Talos Energy Inc (NYSE: TALO) has announced full year 2020 operating and financial guidance. The Company also announced that it expects to close the previously announced acquisition of affiliates of ILX Holdings, among other entities (the "Acquired Assets", the "Acquisition", or the "Transaction"), on February 28, 2020.

The Company expects to generate significant free cash flow in 2020, despite the recent commodity pullback. Talos expects its 2020 capital program, inclusive of the Acquired Assets, to be similar in size, or smaller, than the 2019 Talos stand-alone capital program, while benefiting from production contributions from the Acquired Assets and new wells commencing production throughout the year. The 2020 capital program will continue to focus on infrastructure-led, short-cycle projects, while allocating a portion of the program to high-impact exploration catalysts.

2020 Guidance Highlights

• Significant positive 2020 free cash flow at $50.00/bbl WTI and $2.00/MMBtu Henry Hub, as Talos expects to benefit from strong margins and premium pricing to WTI. Talos expects to be free cash flow neutral at an average 2020 WTI price well below $45.00/bbl, assuming $2.00/MMBtu gas prices. Furthermore, the Company expects free cash flow in excess of $100.0 million at $55.00/bbl WTI and $2.50/MMBtu Henry Hub commodity prices.
• 2020 production sales volumes expected to be 24.4 – 25.7 million barrels of oil equivalent ("MMBoe"), which represents an average daily production of 66.8 – 70.2 thousand barrels of oil equivalent per day ("MBoe/d"), including the impact of planned deferrals. This reflects production from the Acquired Assets beginning on March 1, 2020 – post Transaction close.
• 2020 capital expenditures expected to be between $520.0 million and $545.0 million, inclusive of plugging and abandonment, which is expected to be fully funded within cash flow from operations.
• Continued focus on cost control on all aspects of the business, with cash general and administrative ("G&A") expenses expected to be below $3.00 per Boe.
• The Company expects to continue to maintain its low leverage metrics.

President and Chief Executive Officer Timothy S. Duncan commented, "We are pleased to present our 2020 guidance, which I believe strikes the right balance between free cash flow generation in a volatile commodity market environment, and the appropriate level of investment to allow for longer term value creation for our shareholders. We expect to achieve this balance by continuing to invest in our core business of infrastructure-led development and exploitation projects while exposing a portion of our capital program to high-impact catalysts. Our 2020 capital program will be self-funded well below the current $50.00/bbl WTI commodity price environment, and assures that we can maintain, and even improve, our peer leading leverage metrics. In offshore Mexico, we continue to stay focused on moving Zama forward towards final investment decision and also integrating the data we gathered during our successful Xaxamani discovery on Block 31."

Duncan added, "As we approach the closing of our Transaction, expected at the end of February, we believe we are opportunity rich when combining the pro-forma inventory; however, we will continue to maintain the appropriate level of capital discipline, cost control and balance sheet conservatism throughout the year."

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