Talos Energy Inc. TALO, 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,TechnipFMC plc FTI and Cheniere Energy, Inc. LNG. 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.
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