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What Caused Talos (TALO) Stock To Drop In Extended Trades?

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Talos Energy Inc. (TALO) shares were down -5.90% in after-hours trading at $17.55. During the last session, Talos shares closed at $ 18.65, increasing 2.75% or $ 0.5. Over the course of the day, TALO stock fluctuated between $ 18.16 and $ 18.93.

In the past six months, TALO stock has increased by 132.25%, and the stock has risen by 50.28% in the past three months. TALO stock returns so far this year have been 126.33%.  Even after announcing changes to its reserves-based lending facility, TALO stock fell.

How did that financing work?

Talos is a technically-driven publicly traded energy company focused on getting the most out of its operations both in the U.S. and offshore Mexico. Exploration and production of crude oil and natural gas make up upstream operations at TALO, and emissions capture and storage operations comprise downstream operations of the company. Through its joint venture in carbon capture and storage along the Gulf Coast and Gulf of Mexico, TALO is also using its expertise to reduce industrial emissions.

Talos announced the completion of amendments to its reserves-based lending facility (the “credit facility”), which includes an extension of its maturity date until November 2024.

  • After this amendment, TALO expects to be significantly free cash flow positive by the end of 2021 due to its minimal near-term debt maturities, strong liquidity and anticipated free cash flow.
  • Based on TALO’s liquid-weighted assets, the loan agreement approved $950 million as the borrowing base, reflecting the high quality of its diverse, liquid-weighted portfolio.
  • As a result, the maturity date for the credit facility has been extended from May 2022 to November 2024, or about three and a half years after the amendments were made.
  • TALO currently has $655 million under its credit facility.
  • TALO expects liquid assets of approximately $300 million at June 30, 2021, compared to $465 million on March 31, 2021.
  • The next scheduled redetermination of the borrowing base will occur in November 2021.
  • TALO’s borrowings in accordance with its credit facility are expected to decrease as a result of the supportive commodity price environment.
  • Thus, TALO will increase liquidity and return to pre-pandemic levels of leverage ahead of expectations.

TALO’s financial strategy:

Since Dec 2020, Talos (TALO) has raised over $1.3 billion in four separate transactions spanning the entire capital structure as a result of these commitments and maturity extension of its credit facility. By executing these transactions, TALO has strengthened its financial position considerably.

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