10-Q · May 5, 2026
Talos Energy reported for Q1 2026 a revenue of $472.31 million, exceeding estimates and previous year’s figures despite a drop in production volumes leading to an impairment of $145 million. While EPS improved to -0.07,…
Earnings analysis · 10-Q
TALO earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
Talos posted a strong Q2 recovery, with revenue up 56.5% year over year to $664.8 million and net income of $149.7 million versus a $185.9 million prior-year loss, aided by markedly higher oil prices and the absence of…
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Talos posted a strong Q2 recovery, with revenue up 56.5% year over year to $664.8 million and net income of $149.7 million versus a $185.9 million prior-year loss, aided by markedly higher oil prices and the absence of a quarterly impairment. Production was broadly flat at 93.7 MBoepd, while operating cash flow remained robust at $474.6 million for the first half despite adverse working-capital movement and $96.6 million of cash hedge-settlement losses. The principal offset is a more complex capital and risk profile: Talos is pursuing an $850.0 million acquisition, has expanded long-term debt commitments, and retains meaningful commodity-price, decommissioning, and financial-assurance exposure.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.88
What stood out
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Revenue surged 56.5% year over year
Q2 revenue rose to $664.8 million from $424.7 million a year earlier, a $240.1 million increase (56.5%), and from approximately $472.3 million in Q1 2026. The year-over-year increase was overwhelmingly price-led: oil revenue increased $247.6 million, including a $220.9 million price benefit.
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GAAP earnings swung to profit
Net income attributable to Talos was $149.7 million in Q2 2026, versus a $185.9 million loss in Q2 2025. The comparison benefited from no Q2 2026 oil-and-gas impairment versus a $223.9 million impairment in the prior-year quarter.
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Production held steady despite field declines
Production was essentially stable at 93.7 MBoepd, up 0.4 MBoepd from 93.3 MBoepd a year ago. A 4.1 MBoepd increase at Sunspear more than offset a 3.5 MBoepd decline at Brutus.
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Oil prices materially lifted realizations
Realized oil pricing increased to $99.47 per barrel from $64.08, while total realized price per Boe increased to $77.95 from $50.00. Including realized commodity derivatives, price per Boe was $69.25 versus $53.92, demonstrating a $74.1 million quarterly cash hedge-settlement drag despite stronger physical pricing.
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Cash generation remained substantial
Six-month operating cash flow was $474.6 million, down $145.2 million year over year, while six-month capital expenditures were $231.5 million. Cash flow from operations less reported capex was approximately $243.2 million, before plugging-and-abandonment spending of $40.6 million.
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Liquidity supports planned investment
Available liquidity was $1.182 billion at June 30, 2026, supported by a $700.0 million borrowing base. The borrowing base is set to increase to $850.0 million upon closing of the Coulomb and Na Kika acquisition.
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Development catalysts extend into late 2026
Management expects first oil from Monument by late 2026 after the first development well encountered approximately 250 feet of net pay. The Daenerys appraisal well was spud July 1, 2026, with results expected by year-end 2026.
What to watch
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Pending acquisition has closing and deposit risk
The newly added pending-transactions risk states the $850.0 million Coulomb and Na Kika acquisition may not close on the contemplated terms or timeline. If it fails to close in specified circumstances, Talos must redeem $175.0 million of its 8.000% notes; Shell may also be entitled to Talos's $42.5 million share of the acquisition deposit as liquidated damages under certain circumstances.
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Refinancing increased long-term cash commitments
Talos issued $800.0 million of 8.000% notes due 2034 and redeemed $625.0 million of 9.000% notes due 2029. While the coupon is lower, estimated remaining debt interest payments increased to $796.7 million from $525.5 million because of the longer term and greater principal amount.
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Commodity prices could drive further impairments
Commodity-price sensitivity remains material: the company recorded a $145.0 million U.S. oil-and-gas property impairment in the first six months of 2026. Its June 30 ceiling test used SEC prices of $71.93 per barrel of oil, $3.91 per Mcf of gas, and $18.63 per barrel of NGLs, and management cautioned that lower prices or higher costs could cause future impairments.
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Bonding and collateral needs can constrain liquidity
Financial-assurance exposure remains significant, with $1.5 billion of outstanding performance bonds and $95.7 million of letters of credit at June 30, 2026. The company also has collateral agreements requiring agreed collateral through July 1, 2031, potentially reducing liquidity.
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Workover and corporate costs increased
Operating cost pressure persists: quarterly lease operating expense rose $18.7 million, or 14%, to $155.7 million, principally from the Genovesa workover, and G&A increased $5.2 million, or 13%, to $44.6 million due to legal and equity-compensation costs.
Management's outlook
The 10-Q does not provide revenue or EPS guidance. Management stated that remaining 2026 capital spending is expected to be $500.0 million to $550.0 million, with plugging-and-abandonment and decommissioning obligations of $100.0 million to $130.0 million; the pending Coulomb and Na Kika acquisition is expected to close by the end of 2026.
Earlier filings 4
10-K · February 25, 2026
Talos Energy's 10-K filing for the year ended December 31, 2025 reflects significant challenges marked by decreased revenues and greater losses compared to prior periods. The company recorded a revenue of $1.78 billion…
10-Q · November 6, 2025
Talos Energy Inc. reported Q3 2025 results with revenue of $450 million, a decrease from $509 million in Q3 2024, while diluted EPS improved to -0.19 from -0.49 a year prior. Gross margin showed a slight recovery to…
10-Q · August 7, 2025
Talos Energy reported a challenging Q2 2025 with revenue declining to $425 million, a 22.5% drop from Q2 2024. The company faced significant headwinds, including a $223.9 million impairment on oil properties, leading to…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.