March 15, 2022, ST. PETERSBURG, FL – Water Tower Research (www.watertowerresearch.com) published an Initiation of Coverage report on Talos Energy, Inc. (NYSE: TALO). Talos is a technically driven independent oil and gas exploration and production company headquartered in Houston, Texas. The company’s oil and gas activities are focused on geologic plays in the deepwater areas of the US Gulf of Mexico where management pursues acquisition, development, and exploration opportunities to build long-term value.
In 2021, management formed a carbon capture and sequestration (CCS) business to develop CCS projects on the US Gulf Coast. The CCS business leverages management’s decades of geological and geophysical technical experience to build an emerging long-term business to compliment Talos’s core E&P business. The company has forged strategic partnerships with entities experienced in CCS and with midstream companies to advance its efforts. Since June 2021, Talos has announced two regional-hub CCS projects and two point-source CCS projects.
CCS represents a business opportunity that could develop into a long-term fee-based revenue model with contracts structured as tolling arrangements. Such a business may trade at a higher valuation than a traditional upstream E&P business, providing investors with an intriguing value proposition. Talos’s CCS projects are still in the preliminary engineering and permitting stages. Currently estimated first injection is not anticipated until late 2024 at the earliest.
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