Condensed Consolidating Financial Information

3 Months Ended

Mar. 31, 2020

Condensed Financial Information Of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Financial Information

Note 12 — Condensed Consolidating Financial Information

Talos Energy Inc. owns no operating assets and has no operations independent of its subsidiaries. Talos Production Inc. (formerly Talos Production LLC) and Talos Production Finance Inc. issued 11.00% Notes on May 10, 2018, which are fully and unconditionally guaranteed, jointly and severally, by Talos Energy Inc. and certain 100% owned subsidiaries on a senior unsecured basis.

The following condensed consolidating financial information presents the financial information of the Company on an unconsolidated stand-alone basis and its combined guarantor and combined non-guarantor subsidiaries as of and for the period indicated. Such financial information may not necessarily be indicative of the Company’s results of operations, cash flows or financial position had these subsidiaries operated as independent entities.

TALOS ENERGY INC.

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF March 31, 2020

(In thousands)

(Unaudited)

	Parent		Subsidiary Issuers			Guarantors			Non- Guarantors			Elimination			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	88,453		$	5,231		$	13,268		$	—		$	106,952
Accounts receivable
Trade, net		—		—			81,027			—			—			81,027
Joint interest, net		—		—			26,906			5,988			—			32,894
Other		—		28,153			8,097			306			—			36,556
Assets from price risk management activities		—		192,553			—			—			—			192,553
Prepaid assets		—		2,809			47,442			22			—			50,273
Other current assets		53		—			1,993			—			—			2,046
Total current assets		53		311,968			170,696			19,584			—			502,301
Property and equipment:
Proved properties		—		—			4,538,100			—			—			4,538,100
Unproved properties, not subject to amortization		—		—			166,450			110,600			—			277,050
Other property and equipment		—		24,920			6,829			217			—			31,966
Total property and equipment		—		24,920			4,711,379			110,817			—			4,847,116
Accumulated depreciation, depletion and    amortization		—		(11,728	)		(2,146,773	)		(65	)		—			(2,158,566	)
Total property and equipment, net		—		13,192			2,564,606			110,752			—			2,688,550
Other long-term assets:
Assets from price risk management activities		—		8,794			—			—			—			8,794
Other well equipment inventory		—		—			9,178			—			—			9,178
Operating lease assets		—		3,314			3,030			1,246			—			7,590
Investments in subsidiaries		1,417,909		2,167,746			—			—			(3,585,655	)		—
Other assets		1		364			2,396			19,013			—			21,774
		1,417,963		2,505,378			2,749,906			150,595			(3,585,655	)		3,238,187
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		564		5,151			50,073			2,962			—			58,750
Accrued liabilities		—		10,501			117,001			10,769			—			138,271
Accrued royalties		—		—			24,631			—			—			24,631
Current portion of asset retirement obligations		—		—			38,028			—			—			38,028
Liabilities from price risk management activities		—		4,286			—			—			—			4,286
Accrued interest payable		—		22,105			152			—			—			22,257
Current portion of operating lease liabilities		—		378			773			462			—			1,613
Other current liabilities		255		—			20,663			—			—			20,918
Total current liabilities		819		42,421			251,321			14,193			—			308,754
Long-term liabilities:
Long-term debt, net of discount and deferred    financing costs		—		1,027,102			6,060			—			—			1,033,162
Asset retirement obligations		—		—			387,868			—			—			387,868
Liabilities from price risk management activities		—		1,898			—			—			—			1,898
Operating lease liabilities		—		16,048			2,268			822			—			19,138
Other long-term liabilities		22,247		—			70,223			—			—			92,470
Total liabilities		23,066		1,087,469			717,740			15,015			—			1,843,290
Commitments and Contingencies (Note 11)
Stockholders' equity		1,394,897		1,417,909			2,032,166			135,580			(3,585,655	)		1,394,897
	$	1,417,963	$	2,505,378		$	2,749,906		$	150,595		$	(3,585,655	)	$	3,238,187

TALOS ENERGY INC.

