Talos Energy Inc. announced that its borrowing base has been successfully reaffirmed at its current level of $985 million following the Company's semi-annual redetermination process. Separately, Talos provided updated reserves figures as of September 30, 2020 audited by Netherland, Sewell & Associates, Inc. ("NSAI") as well as updated operational and financial guidance for the fourth quarter of 2020.
The borrowing base under the Company's reserves-based lending facility has been reaffirmed at its current level of $985 million. As of November 30, 2020, Talos maintained over $300 million of liquidity.
President and Chief Executive Officer Timothy S. Duncan commented: "Consistent with the redetermination process in the spring, our bank group has once again shown strong support for our business despite the challenging macro-economic conditions and unique circumstances the Company has experienced this year. Our 2020 capital program was focused on lower-risk, shorter-cycle projects that provided impactful conversions to our Proved Developed Producing reserves and immediately bolstered the collateral value of our business. The reaffirmation of the borrowing base at $985 million is evidence of our success on this front, despite continued pressure on commodity prices compared to pre-COVID levels."
Updated Audited Reserves
In conjunction with the Company's fall borrowing base redetermination process, Talos elected to complete an audit of its reserves as of September 30, 2020 to update its previously disclosed pro forma, unaudited reserves as of June 30, 2020. Additionally, below are sensitivity tables providing PV-10(1) values highlighting substantially higher reserve values at increasing oil prices(3) relative to the September 30, 2020 SEC price assumptions.
As of September 30, 2020, Talos had proved reserves of 177.6 MMBoe, comprised of 68% oil, 75% liquids and 76% was proved developed. The PV-10(1) of proved reserves was approximately $2.4 billion. The reserves and associated PV-10 are audited by NSAI and are fully burdened by and net of all plugging & abandonment costs associated with the properties included in the reserves report. The following table summarizes Talos's proved reserves at September 30, 2020 based on SEC pricing of $43.63 per barrel and $1.97 per MMBtu:
Updated Fourth Quarter 2020 Operational and Financial Guidance
Subsequent to the Company's October 7, 2020 operational and financial guidance, three major storms have caused additional operational disruptions in the Gulf of Mexico. Hurricane Delta, Hurricane Zeta and Tropical Storm Beta resulted in additional production shut-ins by Talos of approximately 11 full days in the fourth quarter of 2020 as well as delays in reaching first oil in multiple new drill projects and delays to the repairs at Ram Powell.
Production from Ram Powell has since been re-established and has stabilized in line with pre-shut-in levels. Talos now expects its Kaleidoscope development to commence production in mid-December and, once online, the Company expects its average daily production to be approximately 71.0 – 73.0 MBoe/d for the remainder of December 2020.
The table below provides the prior fourth quarter 2020 guidance released on October 7, 2020 as well as updated fourth quarter 2020 guidance incorporating the production volume deferrals caused by the significant incremental storm-related activity in the Gulf of Mexico: