debt instruments (in thousands):

	March 31, 2024				December 31, 2023
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
9.000% Second-Priority Senior Secured Notes – due February 2029	$	609,107	$	663,894	$	—	$	—
9.375% Second-Priority Senior Secured Notes – due February 2031	$	608,985	$	666,175	$	—	$	—
12.00% Second-Priority Senior Secured Notes – due January 2026	$	—	$	—	$	601,353	$	655,130
11.75% Senior Secured Second Lien Notes – due April 2026	$	—	$	—	$	234,221	$	233,410
Bank Credit Facility – matures March 2027	$	315,860	$	325,000	$	190,100	$	200,000

Schedule of Impact that Derivatives not Qualifying as Hedging Instruments in Condensed Consolidated Statements of Operations

The following table presents the impact that derivatives, not designated as hedging instruments, had on its Condensed Consolidated Statements of Operations (in thousands):

	Three Months Ended March 31,
	2024			2023
Net cash received (paid) on settled derivative instruments	$	(3,494	)	$	(12,323	)
Unrealized gain (loss)		(83,568	)		71,260
Price risk management activities income (expense)	$	(87,062	)	$	58,937

Schedule of Contracted Volumes and Weighted Average Prices and will Receive Under the Terms of Derivative Contracts

The following tables reflect the contracted average daily volumes and weighted average prices under the terms of the Company's derivative contracts as of March 31, 2024:

Swap Contracts
Production Period	Settlement Index	Volumes		Swap Price
Crude oil:		(Bbls)		(per Bbl)
April 2024 – December 2024	NYMEX WTI CMA		28,147	$	73.47
January 2025 – December 2025	NYMEX WTI CMA		19,679	$	73.19
Natural gas:		(MMBtu)		(per MMBtu)
April 2024 – December 2024	NYMEX Henry Hub		34,455	$	2.91
January 2025 – December 2025	NYMEX Henry Hub		38,644	$	3.60

Two-Way Collar Contracts
Production Period	Settlement Index	Volumes		Floor Price		Ceiling Price
Crude oil:		(Bbls)		(per Bbl)		(per Bbl)
April 2024 – December 2024	NYMEX WTI CMA		1,000	$	70.00	$	75.00
January 2025 – March 2025	NYMEX WTI CMA		3,000	$	65.00	$	84.35
Natural gas:		(MMBtu)		(per MMBtu)		(per MMBtu)
April 2024 – December 2024	NYMEX Henry Hub		10,000	$	4.00	$	6.90

Long Puts
Production Period	Settlement Index	Volumes		Strike Price		Deferred Premium Price
Crude oil:		(Bbls)		(per Bbl)		(per Bbl)
April 2024 – December 2024	NYMEX WTI CMA		4,000	$	70.00	$	(6.28	)
Natural gas:		(MMBtu)		(per MMBtu)		(per MMBtu)
May 2024 – December 2024	NYMEX Henry Hub		13,660	$	2.90	$	(0.40	)

Swaps with Sold Puts
Production Period	Settlement Index	Volumes		Swap Price		Strike Price
Crude oil:		(Bbls)		(per Bbl)		(per Bbl)
April 2024 – December 2024	NYMEX WTI CMA		1,000	$	72.20	$	60.00

Summary of Additional Information Related to Financial Instruments Measured at Fair Value on Recurring Basis

The following tables provide additional information related to financial instruments measured at fair value on a recurring basis (in thousands):

	March 31, 2024
	Level 1		Level 2			Level 3		Total
Assets:
Oil and natural gas derivatives	$	—	$	24,108		$	—	$	24,108
Liabilities:
Oil and natural gas derivatives		—		(77,780	)		—		(77,780	)
Total net asset (liability)	$	—	$	(53,672	)	$	—	$	(53,672	)

	December 31, 2023
	Level 1		Level 2			Level 3		Total
Assets:
Oil and natural gas derivatives	$	—	$	53,703		$	—	$	53,703
Liabilities:
Oil and natural gas derivatives		—		(8,100	)		—		(8,100	)
Total net asset (liability)	$	—	$	45,603		$	—	$	45,603

Schedule of Fair Value of Derivative Financial Instruments

The following table presents the fair value of derivative financial instruments as well as the potential effect of netting arrangements on the Company's recognized derivative asset and liability amounts (in thousands):

	March 31, 2024				December 31, 2023
	Assets		Liabilities		Assets		Liabilities
Oil and natural gas derivatives:
Current	$	18,753	$	74,033	$	36,152	$	7,305
Non-current		5,355		3,747		17,551		795
Total gross amounts presented on balance sheet		24,108		77,780		53,703		8,100
Less: Gross amounts not offset on the balance sheet		18,601		18,601		8,100		8,100
Net amounts	$	5,507	$	59,179	$	45,603	$	—

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Equity Method Investments (Tables)

3 Months Ended

Mar. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Equity Method Investments

The following table presents the Company’s investments in unconsolidated affiliates by segment as of the dates indicated below. The Company accounts for these investments using the equity method of accounting.

	Ownership Interest at
	March 31, 2024			March 31, 2024		December 31, 2023
Upstream:
Talos Energy Mexico 7, S. de R.L. de C.V. (“Talos Mexico”)		50.1	%	$	106,922	$	107,259
SP 49 Pipeline LLC		33.3	%		1,114		861
CCS(1):
Bayou Bend CCS LLC		—	%		—		28,183
Harvest Bend CCS LLC		—	%		—		9,746
Coastal Bend CCS LLC		—	%		—		—
Total Equity Method Investments				$	108,036	$	146,049

(1)See TLCS Divestiture discussion in Note 2 — Acquisitions and Divestitures.

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Debt (Tables)

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Summary of Detail Comprising Debt and Related Book Values

A summary of the detail comprising the Company’s debt and the related book values for the respective periods presented is as follows (in thousands):

	March 31, 2024			December 31, 2023
9.000% Second-Priority Senior Secured Notes – due February 2029	$	625,000		$	—
9.375% Second-Priority Senior Secured Notes – due February 2031		625,000			—
12.00% Second-Priority Senior Secured Notes – due January 2026		—			638,541
11.75% Senior Secured Second Lien Notes – due April 2026		—			227,500
Bank Credit Facility – matures March 2027(1)		325,000			200,000
Total debt, before discount, premium and deferred financing cost		1,575,000			1,066,041
Unamortized discount, premium and deferred financing cost, net		(41,048	)		(40,367	)
Total debt(2)		1,533,952			1,025,674
Less: Current portion of long-term debt		—			33,060
Long-term debt	$	1,533,952		$	992,614

(1)As of March 31, 2024, the Company had outstanding borrowings at a weighted average interest rate of 8.42%.

(2)As of March 31, 2024, the Company was in compliance with all debt covenants.

Summary of Redemption Prices of 9.000% and 9.375% Notes

Thereafter, the Company may redeem all or a portion of the 9.000% Notes in whole at any time or in part from time to time at the following redemption prices (expressed as percentages of the principal amount) plus accrued and unpaid interest if redeemed during the period commencing on February 1 of the years set forth below:

Period	Redemption Price
2026		104.500	%
2027		102.250	%
2028 and thereafter		100.000	%

Thereafter, the Company may redeem all or a portion of the 9.375% Notes in whole at any time or in part from time to time at the following redemption prices (expressed as percentages of the principal amount) plus accrued and unpaid interest if redeemed during the period commencing on February 1 of the years set forth below:

Period	Redemption Price
2027		104.688	%
2028		102.344	%
2029 and thereafter		100.000	%

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Asset Retirement Obligations (Tables)

3 Months Ended

Mar. 31, 2024

Asset Retirement Obligation Disclosure [Abstract]

Schedule of Asset Retirement Obligations

The asset retirement obligations included in the Condensed Consolidated Balance Sheets in current and non-current liabilities, and the changes in that liability were as follows (in thousands):

Asset retirement obligations at December 31, 2023	$	897,226
Obligations assumed(1)		199,519
Obligations incurred		36
Obligations settled		(27,907	)
Accretion expense		26,903
Changes in estimate		13,555
Asset retirement obligations at March 31, 2024	$	1,109,332
Less: Current portion at March 31, 2024		71,799
Long-term portion at March 31, 2024	$	1,037,533

(1)Assumed in connection with the QuarterNorth Acquisition. See further discussion in Note 2 — Acquisitions and Divestitures.

