Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 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 June 30, 2020

(In thousands)

(Unaudited)

	Parent		Subsidiary Issuers			Guarantors			Non- Guarantors			Elimination			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	102,310		$	1,791		$	3,754		$	—		$	107,855
Accounts receivable
Trade, net		—		—			67,042			—			—			67,042
Joint interest, net		—		—			39,793			12,984			—			52,777
Other		—		16,044			5,394			259			—			21,697
Assets from price risk management activities		—		72,666			—			—			—			72,666
Prepaid assets		166		8,748			36,747			28			—			45,689
Other current assets		53		—			1,929			—			—			1,982
Total current assets		219		199,768			152,696			17,025			—			369,708
Property and equipment:
Proved properties		—		—			4,674,529			—			—			4,674,529
Unproved properties, not subject to amortization		—		—			159,063			115,627			—			274,690
Other property and equipment		—		25,119			6,926			217			—			32,262
Total property and equipment		—		25,119			4,840,518			115,844			—			4,981,481
Accumulated depreciation, depletion and    amortization		—		(12,523	)		(2,234,408	)		(78	)		—			(2,247,009	)
Total property and equipment, net		—		12,596			2,606,110			115,766			—			2,734,472
Other long-term assets:
Assets from price risk management activities		—		1,409			—			—			—			1,409
Other well equipment inventory		—		—			14,458			—			—			14,458
Operating lease assets		—		3,400			2,830			1,121			—			7,351
Investments in subsidiaries		1,267,766		2,111,292			—			—			(3,379,058	)		—
Other assets		27,756		364			2,408			16,722			—			47,250
		1,295,741		2,328,829			2,778,502			150,634			(3,379,058	)		3,174,648
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable		636		4,108			98,638			769			—			104,151
Accrued liabilities		—		4,851			168,996			11,145			—			184,992
Accrued royalties		—		—			12,772			—			—			12,772
Current portion of asset retirement obligations		—		—			44,977			—			—			44,977
Liabilities from price risk management activities		—		26,615			—			—			—			26,615
Accrued interest payable		—		10,565			38			—			—			10,603
Current portion of operating lease liabilities		—		560			723			412			—			1,695
Other current liabilities		255		—			21,818			—			—			22,073
Total current liabilities		891		46,699			347,962			12,326			—			407,878
Long-term liabilities:
Long-term debt, net of discount and deferred    financing costs		—		990,981			6,060			—			—			997,041
Asset retirement obligations		—		—			387,083			—			—			387,083
Liabilities from price risk management activities		—		7,018			—			—			—			7,018
Operating lease liabilities		—		16,365			2,115			748			—			19,228
Other long-term liabilities		297		—			61,550			—			—			61,847
Total liabilities		1,188		1,061,063			804,770			13,074			—			1,880,095
Commitments and Contingencies (Note 11)
Stockholders' equity		1,294,553		1,267,766			1,973,732			137,560			(3,379,058	)		1,294,553
	$	1,295,741	$	2,328,829		$	2,778,502		$	150,634		$	(3,379,058	)	$	3,174,648

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 June 30, 2020

(In thousands)

(Unaudited)

	Parent			Subsidiary Issuers			Guarantors			Non- Guarantors			Elimination		Consolidated
Revenues:
Oil revenue	$	—		$	—		$	74,471		$	—		$	—	$	74,471
Natural gas revenue		—			—			11,140			—			—		11,140
NGL revenue		—			—			1,964			—			—		1,964
Other		—			—			1,299			—			—		1,299
Total revenue		—			—			88,874			—			—		88,874
Operating expenses:
Lease operating expense		—			—			64,185			(303	)		—		63,882
Production taxes		—			—			166			—			—		166
Depreciation, depletion and amortization		—			795			87,634			14			—		88,443
Write-down of oil and natural gas properties		—			—			—			—			—		—
Accretion expense		—			—			13,794			—			—		13,794
General and administrative expense		472			7,053			9,041			626			—		17,192
Total operating expenses		472			7,848			174,820			337			—		183,477
Operating loss		(472	)		(7,848	)		(85,946	)		(337	)		—		(94,603	)
Interest expense		—			(20,861	)		(5,329	)		—			—		(26,190	)
Price risk management activities expenses		—			(68,682	)		—			—			—		(68,682	)
Other income (loss)		—			1,660			185			(2,373	)		—		(528	)
Income tax benefit (expense)		49,707			(1	)		(156	)		(158	)		—		49,392
Equity earnings from subsidiaries		(189,846	)		(94,114	)		—			—			283,960		—
Net income (loss)	$	(140,611	)	$	(189,846	)	$	(91,246	)	$	(2,868	)	$	283,960	$	(140,611	)