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF December 31, 2019

(In thousands)

	Parent		Subsidiary Issuers			Guarantors			Non- Guarantors			Elimination			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	78,780		$	593		$	7,649		$	—		$	87,022
Accounts receivable
Trade, net		—		—			107,842			—			—			107,842
Joint interest, net		—		—			11,567			4,985			—			16,552
Other		—		474			5,555			317			—			6,346
Assets from price risk management activities		—		8,393			—			—			—			8,393
Prepaid assets		—		33,323			32,529			25			—			65,877
Other current assets		—		—			1,952			—			—			1,952
Total current assets		—		120,970			160,038			12,976			—			293,984
Property and equipment:
Proved properties		—		—			4,066,260			—			—			4,066,260
Unproved properties, not subject to amortization		—		—			87,618			106,914			—			194,532
Other property and equipment		—		23,142			6,484			217			—			29,843
Total property and equipment		—		23,142			4,160,362			107,131			—			4,290,635
Accumulated depreciation, depletion and    amortization		—		(11,001	)		(2,053,971	)		(51	)		—			(2,065,023	)
Total property and equipment, net		—		12,141			2,106,391			107,080			—			2,225,612
Other long-term assets:
Other well equipment inventory		—		—			7,732			—			—			7,732
Operating lease assets		—		3,178			3,224			1,377			—			7,779
Investments in subsidiaries		1,045,886		1,690,362			—			—			(2,736,248	)		—
Other assets		33,371		364			2,136			18,504			—			54,375
		1,079,257		1,827,015			2,279,521			139,937			(2,736,248	)		2,589,482
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		428		5,145			58,827			6,957			—			71,357
Accrued liabilities		—		4,740			145,051			5,025			—			154,816
Accrued royalties		—		—			31,729			—			—			31,729
Current portion of asset retirement obligations		—		—			61,051			—			—			61,051
Liabilities from price risk management activities		—		19,476			—			—			—			19,476
Accrued interest payable		—		10,211			38			—			—			10,249
Current portion of operating lease liabilities		—		196			821			577			—			1,594
Other current liabilities		255		—			19,925			—			—			20,180
Total current liabilities		683		39,768			317,442			12,559			—			370,452
Long-term liabilities:
Long-term debt, net of discount and deferred    financing costs		—		726,921			6,060			—			—			732,981
Asset retirement obligations		—		—			308,427			—			—			308,427
Liabilities from price risk management activities		—		511			—			—			—			511
Operating lease liabilities		—		13,929			2,416			894			—			17,239
Other long-term liabilities		297		—			81,298			—			—			81,595
Total liabilities		980		781,129			715,643			13,453			—			1,511,205
Commitments and Contingencies (Note 11)
Stockholders' equity		1,078,277		1,045,886			1,563,878			126,484			(2,736,248	)		1,078,277
	$	1,079,257	$	1,827,015		$	2,279,521		$	139,937		$	(2,736,248	)	$	2,589,482

TALOS ENERGY INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED March 31, 2020

(In thousands)

(Unaudited)

	Parent			Subsidiary Issuers			Guarantors			Non- Guarantors			Elimination			Consolidated
Revenues:
Oil revenue	$	—		$	—		$	166,617		$	7		$	—		$	166,624
Natural gas revenue		—			—			11,898			—			—			11,898
NGL revenue		—			—			4,301			—			—			4,301
Other		—			—			4,941			—			—			4,941
Total revenue		—			—			187,757			7			—			187,764
Operating expenses:
Lease operating expense		—			—			58,241			—			—			58,241
Production taxes		—			—			249			—			—			249
Depreciation, depletion and amortization		—			727			92,803			13			—			93,543
Write-down of oil and natural gas properties		—			—			—			57			—			57
Accretion expense		—			—			12,417			—			—			12,417
General and administrative expense		222			16,741			9,828			678			—			27,469
Total operating expenses		222			17,468			173,538			748			—			191,976
Operating income (loss)		(222	)		(17,468	)		14,219			(741	)		—			(4,212	)
Interest expense		7			(18,622	)		(7,233	)		(2	)		—			(25,850	)
Price risk management activities expenses		—			243,217			—			—			—			243,217
Other income (loss)		—			166			184			(496	)		—			(146	)
Income tax (expense)		(55,259	)		—			(1	)		—			—			(55,260	)
Equity earnings from subsidiaries		213,223			5,930			—			—			(219,153	)		—
Net income (loss)	$	157,749		$	213,223		$	7,169		$	(1,239	)	$	(219,153	)	$	157,749

TALOS ENERGY INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED March 31, 2019

(In thousands)

(Unaudited)