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Employee Benefits Plans and Share-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2024

Employee Benefits Plans and Share Based Compensation [Line Items]

Schedule of Acquisition Severance Costs

The following table summarizes severance accrual activity in connection the EnVen Acquisition, QuarterNorth Acquisition and TLCS Divestiture included in “Other current liabilities” and “Other long-term liabilities” on the Condensed Consolidated Balance Sheets as of March 31, 2024 (in thousands):

Severance accrual at December 31, 2023	$	6,295
Accrual additions		17,914
Benefit payments		(10,258	)
Severance accrual at March 31, 2024		13,951
Less: Current portion at March 31, 2024		13,876
Long-term portion at March 31, 2024	$	75

Summary of Restricted Stock Units Activity

The following table summarizes RSU activity under the Talos Energy Inc. 2021 Long Term Incentive Plan (the “2021 LTIP”) for the three months ended March 31, 2024:

	Restricted Stock Units			Weighted Average Grant Date Fair Value
Unvested RSUs at December 31, 2023		2,306,361		$	14.89
Granted		1,435,516		$	13.27
Vested		(1,357,605	)	$	13.56
Forfeited		(41,691	)	$	15.14
Unvested RSUs at March 31, 2024(1)		2,342,581		$	14.66

(1)As of March 31, 2024, 32,213 of the unvested RSUs were accounted for as liability awards in “Accrued liabilities” on the Condensed Consolidated Balance Sheets.

Summary of Performance Share Units Activity

The following table summarizes PSU activity under the 2021 LTIP for the three months ended March 31, 2024:

	Performance Share Units			Weighted Average Grant Date Fair Value
Unvested PSUs at December 31, 2023		1,016,649		$	21.30
Forfeited		(48,995	)	$	20.16
Unvested PSUs at March 31, 2024		967,654		$	21.36

Schedule of Recognized Share Based Compensation Expense, Net

The following table presents the amount of costs expensed and capitalized (in thousands):

	Three Months Ended March 31,
	2024		2023
Share-based compensation costs	$	4,615	$	7,191
Less: Amounts capitalized to oil and gas properties		1,861		3,253
Total share-based compensation expense	$	2,754	$	3,938

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Income (Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Summary of Computation of Basic and Diluted Income (Loss) Per Share

The following table presents the computation of the Company’s basic and diluted income (loss) per share were as follows (in thousands, except for the per share amounts):

	Three Months Ended March 31,
	2024			2023
Net income (loss)	$	(112,439	)	$	89,860
Weighted average common shares outstanding — basic		158,490			105,634
Dilutive effect of securities		—			1,316
Weighted average common shares outstanding — diluted		158,490			106,950
Net income (loss) per common share:
Basic	$	(0.71	)	$	0.85
Diluted	$	(0.71	)	$	0.84
Anti-dilutive potentially issuable securities excluded from diluted common shares		2,789			983

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Summary of Decommissioning Obligations Included in Consolidated Balance Sheets

The decommissioning obligations are included in the Condensed Consolidated Balance Sheets as “Other current liabilities” and “Other long-term liabilities” and the changes in that liability were as follows (in thousands):

	March 31, 2024			December 31, 2023
Balance, beginning of period	$	15,564		$	54,269
Additions		—			266
Obligations assumed		1,326			—
Changes in estimate		855			11,613
Settlements		(3,506	)		(50,584	)
Balance, end of period	$	14,239		$	15,564
Less: Current portion		4,000			3,280
Long-term portion	$	10,239		$	12,284

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Summary of Information by Business Segment

The following table presents selected segment information for the periods indicated (in thousands):

	Upstream			All Other(1)			Total
Revenues from External Customers:
Three Months Ended March 31, 2024	$	429,932		$	—		$	429,932
Three Months Ended March 31, 2023		322,582			—			322,582
Equity in the Net Income (Loss) of Investees Accounted for by the Equity Method:
Three Months Ended March 31, 2024	$	(84	)	$	(7,970	)	$	(8,054	)
Three Months Ended March 31, 2023		132			(1,277	)		(1,145	)
Adjusted EBITDA:
Three Months Ended March 31, 2024	$	269,334		$	(9,872	)	$	259,462
Three Months Ended March 31, 2023		210,483			(6,157	)		204,326
Segment Expenditures:
Three Months Ended March 31, 2024	$	143,848		$	17,519		$	161,367
Three Months Ended March 31, 2023		190,024			21,189			211,213

(1)The CCS Segment is included in the “All Other” category. The CCS Segment was an emerging business in the start-up phase of operations and the business did not generate any revenues. The CCS Segment’s business activities were conducted through both wholly owned subsidiaries and equity method investments with industry partners. CCS equity method investments was a business strategy that enabled us to achieve favorable economies of scale relative to the level of investment and business risk assumed.

Schedule of Reconciliation of Adjusted EBITDA to the Company's Consolidated Totals

The following table presents the reconciliation of Adjusted EBITDA to the Company’s consolidated totals (in thousands):

	Three Months Ended March 31,
	2024			2023
Adjusted EBITDA:
Total for reportable segments	$	269,334		$	210,483
All other		(9,872	)		(6,157	)
General and administrative expense		(1,786	)		(1,263	)
Interest expense		(50,845	)		(37,581	)
Depreciation, depletion and amortization		(215,664	)		(147,323	)
Accretion expense		(26,903	)		(19,414	)
Transaction and other income (expenses)(1)		49,157			(22,009	)
Decommissioning obligations(2)		(855	)		(741	)
Derivative fair value gain (loss)(3)		(87,062	)		58,937
Net cash (received) paid on settled derivative instruments (3)		3,494			12,323
Gain (loss) on debt extinguishment		(60,256	)		—
Non-cash equity-based compensation expense		(2,754	)		(3,938	)
Income (loss) before income taxes	$	(134,012	)	$	43,317

(1)For the three months ended March 31, 2024, transaction expenses include $28.1 million in costs related to the QuarterNorth Acquisition, inclusive of $14.2 million in severance expense and $9.8 million in costs related to the TLCS Divestiture, inclusive of $3.7 million in severance expense. For the three months ended March 31, 2023, transaction expenses included $35.2 million in costs related to the EnVen Acquisition, inclusive of $22.6 million in severance expense. See further discussion in Note 2 — Acquisitions and Divestitures and Note 9 — Employee Benefits Plans and Share-Based Compensation. Other income (expense) includes other miscellaneous income and expenses that we do not view as a meaningful indicator of our operating performance. For the three months ended March 31, 2024, it includes a gain of $86.9 million related to the TLCS Divestiture. See further discussion in Note 2 — Acquisitions and Divestitures. For the three months ended March 31, 2023, it includes a $8.6 million gain on the funding of the capital carry of its investment in Bayou Bend by Chevron.

(2)Estimated decommissioning obligations were a result of working interest partners or counterparties of divestiture transactions that were unable to perform the required abandonment obligations due to bankruptcy or insolvency. See Note 13 — Commitments and Contingencies for additional information on decommissioning obligations.

(3)The adjustments for the derivative fair value (gains) losses and net cash receipts (payments) on settled commodity derivative instruments have the effect of adjusting net loss for changes in the fair value of derivative instruments, which are recognized at the end of each accounting period because we do not designate commodity derivative instruments as accounting hedges. This results in reflecting commodity derivative gains and losses within Adjusted EBITDA on an unrealized basis during the period the derivatives settled.

