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Talos Encounters Major Hydrocarbon Reserves in the Gulf of Mexico

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Talos Energy Inc. (TALO - Free Report) , an independent oil and gas exploration and production company, has announced that it has encountered significant quantities of oil and natural gas at the Katmai West #2 well. The well is located in the Ewing Bank region within the U.S. Gulf of Mexico. The company plans to conclude the casing and suspension of the well by late January 2025.

TALO’s Drilling Success in the U.S. Gulf of Mexico

The company highlighted that the deepwater well was completed significantly under the planned budget and over a month ahead of schedule. Talos stated that the completion plans for the well will be carried out in the second quarter of 2025, and production from the well will start later in the same quarter. The well will be tied back to the subsea infrastructure at TALO’s Tarantula facility.Talos began drilling the Katmai West #2 well in October 2024.

TALO Plans Infrastructure Upgrades

The Tarantula facility is owned and operated by Talos Energy. The facility has been upgraded, and its capacity has been increased to approximately 35 Mboe/d, to handle larger volumes of oil and gas.

However, despite increasing the capacity of the facility, Talos expects the Katmai wells to be rate-constrained, implying that the production from the well will be controlled to keep it under the maximum capacity. This will ensure a flat-to-low decline production from the facility over an extended period of time. The company owns a 50% working interest in the field alongside other Ridgewood Energy-managed entities.

Production Capacity and Resource Potential

Talos mentioned that the well’s production capacity is in line with its pre-drill expectations of approximately 15-20 thousand barrels of oil equivalent per day (MBoe/d). The drilling outcome of the well has increased the proven estimated ultimate recovery (EUR) of the Katmai West Field to approximately 50 million barrels of oil equivalent (MMBoe). The EUR of a field indicates the total amount of recoverable reserves in the field that is economically feasible to extract, per the current technology and market conditions.

As per the company’s projections, the total recoverable resources from the region add up to approximately 100 MMBoe. Talos stated that it expects to generate significant value from the new resource in 2025.

TALO’s Zacks Rank and Key Picks

TALO currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the energy sector are Sunoco LP (SUN - Free Report) ,TechnipFMC plc (FTI - Free Report) and Cheniere Energy, Inc. (LNG - Free Report) . Sunoco currently sports a Zacks Rank #1 (Strong Buy), while TechnipFMC and Cheniere Energy carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sunoco LP is one of the largest distributors of motor fuel in the United States. The partnership distributes fuel to independent dealers, commercial customers, convenience stores and distributors. Its current distribution yield is greater than that of the industry's composite stocks, providing unitholders with consistent returns.

TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. The company’s total backlog witnessed a high of $14.7 million in the third quarter of 2024, indicating an 11.1% increase from the previous year’s level. This growing backlog ensures strong revenue growth for FTI.

Cheniere Energy is involved in LNG-related businesses, which include LNG terminals and natural gas marketing. The company has achieved a milestone with the first production of liquefied natural gas from the first LNG train of its Corpus Christi Stage 3 Liquefaction Project. The project, which includes seven midscale LNG trains, aims to expand the production capacity of the Corpus Christi Liquefaction facility. This expansion is expected to enhance Cheniere's position in the rapidly growing global LNG market, enabling the company to meet the rising demand for LNG, both in the United States and internationally.


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