Talos Energy Inc. (TALO:NYSE) recently announced the sale of its entire carbon capture and storage (CCS) business for a total of US$148 million in cash, which includes reimbursements and adjustments, noted Roth MKM analyst Leo Mariani in a March 18 research note.
According to the report, this equates to approximately US$0.80 per share. The company plans to use the proceeds to pay off borrowings under its credit facility.
Additionally, Talos may realize future cash payments upon the achievement of certain milestones at the Harvest Bend or Coastal Bend CCS projects.
Mariani noted, "We think the market may be slightly disappointed in the sale price."
Still, Mariani pointed out the company's improving balance sheet, high oil cut, low production declines, below-average valuation, and material potential upside from its carbon capture business when discussing his valuation of the company.
Mariani gave Talos a Buy rating and a US$17 target price.
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Disclosures for Roth MKM, Talos Energy Inc., March 18, 2024
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Disclosures: The price target and rating history for Talos Energy, Inc. prior to February 1, 2023 reflect MKM’s published opinion prior to the acquisition of MKM Partners, LLC by Roth Capital Partners, LLC. Within the last twelve months, ROTH Capital Partners, or an affiliate to ROTH Capital Partners, has received compensation for investment banking services from Talos Energy, Inc.. Within the last twelve months, ROTH Capital Partners, or an affiliate to ROTH Capital Partners, has managed or co-managed a public offering for Talos Energy, Inc.
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