Reconciliation of Reportable Segment Expenditures

The following table presents the reconciliation of Segment Expenditures to the Company’s consolidated totals (in thousands):

	Three Months Ended March 31,
	2024			2023
Segment Expenditures:
Total reportable segments	$	143,848		$	190,024
All other		17,519			21,189
Change in capital expenditures included in accounts payable and accrued liabilities		34,262			(55,969	)
Plugging & abandonment		(27,907	)		(10,113	)
Decommissioning obligations settled		(3,506	)		(708	)
Investment in CCS intangibles and equity method investees		(17,519	)		(21,189	)
Deferred Payments		(672	)		—
Non-cash well equipment transfers		—			(19,402	)
Other		52			130
Exploration, development and other capital expenditures	$	146,077		$	103,962

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Organization, Nature of Business and Basis of Presentation - Additional Information (Details) - Segment	3 Months Ended
	Mar. 31, 2024	Mar. 18, 2024
Basis Of Presentation And Schedule Of Accounting Policy [Line Items]
Date of incorporation	Nov. 14, 2017
Number of operating segments		2

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Organization, Nature of Business and Basis of Presentation - Schedule of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents	$ 21,001	$ 33,637
Restricted cash included in Other long term assets	103,360	102,362
Total cash, cash equivalent and restricted cash	$ 124,361	$ 135,999	$ 117,142	$ 44,145

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Acquisitions and Divestitures - Acquisition - Business Combinations - Additional Information (Details) - USD ($) $ in Thousands				3 Months Ended		12 Months Ended
	Mar. 04, 2024	Jan. 13, 2024	Feb. 13, 2023	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Business Acquisition [Line Items]
Issuance of common stock, Shares				34,500,000
Employee Severance
Business Acquisition [Line Items]
Aquisition severance cost				$ 17,914
Quarter North Acquisition
Business Acquisition [Line Items]
Business acquisition, effective date	Mar. 04, 2024
Pro forma financial information				The following supplemental pro forma financial information (in thousands, except per common share amounts), presents the condensed consolidated results of operations for the three months ended March 31, 2024 and 2023 as if the QuarterNorth Acquisition had occurred on January 1, 2023. The unaudited pro forma information was derived from historical statements of operations of the Company and QuarterNorth adjusted to include (i) depletion expense applied to the adjusted basis of the oil and natural gas properties acquired, (ii) interest expense to reflect borrowings under the Bank Credit Facility and New Senior Notes, (iii) general and administrative expense adjusted for transaction related costs incurred (including severance), (iv) weighted average basic and diluted shares of common stock outstanding from the issuance of 24.3 million shares of common stock to QuarterNorth and (v) weighted average basic and diluted shares of common stock outstanding from the issuance of 34.5 million shares of common stock from the upsized underwritten public offering in January 2024 that partially funded the cash portion of the QuarterNorth Acquisition.
Cash consideration	$ 1,247,419
Business Acquisition, Date of Acquisition Agreement		Jan. 13, 2024
Common stock value	$ 322,630
Supplemental pro forma earnings				$ (110,459)	$ 74,320
Quarter North Acquisition | Employee Severance
Business Acquisition [Line Items]
Aquisition severance cost				14,200
Quarter North Acquisition | Employee Severance | Pro Forma
Business Acquisition [Line Items]
Aquisition severance cost				$ 7,400
Quarter North Acquisition | Common Stock
Business Acquisition [Line Items]
Aggregate shares issued	24,300,000
Quarter North Acquisition | Common Stock | Pro Forma
Business Acquisition [Line Items]
Aggregate shares issued				24,300,000
Quarter North Acquisition | General and Administrative Expense
Business Acquisition [Line Items]
Cumulative transaction related costs				$ 21,800
Acquisition, transaction related cost				18,800		$ 3,000
Quarter North Acquisition | Interest Expense
Business Acquisition [Line Items]
Acquisition, transaction related cost				$ 4,900
Quarter North Acquisition | January 2024 equity offering | Common Stock | Pro Forma
Business Acquisition [Line Items]
Aggregate shares issued				34,500,000
QuarterNorth
Business Acquisition [Line Items]
Aquisition severance cost				$ 14,200
QuarterNorth | General and Administrative Expense | Nonrecurring Adjustments [Member]
Business Acquisition [Line Items]
Supplemental pro forma earnings				$ (25,000)	31,700
EnVen Energy Corporation
Business Acquisition [Line Items]
Business acquisition, effective date			Feb. 13, 2023
Pro forma financial information				The following supplemental pro forma financial information (in thousands, except per common share amounts), presents the condensed consolidated results of operations for the three months ended March 31, 2023 as if the EnVen Acquisition had occurred on January 1, 2022. The unaudited pro forma information was derived from historical statements of operations of the Company and EnVen adjusted to include (i) depletion expense applied to the adjusted basis of the oil and natural gas properties acquired, (ii) interest expense to reflect borrowings under the Bank Credit Facility and to adjust the amortization of the premium of the 11.75% Notes (as defined in Note 7 — Debt), (iii) general and administrative expense adjusted for transaction related costs incurred (including severance), (iv) other income (expense) to adjust the accretion of the discount on the two notes receivable to settle future asset retirement obligations and (v) weighted average basic and diluted shares of common stock outstanding from the issuance of 43.8 million shares of common stock to EnVen. Supplemental pro forma earnings for the three months ended March 31, 2023 were adjusted to exclude $62.6 million of general and administrative expenses.
Cash consideration			$ 207,300
Common stock value			832,200
Settlement of preexisting relationship			8,400
Supplemental pro forma earnings					118,090
EnVen Energy Corporation | 11.75% notes
Business Acquisition [Line Items]
Debt instrument interest rate				11.75%
EnVen Energy Corporation | Employee Severance
Business Acquisition [Line Items]
Aquisition severance cost					22,600
EnVen Energy Corporation | Settlement of preexisting relationship
Business Acquisition [Line Items]
Gain or loss recognized on settlement			$ 0
EnVen Energy Corporation | Common Stock
Business Acquisition [Line Items]
Aggregate shares issued			43,800,000
EnVen Energy Corporation | Common Stock | Pro Forma
Business Acquisition [Line Items]
Aggregate shares issued				43,800,000
EnVen Energy Corporation | General and Administrative Expense
Business Acquisition [Line Items]
Cumulative transaction related costs					21,800
Acquisition, transaction related cost					12,600
EnVen Energy Corporation | General and Administrative Expense | Nonrecurring Adjustments [Member]
Business Acquisition [Line Items]
Supplemental pro forma earnings					$ (62,600)

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Acquisitions and Divestitures - Acquisition - Business Combinations - Summary of Purchase Price (Details) - USD ($) $ / shares in Units, $ in Thousands		Mar. 04, 2024	Feb. 13, 2023
Quarter North Acquisition
Business Acquisition [Line Items]
Talos common stock price per share	[1]	$ 13.25
Common stock value		$ 322,630
Cash consideration		1,247,419
Total purchase price	[2]	$ 1,570,049
Quarter North Acquisition | Common Stock
Business Acquisition [Line Items]
Shares of Talos common stock		24,349,452
EnVen Energy Corporation
Business Acquisition [Line Items]
Common stock value			$ 832,200
Cash consideration			$ 207,300

[1] Represents the closing price of the Company’s common stock on March 4, 2024, the date of the closing of the QuarterNorth Acquisition.

[2] Total purchase price net of $331.4 million cash and cash equivalents acquired at closing is $1,238.7 million.

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Acquisitions and Divestitures - Acquisition - Business Combinations - Summary of Purchase Price (Parenthetical) (Details) - USD ($) $ in Thousands		3 Months Ended
	Mar. 04, 2024	Mar. 31, 2024
Business Acquisition [Line Items]
Purchase price net of cash and cash equivalents		$ 916,045
Quarter North Acquisition
Business Acquisition [Line Items]
Cash and cash equivalents	$ 331,374
Purchase price net of cash and cash equivalents	$ 1,238,700

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Acquisitions and Divestitures - Acquisition - Business Combinations - Summary of Allocation of Purchase Price to Assets Acquired and Liabilities Assumed (Details) - Quarter North Acquisition $ in Thousands	Mar. 04, 2024 USD ($)
Business Acquisition [Line Items]
Cash and cash equivalents	$ 331,374
Other current assets	160,978
Property and equipment	1,621,507
Other long-term assets	20,780
Current portion of asset retirement obligations	(6,748)
Other current liabilities	(194,278)
Asset retirement obligations	(192,771)
Deferred tax liabilities	(168,481)
Other long-term liabilities	(2,312)
Allocated purchase price	$ 1,570,049

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Acquisitions and Divestitures - Acquisition - Business Combinations - Summary of Revenue and Net Income Attributable to Acquisition (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Quarter North Acquisition
Business Acquisition [Line Items]
Revenue	$ 43,949
Net income (loss)	$ 6,749
EnVen Energy Corporation
Business Acquisition [Line Items]
Revenue		$ 62,059
Net income (loss)		$ (6,090)

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Acquisitions and Divestitures - Acquisition - Business Combinations - Supplemental Proforma Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Quarter North Acquisition
Business Acquisition [Line Items]
Business Acquisition, Pro Forma Revenue	$ 557,201	$ 482,951
Net income (loss)	$ (110,459)	$ 74,320
Basic net income (loss) per common share	$ (0.6)	$ 0.45
Diluted net income (loss) per common share	$ (0.6)	$ 0.45
EnVen Energy Corporation
Business Acquisition [Line Items]
Business Acquisition, Pro Forma Revenue		$ 374,625
Net income (loss)		$ 118,090
Basic net income (loss) per common share		$ 0.93
Diluted net income (loss) per common share		$ 0.92

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Acquisitions and Divestitures - Divestiture - Additional Information (Details) - USD ($) $ in Thousands		3 Months Ended
	Mar. 18, 2024	Mar. 31, 2024	Mar. 31, 2023
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Sale of stock, consideration received on transaction		$ 141,997	$ 0
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal, Statement of Income or Comprehensive Income [Extensible Enumeration]		Other Operating Income (Expense), Net
TLCS
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal		$ 86,900
Severance expense		3,700
Business exit costs		9,800
TLCS | General and Administrative Expense
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Divestiture expense excludes severance cost		6,700
Business exit costs		6,100
Talos Low Carbon Solutions
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Business disposal date	Mar. 18, 2024
Sale of stock, consideration received on transaction	$ 142,000
Talos Low Carbon Solutions | Disposal Group, Held-for-Sale or Disposed of by Sale, Not Discontinued Operations [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Disposal Group, Not Discontinued Operation, Gain (Loss) on Disposal		$ 86,900
TotalEnergies E&P USA, Inc
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Base purchase price before adjustments	$ 125,000

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Property, Plant and Equipment - Additional Information (Details) - US	3 Months Ended
	Mar. 31, 2024 USD ($) $ / bbl $ / Mcf	Mar. 31, 2023 USD ($)
Property, Plant and Equipment [Line Items]
Write-down of oil and natural gas properties | $	$ 0	$ 0
Oil (MBbls)
Property, Plant and Equipment [Line Items]
SEC pricing	78.19
Gas (MMcf)
Property, Plant and Equipment [Line Items]
SEC pricing | $ / Mcf	2.5
NGL (MBbls)
Property, Plant and Equipment [Line Items]
SEC pricing	17.08

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Leases - Components of Lease Costs (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Lease, Cost [Abstract]
Finance lease cost - interest on lease liabilities		$ 3,372	$ 3,708
Operating lease cost, excluding short-term leases	[1]	897	908
Short-term lease cost	[2]	12,652	32,985
Variable lease cost	[3]	616	363
Variable and fixed sublease income		(359)	0
Total lease cost		$ 17,178	$ 37,964

[1] Operating lease cost reflect a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a straight-line basis.

[2] Short-term lease costs are reported at gross amounts and primarily represent costs incurred for drilling rigs, most of which are short-term contracts not recognized as a right-of-use asset and lease liability on the Condensed Consolidated Balance Sheets.

[3] Variable lease costs primarily represent differences between minimum payment obligations and actual operating charges incurred by the Company related to its long-term leases.

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Leases - Schedule of Right-of-Use Asset and Liability, Adjusted for Initial Direct Costs and Incentives (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Assets and Liabilities, Lessee [Abstract]
Operating lease assets	$ 12,676	$ 11,418
Current portion of operating lease liabilities	$ 3,543	$ 2,666
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Current portion of operating lease liabilities	Current portion of operating lease liabilities
Operating lease liabilities	$ 18,271	$ 18,211
Total operating lease liabilities	21,814	20,877
Proved properties	$ 166,261	$ 166,261
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration]	Capitalized Costs, Proved Properties	Capitalized Costs, Proved Properties
Other current liabilities	$ 18,279	$ 17,834
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]	Other current liabilities	Other current liabilities
Other long-term liabilities	$ 126,461	$ 131,230
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other long-term liabilities	Other long-term liabilities
Total finance lease liabilities	$ 144,740	$ 149,064

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Leases - Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Cash Flow, Operating Activities, Lessee [Abstract]
Operating cash outflow from finance leases		$ 3,372	$ 3,708
Operating cash outflow from operating leases		1,217	1,265
ROU assets obtained in exchange for new operating lease liabilities	[1]	$ 1,601	$ 12,971

[1] See QuarterNorth Acquisition and EnVen Acquisition each in Note 2 — Acquisitions and Divestitures.

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Financial Instruments - Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Carrying Amount	$ 1,533,952	$ 1,025,674
9.000% Second Priority Senior Secured Notes due February 2029
Debt Instrument [Line Items]
Carrying Amount	609,107	0
Fair Value	663,894	0
9.375% Second Priority Senior Secured Notes due February 2031
Debt Instrument [Line Items]
Carrying Amount	608,985	0
Fair Value	666,175	0
12.00% Second-Priority Senior Secured Notes - due January 2026
Debt Instrument [Line Items]
Carrying Amount		601,353
Fair Value	0	655,130
11.75% Senior Secured Second Lien Notes - due April 2026
Debt Instrument [Line Items]
Carrying Amount		234,221
Fair Value	0	233,410
Bank Credit Facility - matures March 2027
Debt Instrument [Line Items]
Carrying Amount	315,860	190,100
Fair Value	$ 325,000	$ 200,000

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Financial Instruments - Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments (Parenthetical) (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
9.000% Second Priority Senior Secured Notes due February 2029
Debt Instrument [Line Items]
Debt instrument interest rate	9.00%
Senior notes, maturity date	Feb. 15, 2029
9.375% Second Priority Senior Secured Notes due February 2031
Debt Instrument [Line Items]
Debt instrument interest rate	9.375%
Senior notes, maturity date	Feb. 15, 2031
12.00% Second-Priority Senior Secured Notes - due January 2026
Debt Instrument [Line Items]
Debt instrument interest rate		12.00%
Senior notes, maturity date	Jan. 15, 2026	Jan. 15, 2026
11.75% Senior Secured Second Lien Notes - due April 2026
Debt Instrument [Line Items]
Debt instrument interest rate		11.75%
Senior notes, maturity date	Apr. 15, 2026	Apr. 15, 2026

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Financial Instruments - Additional Information (Details) $ in Millions	3 Months Ended
	Mar. 31, 2024 USD ($) Counterparty
Concentration Risk [Line Items]
Credit risk, financial instruments	The Company is subject to the risk of loss on its financial instruments as a result of nonperformance by counterparties pursuant to the terms of their contractual obligations. The Company has entered into International Swaps and Derivative Association agreements with counterparties to mitigate this risk. The Company also maintains credit policies with regard to its counterparties to minimize overall credit risk. These policies require (i) the evaluation of potential counterparties’ financial condition to determine their credit worthiness; (ii) the regular monitoring of counterparties’ credit exposures; (iii) the use of contract language that affords the Company netting or set off opportunities to mitigate exposure risk; and (iv) potentially requiring counterparties to post cash collateral, parent guarantees, or letters of credit to minimize credit risk. The Company’s assets and liabilities from commodity price risk management activities at March 31, 2024 represent derivative instruments from nine counterparties; all of which are registered swap dealers that have an “investment grade” (minimum Standard & Poor’s rating of BBB- or better) credit rating, and eight of which are parties under the Company’s Bank Credit Facility. The Company enters into derivatives directly with these counterparties and, subject to the terms of the Company’s Bank Credit Facility, is not required to post collateral or other securities for credit risk in relation to the derivative activities. Had the Company’s counterparties failed to perform under existing commodity derivative contracts the maximum loss at March 31, 2024 would have been $5.5 million.
Maximum loss on commodity contracts | $	$ 5.5
Counterparty Risk Investment Grade
Concentration Risk [Line Items]
Number of counter parties description	all of which
Counterparty Risk Diversification
Concentration Risk [Line Items]
Number of counterparties	9
Bank Credit Facility
Concentration Risk [Line Items]
Number of counterparties	8