	Parent			Subsidiary Issuers			Guarantors			Non- Guarantors			Elimination		Consolidated
Revenues:
Oil revenue	$	—		$	—		$	155,679		$	—		$	—	$	155,679
Natural gas revenue		—			—			14,447			—			—		14,447
NGL revenue		—			—			5,066			—			—		5,066
Other		—			—			3,521			—			—		3,521
Total revenue		—			—			178,713			—			—		178,713
Operating expenses:
Lease operating expense		—			—			67,959			—			—		67,959
Production taxes		—			—			582			—			—		582
Depreciation, depletion and amortization		—			72			64,510			5			—		64,587
Accretion expense		—			—			9,607			—			—		9,607
General and administrative expense		337			8,606			8,775			(109	)		—		17,609
Total operating expenses		337			8,678			151,433			(104	)		—		160,344
Operating income (loss)		(337	)		(8,678	)		27,280			104			—		18,369
Interest expense		—			(16,572	)		(8,518	)		(128	)		—		(25,218	)
Price risk management activities income		—			(109,579	)		—			—			—		(109,579	)
Other income (loss)		—			81			471			(119	)		—		433
Income tax expense		6,837			—			(2	)		(476	)		—		6,359
Equity earnings from subsidiaries		(116,136	)		18,612			—			—			97,524		—
Net income (loss)	$	(109,636	)	$	(116,136	)	$	19,231		$	(619	)	$	97,524	$	(109,636	)

TALOS ENERGY INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED March 31, 2020

(In thousands)

(Unaudited)

	Parent			Subsidiary Issuers			Guarantors			Non- Guarantors			Elimination			Consolidated
Cash flows from operating activities:
Net cash provided by (used in)    operating activities	$	3		$	(6,781	)	$	117,271		$	(261	)	$	—		$	110,232
Cash flows from investing activities:
Exploration, development, and other capital      expenditures		—			(1,604	)		(79,194	)		(2,790	)		—			(83,588	)
Cash paid for acquisitions, net of cash      acquired		—			—			(293,095	)		—			—			(293,095	)
Investments in subsidiaries		—			(570,118	)		—			—			570,118			—
Distributions from subsidiaries		—			289,461			—			—			(289,461	)		—
Net cash provided by (used in)    investing activities		—			(282,261	)		(372,289	)		(2,790	)		280,657			(376,683	)
Cash flows from financing activities:
Proceeds from Bank Credit Facility		—			300,000			—			—			—			300,000
Deferred financing costs		—			(1,285	)		—			—			—			(1,285	)
Other deferred payments		—			—			(7,575	)		—			—			(7,575	)
Payment of capital lease		—			—			(4,049	)		—			—			(4,049	)
Employee stock transactions		—			—			(710	)		—			—			(710	)
Capital contributions		—			—			560,618			9,500			(570,118	)		—
Distributions to Subsidiary Issuer		(3	)		—			(288,628	)		(830	)		289,461			—
Net cash provided by (used in)    financing activities		(3	)		298,715			259,656			8,670			(280,657	)		286,381
Net increase in cash, cash      equivalents and restricted cash		—			9,673			4,638			5,619			—			19,930
Cash, cash equivalents and restricted cash
Balance, beginning of period		—			78,780			593			7,649			—			87,022
Balance, end of period	$	—		$	88,453		$	5,231		$	13,268		$	—		$	106,952

TALOS ENERGY INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED March 31, 2019

(In thousands)

(Unaudited)

	Parent			Subsidiary Issuers			Guarantors			Non- Guarantors			Elimination			Consolidated
Cash flows from operating activities:
Net cash provided by (used in)    operating activities	$	(207	)	$	(9,279	)	$	72,999		$	(22,391	)	$	—		$	41,122
Cash flows from investing activities:
Exploration, development, and other capital      expenditures		—			(1,036	)		(94,144	)		(7,216	)		—			(102,396	)
Cash paid for acquisitions, net of cash      acquired		—			—			(32,916	)		—			—			(32,916	)
Investments in subsidiaries		—			(441,484	)		—			—			441,484			—
Distributions from subsidiaries		—			451,174			—			—			(451,174	)		—
Net cash provided by (used in)    investing activities		—			8,654			(127,060	)		(7,216	)		(9,690	)		(135,312	)
Cash flows from financing activities:
Redemption of Senior Notes and other    long-term debt		—			—			(109	)		—			—			(109	)
Proceeds from Bank Credit Facility		—			35,000			—			—			—			35,000
Repayment of Bank Credit Facility		—			(25,000	)		—			—			—			(25,000	)
Other deferred payments		—			—			(6,575	)		—			—			(6,575	)
Payment of capital lease		—			—			(3,311	)		—			—			(3,311	)
Capital contributions		207			—			421,277			20,000			(441,484	)		—
Distributions to Subsidiary Issuer		—			—			(450,912	)		(262	)		451,174			—
Net cash provided by (used in)    financing activities		207			10,000			(39,630	)		19,738			9,690			5
Net increase (decrease) in cash, cash      equivalents and restricted cash		—			9,375			(93,691	)		(9,869	)		—			(94,185	)
Cash, cash equivalents and restricted cash
Balance, beginning of period		—			13,541			102,049			25,572			—			141,162
Balance, end of period	$	—		$	22,916		$	8,358		$	15,703		$	—		$	46,977