TALOS ENERGY INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2020

(In thousands)

(Unaudited)

	Parent			Subsidiary Issuers			Guarantors			Non-Guarantors			Elimination		Consolidated
Revenues:
Oil revenue	$	—		$	—		$	241,088		$	7		$	—	$	241,095
Natural gas revenue		—			—			23,038			—			—		23,038
NGL revenue		—			—			6,265			—			—		6,265
Other		—			—			6,240			—			—		6,240
Total revenue		—			—			276,631			7			—		276,638
Operating expenses:
Lease operating expense		—			—			122,426			(303	)		—		122,123
Production taxes		—			—			415			—			—		415
Depreciation, depletion and amortization		—			1,522			180,437			27			—		181,986
Write-down of oil and natural gas properties		—			—			—			57			—		57
Accretion expense		—			—			26,211			—			—		26,211
General and administrative expense		694			23,794			18,869			1,304			—		44,661
Total operating expenses		694			25,316			348,358			1,085			—		375,453
Operating loss		(694	)		(25,316	)		(71,727	)		(1,078	)		—		(98,815	)
Interest expense		7			(39,483	)		(12,562	)		(2	)		—		(52,040	)
Price risk management activities income		—			174,535			—			—			—		174,535
Other income (loss)		—			1,826			369			(2,869	)		—		(674	)
Income tax expense		(5,552	)		(1	)		(157	)		(158	)		—		(5,868	)
Equity earnings from subsidiaries		23,377			(88,184	)		—			—			64,807		—
Net income (loss)	$	17,138		$	23,377		$	(84,077	)	$	(4,107	)	$	64,807	$	17,138

TALOS ENERGY INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended June 30, 2019

(In thousands)

(Unaudited)

	Parent			Subsidiary Issuers			Guarantors			Non- Guarantors			Elimination			Consolidated
Revenues:
Oil revenue	$	—		$	—		$	256,908		$	—		$	—		$	256,908
Natural gas revenue		—			—			14,746			—			—			14,746
NGL revenue		—			—			6,645			—			—			6,645
Other		—			—			8,511			—			—			8,511
Total revenue		—			—			286,810			—			—			286,810
Operating expenses:
Lease operating expense		—			—			54,455			—			—			54,455
Production taxes		—			—			506			—			—			506
Depreciation, depletion and amortization		—			1,242			94,554			10			—			95,806
Write-down of oil and natural gas properties		—			—			—			12,361			—			12,361
Accretion expense		—			—			9,945			—			—			9,945
General and administrative expense		48			7,626			10,634			557			—			18,865
Total operating expenses		48			8,868			170,094			12,928			—			191,938
Operating income (loss)		(48	)		(8,868	)		116,716			(12,928	)		—			94,872
Interest expense		—			(17,020	)		(7,719	)		(193	)		—			(24,932	)
Price risk management activities income		—			29,990			—			—			—			29,990
Other income (loss)		—			106			765			(40	)		—			831
Income tax benefit (expense)		(6,187	)		—			(294	)		484			—			(5,997	)
Equity earnings from subsidiaries		100,999			96,791			—			—			(197,790	)		—
Net income (loss)	$	94,764		$	100,999		$	109,468		$	(12,677	)	$	(197,790	)	$	94,764

TALOS ENERGY INC.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2019

(In thousands)

(Unaudited)

	Parent			Subsidiary Issuers			Guarantors			Non-Guarantors			Elimination			Consolidated
Revenues:
Oil revenue	$	—		$	—		$	412,587		$	—		$	—		$	412,587
Natural gas revenue		—			—			29,193			—			—			29,193
NGL revenue		—			—			11,711			—			—			11,711
Other		—			—			12,032			—			—			12,032
Total revenue		—			—			465,523			—			—			465,523
Operating expenses:
Lease operating expense		—			—			122,414			—			—			122,414
Production taxes		—			—			1,088			—			—			1,088
Depreciation, depletion and amortization		—			1,314			159,064			15			—			160,393
Write-down of oil and natural gas properties		—			—			—			12,361			—			12,361
Accretion expense		—			—			19,552			—			—			19,552
General and administrative expense		385			16,232			19,409			448			—			36,474
Total operating expenses		385			17,546			321,527			12,824			—			352,282
Operating income (loss)		(385	)		(17,546	)		143,996			(12,824	)		—			113,241
Interest expense		—			(33,592	)		(16,237	)		(321	)		—			(50,150	)
Price risk management activities expenses		—			(79,589	)		—			—			—			(79,589	)
Other income (loss)		—			187			1,236			(159	)		—			1,264
Income tax benefit (expense)		650			—			(296	)		8			—			362
Equity earnings from subsidiaries		(15,137	)		115,403			—			—			(100,266	)		—
Net income (loss)	$	(14,872	)	$	(15,137	)	$	128,699		$	(13,296	)	$	(100,266	)	$	(14,872	)