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Financial Instruments - Schedule of Impact that Derivatives not Qualifying as Hedging Instruments in Condensed Consolidated Statements of Operations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative fair value gain (loss)	$ (87,062)	$ 58,937
Gain Loss On Derivative Instruments Unrealized Component
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative fair value gain (loss)	(83,568)	71,260
Commodity Contract
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative fair value gain (loss)	(87,062)	58,937
Commodity Contract | Gain Loss On Derivative Instruments Realized Component
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Derivative fair value gain (loss)	$ (3,494)	$ (12,323)

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Financial Instruments - Schedule of Contracted Volumes and Weighted Average Prices and will Receive Under the Terms of Derivative Contracts (Details)	3 Months Ended
	Mar. 31, 2024 MMBTU $ / bbl $ / MMBTU bbl
Crude Oil | January 2025 - March 2025 | Collar
Derivative [Line Items]
Settlement Index	NYMEX WTI CMA
Volumes | bbl	3,000
Floor Price	65
Ceiling Price	84.35
Crude Oil | January 2025 - December 2025 | Swap
Derivative [Line Items]
Settlement Index	NYMEX WTI CMA
Volumes | bbl	19,679
Swap Price	73.19
Crude Oil | April 2024 - December 2024 | Swap
Derivative [Line Items]
Settlement Index	NYMEX WTI CMA
Volumes | bbl	28,147
Swap Price	73.47
Crude Oil | April 2024 - December 2024 | Collar
Derivative [Line Items]
Settlement Index	NYMEX WTI CMA
Volumes | bbl	1,000
Floor Price	70
Ceiling Price	75
Crude Oil | April 2024 - December 2024 | Long Puts
Derivative [Line Items]
Settlement Index	NYMEX WTI CMA
Volumes | bbl	4,000
Deferred Premium Price	(6.28)
Strike Price	70
Crude Oil | April 2024 - December 2024 | Swaps with Sold Puts
Derivative [Line Items]
Settlement Index	NYMEX WTI CMA
Volumes | bbl	1,000
Swap Price	72.2
Strike Price	60
Natural Gas | January 2025 - December 2025 | Swap
Derivative [Line Items]
Settlement Index	NYMEX Henry Hub
Average Daily Volumes | MMBTU	38,644
Swap Price | $ / MMBTU	3.6
Natural Gas | April 2024 - December 2024 | Swap
Derivative [Line Items]
Settlement Index	NYMEX Henry Hub
Average Daily Volumes | MMBTU	34,455
Swap Price | $ / MMBTU	2.91
Natural Gas | April 2024 - December 2024 | Collar
Derivative [Line Items]
Settlement Index	NYMEX Henry Hub
Average Daily Volumes | MMBTU	10,000
Floor Price | $ / MMBTU	4
Ceiling Price | $ / MMBTU	6.9
Natural Gas | May 2024 - December 2024 | Long Puts
Derivative [Line Items]
Settlement Index	NYMEX Henry Hub
Average Daily Volumes | MMBTU	13,660
Deferred Premium Price | $ / MMBTU	(0.4)
Strike Price | $ / MMBTU	2.9

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Financial Instruments - Summary of Additional Information Related to Financial Instruments Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Oil and Natural Gas Derivatives
Assets:
Oil and natural gas derivatives	$ 5,507	$ 45,603
Liabilities:
Oil and natural gas derivatives	59,179	0
Fair Value on Recurring Basis
Liabilities:
Total net asset (liability)	(53,672)	45,603
Fair Value on Recurring Basis | Oil and Natural Gas Derivatives
Assets:
Oil and natural gas derivatives	$ 24,108	$ 53,703
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Assets	Assets
Liabilities:
Oil and natural gas derivatives	$ (77,780)	$ (8,100)
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Liabilities	Liabilities
Fair Value on Recurring Basis | Level 1
Liabilities:
Total net asset (liability)	$ 0	$ 0
Fair Value on Recurring Basis | Level 1 | Oil and Natural Gas Derivatives
Assets:
Oil and natural gas derivatives	$ 0	$ 0
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Assets	Assets
Liabilities:
Oil and natural gas derivatives	$ 0	$ 0
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Liabilities	Liabilities
Fair Value on Recurring Basis | Level 2
Liabilities:
Total net asset (liability)	$ (53,672)	$ 45,603
Fair Value on Recurring Basis | Level 2 | Oil and Natural Gas Derivatives
Assets:
Oil and natural gas derivatives	$ 24,108	$ 53,703
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Assets	Assets
Liabilities:
Oil and natural gas derivatives	$ (77,780)	$ (8,100)
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Liabilities	Liabilities
Fair Value on Recurring Basis | Level 3
Liabilities:
Total net asset (liability)	$ 0	$ 0
Fair Value on Recurring Basis | Level 3 | Oil and Natural Gas Derivatives
Assets:
Oil and natural gas derivatives	$ 0	$ 0
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Assets	Assets
Liabilities:
Oil and natural gas derivatives	$ 0	$ 0
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Liabilities	Liabilities

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Financial Instruments - Schedule of Fair Value of Derivative Financial Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Price Risk Derivatives [Line Items]
Derivative Asset, Current	$ 18,753	$ 36,152
Derivative Asset, Noncurrent	5,355	17,551
Derivative Liability, Current	74,033	7,305
Derivative Liability, Noncurrent	3,747	795
Oil and Natural Gas Derivatives
Price Risk Derivatives [Line Items]
Derivative Asset, Current	18,753	36,152
Derivative Asset, Noncurrent	5,355	17,551
Total gross amounts presented on balance sheet, Assets	24,108	53,703
Gross amounts not offset on the balance sheet	18,601	8,100
Net Amounts	5,507	45,603
Derivative Liability, Current	74,033	7,305
Derivative Liability, Noncurrent	3,747	795
Total gross amounts presented on balance sheet, Liabilities	77,780	8,100
Gross amounts not offset on the balance sheet	18,601	8,100
Net Amounts	$ 59,179	$ 0

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Equity Method Investments - Schedule of Equity Method Investments (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Schedule of Equity Method Investments [Line Items]
Total equity method investments	$ 108,036	$ 146,049
Talos Energy Mexico 7, S. de R.L. de C.V. ("Talos Mexico") | Upstream
Schedule of Equity Method Investments [Line Items]
Total equity method investments	$ 106,922	107,259
Equity method investment, ownership interest	50.10%
SP 49 Pipeline LLC | Upstream
Schedule of Equity Method Investments [Line Items]
Total equity method investments	$ 1,114	861
Equity method investment, ownership interest	33.30%
Bayou Bend CCS LLC | CCS
Schedule of Equity Method Investments [Line Items]
Total equity method investments	$ 0	28,183
Equity method investment, ownership interest	0.00%
Harvest Bend CCS LLC | CCS
Schedule of Equity Method Investments [Line Items]
Total equity method investments	$ 0	9,746
Equity method investment, ownership interest	0.00%
Coastal Bend CCS LLC | CCS
Schedule of Equity Method Investments [Line Items]
Total equity method investments	$ 0	$ 0
Equity method investment, ownership interest	0.00%

