Talos Energy announced updated full year 2020 financial guidance, inclusive of $170.0 million of reductions in capital, operating and G&A expenses. Company announced updated full year 2020 financial guidance, inclusive of $170.0 million of reductions in capital, operating and G&A expenses. The company will continue to evaluate additional opportunities to further reduce 2020 cost.
The Company is evaluating potential alternative future dates for the event. Concurrently with the closing of the Transaction, Talos also closed on the increase of its borrowing base to $1,150.0 million. Those reductions would be incremental to the $170.0 million already identified. The Company also provided an operational update regarding selected projects in the U.S. Gulf of Mexico.
Talos continues to expect to generate positive free cash flow in 2020 despite the current commodity environment. Talos is the operator of Zama, located offshore Mexico, and holds a 35% working interest in Block 7 in a consortium. The company believes that these cost reduction measures. The Company will continue to evaluate additional opportunities to further reduce 2020 costs.
Coupled with Talos’s low cash cost structure and robust hedge book, allow the company to generate free cash flow in 2020. After taking into account customary closing adjustments based on an effective date of July 1, 2019, total cash consideration paid by Talos was reduced from $385.0 million to $291.7 million. The Company has filed a preliminary information statement with the SEC to inform the Company’s stockholders about the Acquisition.
After capital expenditures and interest expense, in the mid-$20’s per barrel average WTI prices for the balance of the year. The filing is an important milestone that helps pave the way for the closing of the Acquisition. NSAI’s “Best Estimate” of the 2C gross recoverable resource estimate is approximately 670 million barrels of oil equivalent (“MMBoe”).
The company’s updated guidance for 2020 reflects investments in infrastructure-led. The Company expects to close the Transaction approximately 20 days after a definitive information statement is mailed to stockholders. NSAI estimates 60% of the total resources of Zama are located on Block 7 in the 2C case. As previously disclosed.
“I believe Talos is well positioned to successfully navigate the current environment”, said President and CEO Timothy S. Duncan.
Short-cycle projects that were previously committed to and that are focused on lowering the lifting cost structure. Talos expects to close the Transaction on or before March 16, 2020. NSAI’s “High Estimate” of the 3C gross recoverable resource estimate is approximately 1,010 MMBoe. Upon closing of the Acquisition, the Company will issue 11.0 million shares of Talos’s common stock to the sellers and pay the cash consideration.
Talos’s assets by adding incremental barrels through existing fixed-cost offshore production facilities. The cash consideration of $385.0 million will be reduced at closing by the approximately $31.8 million deposit. Given the ability to utilize existing infrastructure, Talos believes these high margin, low breakeven investments are economic.
High quality oil accounts for approximately 94% of total resource estimates in both 2C and 3C cases. The cash consideration will be further reduced at closing by the cash flow generated by the Acquired Assets between the July 1, 2019. Also included in the guidance is a limited, but unchanged, portion of Talos’s budget dedicated to the front-end engineering.
Talos expects to fund the remaining cash component of the Acquisition with borrowings under the Company’s upsized reserves based lending credit facility. Design work related to Zama project offshore Mexico. The cash consideration was funded primarily through the Company’s revolving credit facility and cash on hand.
Company taken immediate and decisive steps to defer certain investments. The filing of the information statement is an important step towards closing the acquisition. API gravities average approximately 28 degrees. This updated guidance delivers continued free cash flow generation in a volatile commodity market environment.
Company expect to continue to invest in our infrastructure-led short-cycled developments while staying focused on moving Zama. At Talos, the health and safety of our employees, the communities we operate in and all of our stakeholders is paramount. Talos engaged Netherland Sewell, a leading global oil and gas reserves auditing.
Company maintaining abundant collateral value and access to substantial liquidity. Company announced further cost cuts, inclusive of $170.0 million of reductions in capital. Norway’s Equinor and Canada’s Husky Energy have reportedly pulled brakes on the plan. Company expect to continue to invest in our infrastructure-led short-cycled developments while staying focused on moving Zama.
President says “We believe our 2020 updated capital program will be self-funded in the mid-$20’s per barrel of WTI”.
Talos’s updated 2020 capital expenditures guidance represents approximately a 34% reduction from the 2019 investments. Equinor and partner Husky Energy have decided to defer the Bay du Nord development project. Oil and gas company BW Energy, with assets in Gabon and Brazil, has decided to cut down its planned Gabon investments.
Pro forma for the acquisition that closed in February, while maintaining our focus on safety. The project will see the development of a highly efficient method for measuring fatigue. Meeting with P&A obligations and continuing investments in asset management projects. The company saidlast Monday that it would continue to evaluate additional opportunities.
Equinor will now take the time to further improve the project business case and assess the duration of this deferral. The capital reductions plus reductions in operating and G&A expenses. The system has the potential to vastly reduce operating costs by lowering. Company believe that it can continue to generate free cash flow in the current environment.
The projects will retain for the year are those previously committed to. The funding was won as part of a competition run by The Carbon Trust. It will bolster the stability of our asset base by lowering our lifting costs structure on a per barrel basis. The impact of international travel restrictions is limiting the Company’s ability to move essential personnel.
It have already identified the $170.0 million that we are announcing today, and we will continue to look for additional opportunities to further reduce costs. The reductions would be incremental to the $170.0 million already identified. This may affect the timing of the drilling of the planned DTM-7H well and the subsequent exploration well.
These are not the only spending reduction and costs savings we expect in 2020. Talos continues to expect to generate positive free cash flow in 2020. Company also expect the costs associated with certain services to come down throughout the year. The major contracts provide for certain termination rights under the current circumstances.
It’s not counting on or including such cost reductions in these assumptions. The Company has for the same reason decided to not exercise the options for the two additional exploration. Talos will not only weather this storm, but will be positioned to be nimble and opportunistic.
“We entered this crisis with a track record of consistently generating free cash flow, approximately $600.0 million of liquidity”, Duncan said.
Talos explained that its updated spending guidance reflected investments in infrastructure-led. AS Mosley will now work alongside its project partners to develop the system. The revised capital spending program for 2020 amounts to approximately USD 125 million. When the market has recovered, company confident in the long-term outlook for Talos.