TALOS ENERGY INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Six Months Ended June 30, 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	$	(324	)	$	49,486		$	154,079		$	(11,629	)	$	—		$	191,612
Cash flows from investing activities:
Exploration, development, and other capital      expenditures		—			(1,791	)		(149,621	)		(3,216	)		—			(154,628	)
Cash paid for acquisitions, net of cash      acquired		—			—			(296,966	)		—			—			(296,966	)
Investments in subsidiaries		—			(783,703	)		—			—			783,703			—
Distributions from subsidiaries		—			462,034			—			—			(462,034	)		—
Net cash provided by (used in)    investing activities		—			(323,460	)		(446,587	)		(3,216	)		321,669			(451,594	)
Cash flows from financing activities:
Redemption of Senior Notes and other long-term debt		—			(1,209	)		—			—			—			(1,209	)
Proceeds from Bank Credit Facility		—			300,000			—			—			—			300,000
Deferred financing costs		—			(1,287	)		—			—			—			(1,287	)
Other deferred payments		—			—			(7,575	)		—			—			(7,575	)
Payment of capital lease		—			—			(8,323	)		—			—			(8,323	)
Employee stock transactions		—			—			(791	)		—			—			(791	)
Capital contributions		331			—			770,872			12,500			(783,703	)		—
Distributions to Subsidiary Issuer		(7	)		—			(460,477	)		(1,550	)		462,034			—
Net cash provided by (used in)    financing activities		324			297,504			293,706			10,950			(321,669	)		280,815
Net increase (decrease) in cash, cash      equivalents and restricted cash		—			23,530			1,198			(3,895	)		—			20,833
Cash, cash equivalents and restricted cash
Balance, beginning of period		—			78,780			593			7,649			—			87,022
Balance, end of period	$	—		$	102,310		$	1,791		$	3,754		$	—		$	107,855

TALOS ENERGY INC.

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Six Months Ended June 30, 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	$	(259	)	$	(59,988	)	$	266,802		$	(23,934	)	$	—		$	182,621
Cash flows from investing activities:
Exploration, development, and other capital      expenditures		—			(1,442	)		(207,340	)		(20,819	)		—			(229,601	)
Cash paid for acquisitions, net of cash      acquired		—			—			(32,916	)		—			—			(32,916	)
Investments in subsidiaries		—			(784,698	)		—			—			784,698			—
Proceeds from sale of other property and equipment		—			—			5,369			—			—			5,369
Distributions from subsidiaries		—			838,920			—			—			(838,920	)		—
Net cash provided by (used in)    investing activities		—			52,780			(234,887	)		(20,819	)		(54,222	)		(257,148	)
Cash flows from financing activities:
Redemption of Senior Notes and other    long-term debt		—			—			(10,567	)		—			—			(10,567	)
Proceeds from Bank Credit Facility		—			75,000			—			—			—			75,000
Repayment of Bank Credit Facility		—			(25,000	)		—			—			—			(25,000	)
Deferred financing costs		—			—			—			—			—			—
Other deferred payments		—			—			(9,921	)		—			—			(9,921	)
Payment of capital lease		—			—			(6,759	)		—			—			(6,759	)
Employee stock transactions		—			(283	)		—			—			—			(283	)
Capital contributions		259			—			734,939			49,500			(784,698	)		—
Distributions to Subsidiary Issuer		—			—			(838,595	)		(325	)		838,920			—
Net cash provided by (used in)    financing activities		259			49,717			(130,903	)		49,175			54,222			22,470
Net increase (decrease) in cash, cash      equivalents and restricted cash		—			42,509			(98,988	)		4,422			—			(52,057	)
Cash, cash equivalents and restricted cash
Balance, beginning of period		—			13,541			102,049			25,572			—			141,162
Balance, end of period	$	—		$	56,050		$	3,061		$	29,994		$	—		$	89,105