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Debt - Summary of Detail Comprising Debt and Related Book Values (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Total debt, before discount, premium and deferred financing cost	$ 1,575,000	$ 1,066,041
Unamortized discount, premium and deferred financing cost, net	(41,048)	(40,367)
Total debt	1,533,952	1,025,674
Less: current portion of long-term debt	0	33,060
Long-term debt	1,533,952	992,614
Senior Notes | 9.000% Second-Priority Senior Secured Notes - due February 2029
Debt Instrument [Line Items]
Total debt, before discount, premium and deferred financing cost	625,000	0
Senior Notes | 9.375% Second-Priority Senior Secured Notes - due February 2031
Debt Instrument [Line Items]
Total debt, before discount, premium and deferred financing cost	625,000	0
Senior Notes | 12.00% Second-Priority Senior Secured Notes - due January 2026
Debt Instrument [Line Items]
Total debt, before discount, premium and deferred financing cost	0	638,541
Senior Notes | 11.75% Senior Secured Second Lien Notes due April 2026
Debt Instrument [Line Items]
Total debt, before discount, premium and deferred financing cost	0	227,500
Line of Credit | Bank Credit Facility - matures March 2027
Debt Instrument [Line Items]
Total debt, before discount, premium and deferred financing cost	$ 325,000	$ 200,000

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Debt - Summary of Detail Comprising Debt and Related Book Values (Parenthetical) (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023	Feb. 07, 2024
Senior Notes | 9.000% Second-Priority Senior Secured Notes - due February 2029
Debt Instrument [Line Items]
Debt instrument interest rate	9.00%		9.00%
Senior notes, maturity date	Feb. 01, 2029
Senior Notes | 9.375% Second-Priority Senior Secured Notes - due February 2031
Debt Instrument [Line Items]
Debt instrument interest rate	9.375%		9.375%
Senior notes, maturity date	Feb. 01, 2031
Senior Notes | 12.00% Second-Priority Senior Secured Notes - due January 2026
Debt Instrument [Line Items]
Debt instrument interest rate		12.00%	12.00%
Senior notes, maturity date	Jan. 15, 2026	Jan. 15, 2026
Senior Notes | 11.75% Senior Secured Second Lien Notes due April 2026
Debt Instrument [Line Items]
Debt instrument interest rate		11.75%	11.75%
Senior notes, maturity date	Apr. 15, 2026	Apr. 15, 2026
Line of Credit | Bank Credit Facility - matures March 2027
Debt Instrument [Line Items]
Bank credit facility, maturity date	Mar. 31, 2027	Mar. 31, 2027
Weighted average interest rate	8.42%

XML

Debt - Additional Information (Details) - USD ($) $ in Thousands				3 Months Ended		12 Months Ended
	Jan. 31, 2027	Jan. 31, 2026	Feb. 07, 2024	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Apr. 15, 2024	Jan. 13, 2024
Debt Instrument [Line Items]
Loss on extinguishment of debt				$ (60,256)	$ 0
Line of Credit
Debt Instrument [Line Items]
Line of Credit Facility, Borrowing Capacity, Description				The Bank Credit Facility provides for the determination of the borrowing base based on the Company’s proved producing reserves and a portion of the Company's proved undeveloped reserves.
9.000% Second-Priority Senior Secured Notes - due February 2029
Debt Instrument [Line Items]
Debt issuance costs				$ 16,200
9.000% Second-Priority Senior Secured Notes - due February 2029 | Senior Notes
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage			9.00%	9.00%
Debt instrument interest rate			9.00%	9.00%
Debt Instrument, Frequency of Periodic Payment				semi-annually
Debt instrument payment terms				semi-annually each February 1 and August 1
Debt instrument maturity date				Feb. 01, 2029
Debt instrument redemption, description				the Company may redeem all or a portion of the 9.000% Notes in whole at any time or in part from time to time at the following redemption prices (expressed as percentages of the principal amount) plus accrued and unpaid interest if redeemed during the period commencing on February 1 of the years set forth below
9.000% Second-Priority Senior Secured Notes - due February 2029 | Senior Notes | Forecast
Debt Instrument [Line Items]
Debt Instrument, Redemption Price, Percentage		109.00%
Percentage of principal amount redeemed		40.00%
9.375% Second-Priority Senior Secured Notes - due February 2031
Debt Instrument [Line Items]
Debt issuance costs				$ 16,200
9.375% Second-Priority Senior Secured Notes - due February 2031 | Senior Notes
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage			9.375%	9.375%
Debt instrument interest rate			9.375%	9.375%
Debt Instrument, Frequency of Periodic Payment				semi-annually
Debt instrument payment terms				semi-annually each February 1 and August 1
Debt instrument maturity date				Feb. 01, 2031
Debt instrument redemption, description				the Company may redeem all or a portion of the 9.375% Notes in whole at any time or in part from time to time at the following redemption prices (expressed as percentages of the principal amount) plus accrued and unpaid interest if redeemed during the period commencing on February 1 of the years set forth below
9.375% Second-Priority Senior Secured Notes - due February 2031 | Senior Notes | Forecast
Debt Instrument [Line Items]
Debt Instrument, Redemption Price, Percentage	109.375%
Percentage of principal amount redeemed	40.00%
12.00% Second-Priority Senior Secured Notes | Senior Notes
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage			12.00%			12.00%
Debt Instrument, Redemption Price, Percentage			103.00%
Debt instrument interest rate			12.00%			12.00%
Debt instrument, repurchase amount			$ 638,500
Debt instrument maturity date				Jan. 15, 2026		Jan. 15, 2026
11.75% Senior Secured Second Lien Notes | Senior Notes
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage			11.75%			11.75%
Debt Instrument, Redemption Price, Percentage			102.938%
Debt instrument interest rate			11.75%			11.75%
Debt instrument, repurchase amount			$ 227,500
Debt instrument maturity date				Apr. 15, 2026		Apr. 15, 2026
Bank Credit Facility [Member]
Debt Instrument [Line Items]
Line of borrowing credit facility								$ 965,000
Bank Credit Facility - matures March 2027
Debt Instrument [Line Items]
Bank credit facility, description				The borrowing base is redetermined by the lenders at least semi-annually during the second quarter and fourth quarter of each year. On January 13, 2024, the Company entered into the Tenth Amendment to Credit Agreement (the “Tenth Amendment”). The Tenth Amendment, among other things, (i) permitted the incurrence of additional indebtedness in order to fund the QuarterNorth Acquisition, with such indebtedness excluded from any reduction of the borrowing base that would otherwise result from such incurrence, (ii) reaffirmed the borrowing base at approximately $1.1 billion and (iii) reaffirmed commitments at $965.0 million effective upon the amendment effective date.
Other Nonoperating Income (Expense) | 12.00% Second-Priority Senior Secured Notes | Senior Notes
Debt Instrument [Line Items]
Loss on extinguishment of debt			54,900
Other Nonoperating Income (Expense) | 11.75% Senior Secured Second Lien Notes | Senior Notes
Debt Instrument [Line Items]
Loss on extinguishment of debt			$ 5,400
Quarter North Acquisition | 12.00% Second-Priority Senior Secured Notes
Debt Instrument [Line Items]
Debt instrument, repurchase date			Feb. 07, 2024
Quarter North Acquisition | Bank Credit Facility [Member]
Debt Instrument [Line Items]
Line of borrowing credit facility								$ 1,100,000
Subsequent Event [Member] | 11.75% Senior Secured Second Lien Notes | Senior Notes
Debt Instrument [Line Items]
Debt Instrument, Interest Rate, Stated Percentage							11.75%
Debt instrument interest rate							11.75%

