Talos Energy Inc. reported a net loss of $494.3 million for 2025 and a Q4 loss of $202.6 million, while revenue fell 3.4% to $1.78 billion. Adjusted EBITDA for the year was $1.20 billion, a decline of 7.6% from the $1.30 billion reported in 2024, driven largely by lower realized oil prices and higher hedging costs. The company generated $420 million in adjusted free cash flow, enabling a $120 million share‑repurchase program that returned capital to shareholders and helped maintain a net debt‑to‑adjusted EBITDA ratio of 0.7x at year‑end.
Talos produced an average of 94.6 thousand barrels of oil equivalent per day (MBoe/d) in 2025, a 2.15% increase from the 92.6 MBoe/d reported in 2024. Operating expenses rose to $1.53 billion, largely reflecting higher drilling and completion costs; however, lease operating expenses were $546.7 million, indicating that the bulk of the expense increase came from capital‑intensive activities rather than core operating costs.
The year‑end net loss was amplified by a $454.5 million non‑cash ceiling‑test impairment charge, of which $170.4 million was recorded in Q4. These one‑time charges, combined with a $70 million increase in hedging costs, offset the company’s operational cash‑flow generation and caused the earnings miss relative to the consensus estimate of a $0.32 adjusted net loss per share.
Management reiterated its 2026 guidance, targeting $100 million in free cash flow and maintaining a net debt‑to‑EBITDA ratio in the 0.8x range. The company also highlighted the successful completion of the Katmai West #2 well and the discovery of the Daenerys prospect, both of which are expected to add significant reserves in 2026. These milestones reinforce Talos’s focus on expanding its offshore portfolio while managing capital expenditures.
Investors reacted negatively to the earnings miss, citing the impact of the impairment charge and the lower-than‑expected revenue. The market’s response underscored concerns about the company’s near‑term profitability, even as the firm’s free‑cash‑flow performance and shareholder‑return program remain robust.
"We realized more than $70 million in free cash flow enhancements, putting us on a strong trajectory toward achieving our $100 million target in 2026," said President and CEO Paul Goodfellow. "We generated approximately $420 million in free cash flow, enabling the company to return $120 million of capital to shareholders while strengthening our balance sheet," added CFO Zachary Dailey.
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