XML

Debt - Summary of Redemption Prices of 9.000% and 9.375% Notes (Details)	3 Months Ended
	Mar. 31, 2024
9.000% Second-Priority Senior Secured Notes - due February 2029 | Debt Instrument, Redemption, Period One
Debt Instrument, Redemption [Line Items]
Debt Instrument, Redemption Price, Percentage	104.50%
9.000% Second-Priority Senior Secured Notes - due February 2029 | Debt Instrument, Redemption, Period Two
Debt Instrument, Redemption [Line Items]
Debt Instrument, Redemption Price, Percentage	102.25%
9.000% Second-Priority Senior Secured Notes - due February 2029 | Debt Instrument, Redemption, Period After Two
Debt Instrument, Redemption [Line Items]
Debt Instrument, Redemption Price, Percentage	100.00%
9.375% Second-Priority Senior Secured Notes - due February 2031 | Debt Instrument, Redemption, Period One
Debt Instrument, Redemption [Line Items]
Debt Instrument, Redemption Price, Percentage	104.688%
9.375% Second-Priority Senior Secured Notes - due February 2031 | Debt Instrument, Redemption, Period Two
Debt Instrument, Redemption [Line Items]
Debt Instrument, Redemption Price, Percentage	102.344%
9.375% Second-Priority Senior Secured Notes - due February 2031 | Debt Instrument, Redemption, Period After Two
Debt Instrument, Redemption [Line Items]
Debt Instrument, Redemption Price, Percentage	100.00%

XML

Asset Retirement Obligations - Schedule of Asset Retirement Obligations (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Asset Retirement Obligation Disclosure [Abstract]
Asset retirement obligations at December 31, 2023	$ 897,226
Obligations assumed	199,519
Obligations incurred	36
Obligations settled	(27,907)
Accretion expense	26,903	$ 19,414
Changes in estimate	13,555
Asset retirement obligations at March 31, 2024	1,109,332
Less: Current portion at March 31, 2024	71,799		$ 77,581
Long-term portion at March 31, 2024	$ 1,037,533		$ 819,645

XML

Asset Retirement Obligations - Additional Information (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Restricted cash	$ 103,360	$ 102,362
Future plugging and abandonment obligations
Restricted cash	103,400
Receivable with imputed interest, face amount	$ 66,200

XML

Employee Benefits Plans and Share-Based Compensation - Additional Information (Details) - Employee Severance $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($)
Employee Benefits Plans and Share Based Compensation [Line Items]
Aquisition severance cost	$ 17,914
Quarter North Acquisition
Employee Benefits Plans and Share Based Compensation [Line Items]
Aquisition severance cost	14,200
Quarter North Acquisition | Pro Forma
Employee Benefits Plans and Share Based Compensation [Line Items]
Aquisition severance cost	$ 7,400

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Employee Benefits Plans and Share-Based Compensation - Schedule of Acquisition Severance Costs (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($)
QuarterNorth
Acquisition Severance Costs [Line Items]
Accrual additions	$ 14,200
Employee Severance
Acquisition Severance Costs [Line Items]
Severance accrual at December 31, 2023	6,295
Accrual additions	17,914
Benefit payments	(10,258)
Severance accrual at March 31, 2024	13,951
Less: Current portion at March 31, 2024	13,876
Long-term portion at March 31, 2024	75
Employee Severance | Quarter North Acquisition
Acquisition Severance Costs [Line Items]
Accrual additions	$ 14,200

XML

Employee Benefits Plans and Share-Based Compensation - Schedule of Restricted Stock and Performance Share Units Activity (Details)	3 Months Ended
	Mar. 31, 2024 $ / shares shares
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested beginning of the period | shares	2,306,361
Granted | shares	1,435,516
Vested | shares	(1,357,605)
Forfeited | shares	(41,691)
Unvested end of the period | shares	2,342,581	[1]
Unvested weighted average grant date fair value, beginning of the period | $ / shares	$ 14.89
Unvested weighted average grant date fair value, granted | $ / shares	13.27
Unvested weighted average grant date fair value, vested | $ / shares	13.56
Unvested weighted average grant date fair value, forfeited | $ / shares	15.14
Unvested weighted average grant date fair value, end of the period | $ / shares	$ 14.66	[1]
Performance Share Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested beginning of the period | shares	1,016,649
Forfeited | shares	(48,995)
Unvested end of the period | shares	967,654
Unvested weighted average grant date fair value, beginning of the period | $ / shares	$ 21.3
Unvested weighted average grant date fair value, forfeited | $ / shares	20.16
Unvested weighted average grant date fair value, end of the period | $ / shares	$ 21.36

[1] As of March 31, 2024, 32,213 of the unvested RSUs were accounted for as liability awards in “Accrued liabilities” on the Condensed Consolidated Balance Sheets.

XML

Employee Benefits Plans and Share-Based Compensation - Schedule of Restricted Stock and Performance Share Units Activity (Parenthetical) (Details) - shares	Mar. 31, 2024		Dec. 31, 2023
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested	2,342,581	[1]	2,306,361
Performance Share Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested	967,654		1,016,649
Accrued Liabilities | Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unvested	32,213

[1] As of March 31, 2024, 32,213 of the unvested RSUs were accounted for as liability awards in “Accrued liabilities” on the Condensed Consolidated Balance Sheets.

XML

Employee Benefits Plans and Share-Based Compensation - Schedule of Recognized Share Based Compensation Expense, Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Share-based compensation costs	$ 4,615	$ 7,191
Less: Amounts capitalized to oil and gas properties	1,861	3,253
Share-Based Payment Arrangement, Expense	$ 2,754	$ 3,938

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Mar. 04, 2024	Dec. 31, 2023
Income tax benefit (expense)	$ 21,573	$ 46,543
Effective tax rate	16.10%	(107.40%)
U.S. Federal statutory rate	21.00%	21.00%
Decrease in valuation allowance		$ 54,900
Other Noncurrent Liabilities
Deferred tax liabilities	$ 240,600			$ 92,200
Quarter North Energy [Member]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities			$ 168,500
Income tax payable current			$ 11,900

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Income (Loss) Per Share - Summary of Computation of Basic and Diluted Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Earnings Per Share [Abstract]
Net income (loss)	$ (112,439)	$ 89,860
Weighted average common shares outstanding — basic	158,490	105,634
Dilutive effect of securities	0	1,316
Weighted average common shares outstanding — diluted	158,490	106,950
Basic	$ (0.71)	$ 0.85
Diluted	$ (0.71)	$ 0.84
Anti-dilutive potentially issuable securities excluded from diluted common shares	2,789	983

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Related Party Transactions - Additional Information (Details) - USD ($) $ in Thousands, shares in Millions		3 Months Ended
	Feb. 07, 2024	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Related Party Transaction [Line Items]
Share of common stock		34.5
General and administrative expense		$ 69,841	$ 63,187
Second Priority Senior Secured Notes
Related Party Transaction [Line Items]
Debt instrument, face amount	$ 1,250,000
Slim Family
Related Party Transaction [Line Items]
Related party receivable		0
Investment, Identifier [Axis]: Slim Family Office
Related Party Transaction [Line Items]
Debt instrument, face amount	312,500
Secondary Offering Expenses
Related Party Transaction [Line Items]
General and administrative expense		$ 0	$ 0
Beneficial Owner | Bain Capital LP
Related Party Transaction [Line Items]
Stock ownership percentage		8.20%
Beneficial Owner | Slim Family
Related Party Transaction [Line Items]
Stock ownership percentage		19.50%
Beneficial Owner | Quarter North Acquisition
Related Party Transaction [Line Items]
Stock ownership percentage		13.50%
Equity Method Investee
Related Party Transaction [Line Items]
Related party receivable		$ 2,300		$ 5,500
Nonrelated Party [Member] | Banco Inbursa
Related Party Transaction [Line Items]
Advisory fee	$ 2,700

XML

Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended	48 Months Ended
	Mar. 31, 2024	Dec. 31, 2028
Loss Contingencies [Line Items]
Payments for Legal Settlements	$ 14.4
Bank Credit Facility | Letter of Credit
Loss Contingencies [Line Items]
Letters of credit outstanding amount	10.8
Firm Transportation | Forecast [Member]
Loss Contingencies [Line Items]
Contractual obligations		$ 22.0
Pending Litigation
Loss Contingencies [Line Items]
Surety performance bonds outstanding	80.0
Surety Bond
Loss Contingencies [Line Items]
Surety performance bonds outstanding	$ 1,500.0

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Commitments and Contingencies - Summary of Decommisioning Obligations Included in consolidated Balance Sheets (Details) - Decommissioning Abandonment Obligations - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Loss Contingencies [Line Items]
Balance, beginning of period	$ 15,564	$ 54,269
Additions	0	266
Decommissioning Obligation Assumed	1,326	0
Changes in estimate	855	11,613
Settlements	(3,506)	(50,584)
Balance, end of period	14,239	15,564
Other Current Liabilities
Loss Contingencies [Line Items]
Less: Current portion	4,000	3,280
Other Noncurrent Liabilities
Loss Contingencies [Line Items]
Loss Contingency, Accrual, Noncurrent, Total	$ 10,239	$ 12,284

XML

Segment Information - Additional Information (Details) - Segment	3 Months Ended
	Mar. 31, 2024	Mar. 18, 2024
Segment Reporting [Abstract]
Number of operating segments		2
Segment reporting, no asset information [true false]	true

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Segment Information - Summary of Information by Business Segment (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Segment Reporting Information [Line Items]
Revenues from External Customers		$ 429,932	$ 322,582
Equity in the Net Income (Loss) of Investees Accounted for by the Equity Method		(8,054)	7,443
Operating Segments
Segment Reporting Information [Line Items]
Revenues from External Customers		429,932	322,582
Equity in the Net Income (Loss) of Investees Accounted for by the Equity Method		(8,054)	(1,145)
Adjusted EBITDA		259,462	204,326
Segment Expenditures		161,367	211,213
Operating Segments | Upstream
Segment Reporting Information [Line Items]
Revenues from External Customers		429,932	322,582
Equity in the Net Income (Loss) of Investees Accounted for by the Equity Method		(84)	132
Adjusted EBITDA		269,334	210,483
Segment Expenditures		143,848	190,024
Operating Segments | All Other
Segment Reporting Information [Line Items]
Revenues from External Customers	[1]	0	0
Equity in the Net Income (Loss) of Investees Accounted for by the Equity Method		(7,970)	(1,277)	[1]
Adjusted EBITDA	[1]	(9,872)	(6,157)
Segment Expenditures	[1]	$ 17,519	$ 21,189

[1] The CCS Segment is included in the “All Other” category. The CCS Segment was an emerging business in the start-up phase of operations and the business did not generate any revenues. The CCS Segment’s business activities were conducted through both wholly owned subsidiaries and equity method investments with industry partners. CCS equity method investments was a business strategy that enabled us to achieve favorable economies of scale relative to the level of investment and business risk assumed.

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Segment Information - Schedule of Reconciliation of Adjusted EBITDA to the Company's Consolidated Totals (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2024	Mar. 31, 2023
Segment Reporting Information [Line Items]
General and administrative expense		$ (69,841)	$ (63,187)
Interest expense		(50,845)	(37,581)
Depreciation, depletion and amortization		(215,664)	(147,323)
Derivative fair value gain (loss)		(87,062)	58,937
Gain (loss) on debt extinguishment		(60,256)	0
Non-cash equity-based compensation expense		(2,754)	(3,938)
Net income (loss) before income taxes		(134,012)	43,317
Operating Segments
Segment Reporting Information [Line Items]
Adjusted EBITDA		259,462	204,326
Segment Reconciling Items [Member]
Segment Reporting Information [Line Items]
General and administrative expense		(1,786)	(1,263)
Interest expense		(50,845)	(37,581)
Depreciation, depletion and amortization		(215,664)	(147,323)
Accretion expense		(26,903)	(19,414)
Transaction and other income (expenses)	[1]	49,157	(22,009)
Decommissioning Obligations	[2]	(855)	(741)
Derivative fair value gain (loss)	[3]	(87,062)	58,937
Net cash (received) paid on settled derivative instruments	[3]	3,494	12,323
Gain (loss) on debt extinguishment		(60,256)	0
Non-cash equity-based compensation expense		(2,754)	(3,938)
Reportable segment | Operating Segments
Segment Reporting Information [Line Items]
Adjusted EBITDA		269,334	210,483
All Other | Operating Segments
Segment Reporting Information [Line Items]
Adjusted EBITDA	[4]	$ (9,872)	$ (6,157)

[1] For the three months ended March 31, 2024, transaction expenses include $28.1 million in costs related to the QuarterNorth Acquisition, inclusive of $14.2 million in severance expense and $9.8 million in costs related to the TLCS Divestiture, inclusive of $3.7 million in severance expense. For the three months ended March 31, 2023, transaction expenses included $35.2 million in costs related to the EnVen Acquisition, inclusive of $22.6 million in severance expense. See further discussion in Note 2 — Acquisitions and Divestitures and Note 9 — Employee Benefits Plans and Share-Based Compensation. Other income (expense) includes other miscellaneous income and expenses that we do not view as a meaningful indicator of our operating performance. For the three months ended March 31, 2024, it includes a gain of $86.9 million related to the TLCS Divestiture. See further discussion in Note 2 — Acquisitions and Divestitures. For the three months ended March 31, 2023, it includes a $8.6 million gain on the funding of the capital carry of its investment in Bayou Bend by Chevron.

[2] Estimated decommissioning obligations were a result of working interest partners or counterparties of divestiture transactions that were unable to perform the required abandonment obligations due to bankruptcy or insolvency. See Note 13 — Commitments and Contingencies for additional information on decommissioning obligations.

[3] The adjustments for the derivative fair value (gains) losses and net cash receipts (payments) on settled commodity derivative instruments have the effect of adjusting net loss for changes in the fair value of derivative instruments, which are recognized at the end of each accounting period because we do not designate commodity derivative instruments as accounting hedges. This results in reflecting commodity derivative gains and losses within Adjusted EBITDA on an unrealized basis during the period the derivatives settled.

[4] The CCS Segment is included in the “All Other” category. The CCS Segment was an emerging business in the start-up phase of operations and the business did not generate any revenues. The CCS Segment’s business activities were conducted through both wholly owned subsidiaries and equity method investments with industry partners. CCS equity method investments was a business strategy that enabled us to achieve favorable economies of scale relative to the level of investment and business risk assumed.

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Segment Information - Schedule of Reconciliation of Adjusted EBITDA to the Company's Consolidated Totals (Details) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
TLCS
Segment Reporting Information [Line Items]
Severance expense	$ 3,700
Business Exit Costs	9,800
Gain loss on Divestitures	86,900
QuarterNorth
Segment Reporting Information [Line Items]
Aquisition severance cost	14,200
Employee Severance
Segment Reporting Information [Line Items]
Aquisition severance cost	17,914
Employee Severance | EnVen Energy Corporation
Segment Reporting Information [Line Items]
Aquisition severance cost		$ 22,600
Operating Segments | EnVen Energy Corporation
Segment Reporting Information [Line Items]
Transaction and other income (expenses)		35,200
Operating Segments | QuarterNorth
Segment Reporting Information [Line Items]
Transaction and other income (expenses)	$ 28,100
Operating Segments | Bayou Bend CCS LLC | Capital Carry
Segment Reporting Information [Line Items]
Gain on partial disposal of investment		8,600
Operating Segments | Employee Severance | EnVen Energy Corporation
Segment Reporting Information [Line Items]
Aquisition severance cost		$ 22,600

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Segment Information - Reconciliation of Reportable Segment Expenditures (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Segment Reporting Information [Line Items]
Plugging & abandonment	$ (27,907)	$ (10,113)
Deferred payments	(672)	0
Exploration, development and other capital expenditures	146,077	103,962
Operating Segments | Reportable segment
Segment Reporting Information [Line Items]
Segment Expenditures	143,848	190,024
Operating Segments | All Other
Segment Reporting Information [Line Items]
Segment Expenditures	17,519	21,189
Segment Reconciling Items [Member]
Segment Reporting Information [Line Items]
Change in capital expenditures included in accounts payable and accrued liabilities	34,262	(55,969)
Plugging & abandonment	(27,907)	(10,113)
Settlements	(3,506)	(708)
Investment in CCS intangibles and equity method investees	(17,519)	(21,189)
Deferred payments	(672)
Non-cash well equipment transfers	0	(19,402)
Other	$ 52	$ 130